NHL and NHLPA Agree on a Salary Cap Formula

The Toronto Globe and Mail is reporting that it has two separate sources telling them the NHL and the NHLPA have agreed to a salary cap formula based on team-by-team revenue (whatever that means, and the meaning certainly is not clear as is evidenced by the comments and discussion at TSN.CA).

This [the salary cap system] has been the most contentious issue between the owners and players, but the sources also said it does not mean a new collective agreement is close to completion. The negotiating teams are now working on salary arbitration, free agency, qualifying contract offers and other issues, any of which could be deal-breakers.

… According to a source with ties to both owners and players, and another source close to the owners, there will be a team-by-team salary floor and cap based on a percentage of each team’s revenue. The actual percentage is not known, although the league had been demanding 54 per cent.

In the first year of what is thought to be a six-year deal, based on revenue projections by both sides, the salary cap will range from $34-million to $36-million, with the floor from $22-million to $24-million.

What is not clear is how the percentage will be applied to each team, since there is a large disparity in revenue among the NHL’s 30 teams, although it is clear the agreement is a complicated one. If a strict percentage were used, then a large-revenue team like the Toronto Maple Leafs would have a salary cap not only much higher than $36-million, but vastly higher than a team like the Phoenix Coyotes, whose financial situation is regarded by insiders as one of the worst in the NHL.

According to the formula, a dollar-for-dollar luxury tax will kick in at the midway point between the floor and the cap. If the floor of the lowest team proves to be $22-million and the cap on the highest team is $36-million next season, then the tax will come into effect at $29-million.

I cannot figure out the details (i.e., I may be wrong about this), but this agreement looks a lot worse than the $42m cap that the NHLPA turned down back in February. And as I wrote then, it seemed to me that Gary Bettman was correct that it was the best offer the players would see. If so, NHLPA prez, Bob Goodenow will likely soon be replaced or edged aside. The Globe and Mail story sort of supports this idea, but not quite….

Management sources said the agreement on the cap was reached because moderate voices like NHLPA president Trevor Linden were willing to make a deal and because both sides were able to agree on accounting methods after long and arduous studies of team finances by groups from both sides.

What is not clear is the role of NHLPA executive director Bob Goodenow in the agreement. While management sources insist he has moved into the background, with Linden and Saskin handling most of the negotiating, there is a long history of animosity between owners and general managers and Goodenow, who fights hard at every turn for the NHLPA members.

Player sources say there is no sign of any erosion of Goodenow’s leadership, but that he has tightened up the flow of information from the negotiators.


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Author: John Palmer

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