Month: July 2011

NHL SALARY CAP “MOVING ON UP”!

The NHL salary cap continues to climb every year! Average players are handed out exorbitant amounts of money on the free agent market. Players coming out of their Entry Level contracts are banking excessive amounts and long term contracts. One General Manager, Dale Tallon, spent and guaranteed in excess of $100 million dollars in one day in his attempt to rebuild his team, the Florida Panthers.

Many hockey fans are bewildered and confused. With unemployment hovering at around 10% in the US, home values deflated up to 45% in many areas and the many other issues facing the economy, it’s hard to understand the amounts of money that NHL teams are willing to pay their players.  

I can’t say that I understand all of the reasoning or agree with all of those contracts but I can offer some plausible explanations:

The 2004 NHL lockout gave the owners what they wanted most: COST CERTAINTY. They wanted to control the high spenders and have the ability to project player cost by establishing a salary cap.

The NHL salary cap is formally titled the “Upper Limit of the Payroll Range” (the ceiling) in the new CBA.  Following the NHL lockout, for the 2005–06 season, the salary cap was set at $39 million dollars per team, with a maximum of $7.8 million (20% of the team’s cap) for one player. The CBA also contains a “Lower Limit of the Payroll Range”, (the floor) which is the minimum that each team must pay in player salaries. The lower limit was originally set at 55% of the cap, but is now defined to be $16 million below the upper cap.

The NHL salary cap in 2011-12 will be $64.3 million per team, with the “floor cap” set at $48.3 million dollars. That is $8.7 million more than the “upper cap” was in 2005 after the lockout.

How did all this happen?  Is our game so good that hockey fans and corporate sponsors will spend money to watch hockey regardless of a poor economy? The NHL has done an excellent job in increasing the visibility and exposure of our sports and developing a new fan base by promoting our great stars. Is that enough to justify the increase in revenue and spending? I don’t think so.

One of the reasons for the continued increase in revenues that the league has enjoyed in the past few years is the “Canadian Dollar”.

Revenues for the six (now seven) Canadian teams have all increased significantly since the lockout due to the fact the Canadian dollar has risen in value, reaching parity with the U.S. dollar. As a result, league-wide revenues measured in U.S. dollars have been inflated accordingly. Most Canadian teams play to near capacity; ticket prices are generally higher in Canada to reflect the supply and demand and the difference in monetary exchange. All six Canadian teams pay into the current revenue sharing plan which was designed in the new CBA to provide some protection to small market teams.

Consequently, the cap has been raised each year to its current figure of $64.3 million for the 2011–12 season, with a cap of $12.86 million for one player.

The league as a whole is happy regardless of the increase in salary as long as the fixed percentage of total league revenues doesn’t go over the 57% stipulated in the CBA. 

To ensure compliance with this provision, a percentage of each player’s salary is withheld in escrow until the season is over, at which time the funds are divided between the players and owners to reach the agreed percentage. In the first season of the current CBA, revenues exceeded expectations to such a margin that players received the entire escrow back plus additional funds from the owners, however in subsequent seasons this has not been the case.

While Canadian teams are enjoying this increase in revenues, the percentage paid to the players (57%) is a figure calculated league wide. Some U.S. teams are far below the league average in revenues and are struggling with the unexpected increase in salaries. Not all teams benefit from the revenue sharing and the money THEY spend on players’ salaries far exceed the league wide 57% of THEIR revenue.

It will be interesting to watch the posturing from both sides in preparation for the next bargaining agreement which expires at the end of the 2011-12 season. My guess is that the players would like to have “status quo” but don’t like the “escrow”.  I believe that the owners have some issues that will surface at the negotiation table. The NBA and the NFL will be first at modifying their CBA. Although specific issues are totally different, some fundamental principles may pave the way to solving some of the NHL issues.

HAVE A GREAT HOCKE DAY!

PHIL MYRE (www.philmyretalkshockey.com)

Reference: http://en.wikipedia.org/wiki/NHL_salary_cap

CANADA DAY!

Occasionally, I like to bring in a “Guest Blogger” whenever I read one that is worthy. 

This was written by Kerry Huffman from Platinum Hockey Group.  

July 1st is Canada Day! So for all us goofy Canadians, this one is for us. (remember it’s all in good fun.) 

 You know you’re Canadian if :

 
You’re not offended by the term, “Homo Milk”.
You understand the sentence, “Could you please pass me a serviette, I just spilled my Bowl of Poutine!”
You eat chocolate bars instead of candy bars.
You drink pop, not soda.
You had a Prime Minister who wasn’t fluent in either of the official languages (English & French).
You know that a mickey and 2-4’s mean “Party at thecamp, eh?!”
You talk about the weather with strangers and friends alike.
When there is a social problem, you turn to your government to fix it, instead of telling them to stay out of it.
You get milk in bags as well as cartons and plastic jugs.
Pike is a type of fish, not some part of a highway.
You drive on a highway, not a freeway.
You have Canadian Tire money in your kitchen drawers.
You know that Mounties “don’t always look like that.”
You dismiss all beers under 6% as “for children and the elderly.”
You have an Inuit carving by your bedside with the rationale, “What’s good enough protection for the Prime Minister is good enough for me.”
You wonder why there isn’t a 5 dollar coin yet.
Like any international assasin/terrorist/spy in the world, you possess a Canadian Passport.
You know the French equivalents of “free”, “prize”, and “no sugar added”, thanks to your extensive education in bilingual cereal packaging.
You are excited whenever an American television show mentions Canada.
You were mad at the CBC when “The Beachcombers” were taken off the air.
You know what a touque is and you own one and often wear it.
You know Toronto is NOT a province.
You never miss “Coach’s Corner” during Hockey Night in Canada.
Back bacon and Kraft Dinner are two of your favourite food groups.
If you live in some of the colder Canadian provinces, your car has a cord and plug sticking out of the grill … it’s a block heater for those sub-zero (in Celsius) days.
You only know three spices: salt, pepper and ketchup.
You design your Halloween costume to fit over a snowsuit.
The mosquitoes have landing lights.
You have more kilometres on your snow blower than your car.
Canadian Tire Store on any Saturday is busier than most toy stores at Christmas.
You’ve taken your kids trick-or-treating in a blizzard.
Driving is better in the winter because the potholes are filled in with frozen snow and slush.
You think sexy lingerie is tube-socks and a flannel nightie with only 8 buttons.
You owe more money on your snowmobile than your car.
The local paper covers national and international headlines on 2 pages, but requires 6 pages for hockey.
At least twice a year, the kitchen doubles as a meat processing plant.
The most effective mosquito repellent is a shotgun.
Your snowblower gets stuck on the roof.
You think the start of deer season is a national holiday.
You head South to go to your cottage.
You know which leaves make good toilet paper now that there are no more dollar bills..
You find -40C a little chilly.
You know 4 seasons: Winter, Still Winter, almost Winter and Construction.
The municipality buys a Zamboni before a bus.
You understand the Labatt Blue commercials.
You perk-up when you hear the theme from “Hockey Night in Canada”.
Have a safe and fun holiday weekend!!!!!