This season was one of the most successful for the NHL in terms of real revenue. Because of that success, the salary cap jumped again to a top of $56.3 million and a floor of $40.3 million.

Where the cap is now faltering is with the bottom range. It doesn’t take into consideration that all teams and markets aren’t created equal. Without revenue sharing and a huge jump in the value of the Canadian dollar, a handful of teams would be back in the situation they were in before the lockout…running in the red and facing a bleak future.

The NHL as a corporate entity is in fine shape. Salaries are under control, amounting to roughly 56% of operating expenses. Players are fine, too, as the average NHL salary is at an all-time high, and players are starting to approach pre-lockout highs in yearly salary.

Some teams, though, will continue to face trouble reaching the cap floor. Most teams have managed to get to that level, but at the cost of some seriously elevated player contracts. If the cap continues to rise, more teams will fall into this gap. Since the institution of the lockout, the cap has risen by an average of $6 million per year, from $44 million in 05-06. If that trend continues, the 09-10 floor will be $46 million, which by current payrolls, would put 11 teams on that line.

The trend can’t continue forever, but it’s possible for at least the next few seasons. If the league get’s a better television deal, or if they do the unthinkable and expand again, it perpetuates this process. I see the day when more than one franchise fails outright and the league will either move these teams, or do the right thing and contract. The league is probably more stable at 26 teams than 30.

Trackback Post

Related Posts