The Cap Should Be Over $100 Million Right Now. How Is The NHL going to handle the inevitable post-COVID cap rise?

[Soundwave]

I think you should just answer why the players would be willing to jeopardize half a season to a season worth of salary to make sure a cap that is going up is just going to go up faster.

You keep dodging that question for some reason...

I don't think the owners are going to fight that hard on this. Even Bettman is saying publicly they expect big rises in the cap in the next couple of years. The revenue is what it is, the players did everything they were supposed to with the COVID/Return to Play stipulations.

What more do you want from them exactly?

"GMs can't be trusted with large cap raises" is a funny meme, but in a serious negotiation, that doesn't really hold much water. You can maybe get them to space out the payments a bit due to escrow issues, but that's on the players, I think there's only going to be so much give on that. The players have put up with a relatively stationary cap for a long time now, I don't think the appetite for more slow motion increases for another 5 years is that high.

It's not like the players are stealing someone's money here, the cap rising is something that's well deserved by them. When the league is doing very well, which it is, the cap should be rising by design.

 

[Tawnos]

I think you should just read the Reddit post. There is no 5% rule any longer after 25-26 season, after that it will probably just return to how it was calculate before, but if they do that the cap would explode into $108 million or something, lol.

You're basically relying on players to say "no, actually we want a lower salary cap even though we're not obligated to do that", which push comes to shove I don't know if the majority of the PA is going to support that.

A lot of these guys have new contracts coming up in the next few years and want as high of a cap ceiling as possible, we saw with the NBA, the players did not listen to the argument for a lower cap and took the higher amount.

But fundamentally I think the argument of "GMs are stupid and you can't give them that much cap space so lets all agree on more modest cap rises" is not going to carry a whole lot of water with the players.

I think this is misrepresenting what will happen. To be honest, I think both sides are pretty happy with the compromise they found in the last CBA. An escrow cap (6%) in exchange for a limit on the size of the cap increase (5%). Those numbers may not end up being the same, but I'd be somewhat surprised to not have both of those mechanisms in the next contract.

 

[FriendlyGhost92]

I don't think the owners are going to fight that hard on this. Even Bettman is saying publicly they expect big rises in the cap in the next couple of years. The revenue is what it is, the players did everything they were supposed to with the COVID/Return to Play stipulations.

What more do you want from them exactly?

"GMs can't be trusted with large cap raises" is a funny meme, but in a serious negotiation, that doesn't really hold much water. You can maybe get them to space out the payments a bit due to escrow issues, but that's on the players, I think there's only going to be so much give on that. The players have put up with a relatively stationary cap for a long time now, I don't think the appetite for more slow motion increases for another 5 years is that high.

It's not like the players are stealing someone's money here, the cap rising is something that's well deserved by them.

You don't think billionaires are going to fight about money?

 

[Golden_Jet]

This is the chart from tkecanuck341 from the original Reddit post, I would suggest people actually read the original Reddit post fully because I believe he's done a lot more home work on this, again the link is:

Once the current CBA expires, the league will presumably return to a 50/50 split of revenue between the owners and players. Keep in mind, the salary cap hasn't been calculated by the 50/50 split since it was set at $81.5M for the 2019-20 season. Here's a list of the hockey related revenue and salary cap from the last 10 years:


[TABLE=collapse]
[TR]
[TH]Season [/TH]
[TH] Hockey Related Revenue: Prior Season [/TH]
[TH] Salary Cap * Number of Teams [/TH]
[TH] Salary Cap as a percent of HRR [/TH]
[/TR]
[TR]
[TD] 2014-15 [/TD]
[TD] $3.7B [/TD]
[TD] $69M * 30 = $2.07B [/TD]
[TD] 55.9% [/TD]
[/TR]
[TR]
[TD] 2015-16 [/TD]
[TD] $3.98B [/TD]
[TD] $71.4M * 30 = $2.142B [/TD]
[TD] 53.8% [/TD]
[/TR]
[TR]
[TD] 2016-17 [/TD]
[TD] $4.1B [/TD]
[TD] $73M * 30 = $2.19B [/TD]
[TD] 53.4% [/TD]
[/TR]
[TR]
[TD] 2017-18 [/TD]
[TD] $4.43B [/TD]
[TD] $75M * 31 = $2.325B [/TD]
[TD] 52.5% [/TD]
[/TR]
[TR]
[TD] 2018-19 [/TD]
[TD] $4.86B [/TD]
[TD] $79.5M * 31 = $2.465B [/TD]
[TD] 50.7% [/TD]
[/TR]
[TR]
[TD] 2019-20 [/TD]
[TD] $5.09B [/TD]
[TD] $81.5M * 31 = $2.527B [/TD]
[TD] 49.6% [/TD]
[/TR]
[TR]
[TD] 2020-21* [/TD]
[TD] $4.37B [/TD]
[TD] $81.5M * 31 = $2.527B [/TD]
[TD] 57.8% [/TD]
[/TR]
[TR]
[TD] 2021-22* [/TD]
[TD] $2.33B [/TD]
[TD] $81.5M * 32 = $2.608B [/TD]
[TD] 119.3% [/TD]
[/TR]
[TR]
[TD] 2022-23+ [/TD]
[TD] $5.93B [/TD]
[TD] $82.5M * 32 = $2.64B [/TD]
[TD] 44.5% [/TD]
[/TR]
[TR]
[TD] 2023-24+ [/TD]
[TD] $6.43B [/TD]
[TD] $83.5M * 32 = $2.672B [/TD]
[TD] 41.5% [/TD]
[/TR]
[TR]
[TD] 2024-25++ [/TD]
[TD] Not Announced [/TD]
[TD] $88M * 32 = $2.816B [/TD]
[TD] [/TD]
[/TR]
[/TABLE]
*: Shortened and/or fanless season +: Escrow debt ++: Lag formula

With the implementation of the flat cap due to COVID and the adoption of the lag formula to mitigate a huge jump to the salary cap once that debt was paid off, the salary cap has increasingly lagged (pun intended) behind the normal 50/50 split calculation. Assuming a modest 4% increase in revenues each season since the last revenue numbers were reported in 2022-23, revenues would look like this:


[TABLE=collapse]
[TR]
[TH] Season [/TH]
[TH] HRR - Prior Season (est. 4% increase per year) [/TH]
[TH] Salary Cap with 5% Increase (lag formula) [/TH]
[TH] Salary Cap with usual 50/50 formula (50% of HRR) [/TH]
[/TR]
[TR]
[TD] 2024-25 [/TD]
[TD] $6.69B [/TD]
[TD] $88M [/TD]
[TD] $104.5M [/TD]
[/TR]
[TR]
[TD] 2025-26 [/TD]
[TD] $6.96B [/TD]
[TD] $92.4M [/TD]
[TD] $108.7M [/TD]
[/TR]
[TR]
[TD] 2026-27 [/TD]
[TD] $7.24B [/TD]
[TD] $97M [/TD]
[TD] $113.1M [/TD]
[/TR]
[/TABLE]

While ignoring factors listed in this thread again, other than lag.
You’re improving now, as I see you listed the 57/43 this time, when you were doing 50/50 for the life of the cap.

 

[Soundwave]

You don't think billionaires are going to fight about money?

Business is very good for owners right now especially with those massive expansion fees, I don't think there is much appetite to shoot themselves in the foot and have a work stoppage right after COVID issues just cleared.

For what?

Because the cap will to have to rise? It's supposed to rise when your revenue is up a whopping 32%+ lol. What is even the argument against that?

 

[Golden_Jet]

How does the escrow work when it goes the other way? Say pure HRR means it should have been a cap of 90 mil, does the NHL then pay the players the difference?

The cap is based on the midpoint, not the max (88), since most teams exceed the midpoint, there is always escrow.

But in the scenario you listed, it must be either the difference, or rolled into the following seasons cap, but I’m not sure.

 

[FriendlyGhost92]

Business is very good for owners right now especially with those massive expansion fees, I don't think there is much appetite to shoot themselves in the foot and have a work stoppage right after COVID issues just cleared.

For what?

Because the cap is rising? It's supposed to rise when your revenue is up a whopping 32%+ lol. What is even the argument against that?

Those expansion fees are coming regardless of a CBA squabble...

The cap is rising one way or another. The entire body of the NHLPA is not jeopardizing their money for a season so that a small portion of the NHLPA can reap the benefits of the cap being increased drastically rather than gradually.

 

[Soundwave]

Those expansion fees are coming regardless of a CBA squabble...

The cap is rising one way or another. The entire body of the NHLPA is not jeopardizing their money for a season so that a small portion of the NHLPA can reap the benefits of the cap being increased drastically rather than gradually.

Define "gradually" and why should the players go along with something "gradually" when there is no stipulation that says they have to?

They players have already played ball, the cap has grown very little in half a decade, that's a huge chunk of most of these guys' career, why exactly should they accept an artifically low cap for another 3-5 years?

Because some dumb GM can't manage money? Well that's not the player's problem. If anything that's good for the players, you want exactly that situation.

I think the players will make some concessions on this, but I don't think it's going to be as much as people think. 5% for 26-27 for example? No chance. The players would be incredibly stupid to accept that especially when they went out of their way to pay down the COVID debt by taking lower cap rises in previous years to avoid getting stuck with the 5% rule guarantee for an extra year.

 

[Mr Positive]

If the cap is kept artificially low and the player debt from COVID has been paid off, then isn't the cap being kept low like stealing from the players? Will the owners have a debt to pay back at that point?

 

[FriendlyGhost92]

Define "gradually" and why should the players go along with something "gradually" when there is no stipulation that says they have to?

They players have already played ball, the cap has grown very little in half a decade, that's a huge chunk of most of these guys' career, why exactly should they accept an artifically low cap for another 3-5 years?

Because some dumb GM can't manage money? Well that's not the player's problem. If anything that's good for the players, you want exactly that situation.

I think the players will make some concessions on this, but I don't think it's going to be as much as people think. 5% for 26-27 for example? No chance. The players would be incredibly stupid to accept that especially when they went out of their way to pay down the COVID debt by taking lower cap rises in previous years to avoid getting stuck with the 5% rule guarantee for an extra year.

Gradually is pretty clear... It's outlined in the current CBA.

Still failing to answer why the entire body of the NHLPA would jeopardize a lockout so that a small fraction of the players could reap the benefits. Or why most stars are taking max extensions if they intended on fighting for a mass cap increase in two years.

 

[Soundwave]

Gradually is pretty clear... It's outlined in the current CBA.

Still failing to answer why the entire body of the NHLPA would jeopardize a lockout so that a small fraction of the players could reap the benefits. Or why most stars are taking max extensions if they intended on fighting a mass cap increase in two years.

The 5% only applies to next season as a set rate, and even that I'm not sure is set because the NHL technically allowed more than 5% last year.

But after that as far I know there is nothing that says there has to be a gradual rate of increase, I don't think that's been in any of the previous CBAs.

The cap has risen by over 9 million (inflation adjusted) in multiple years in the past for example.

If HRR is like 6.6 billion for example ... the cap could be like 105 million or more. There's nothing in the existing CBA that as far I know prevents that.

The salary cap contrary to popular opinion on fan sites is not designed to stop GMs from spending money in stupid ways either. It's simply meant to tie revenue to the salary cap giving both owners and players a rough guarantee of what costs/salaries could be. It's not designed however designed to be like "well the cap can't go up $10 million in a year because if it does it means Player X gets $14.5 mill and we can't have that happen".

 

[FriendlyGhost92]

The 5% only applies to next season as a set rate, and even that I'm not sure is set because the NHL technically allowed more than 5% last year.

But after that as far I know there is nothing that says there has to be a gradual rate of increase, I don't think that's been in any of the previous CBAs.

If HRR is like 6.6 billion for example ... the cap could be like 105 million or more. There's nothing in the existing CBA that as far I know prevents that.

The salary cap contrary to popular opinion on fan sites is not designed to stop GMs from spending money in stupid ways either. It's simply meant to tie revenue to the salary cap giving both owners and players a rough guarantee of what costs/salaries could be. It's not designed however designed to be like "well the cap can't go up $10 million in a year because if it does it means Player X gets $14.5 mill and we can't have that happen".

Still failing to answer why the entire body of the NHLPA would jeopardize a lockout so that a small fraction of the players could reap the benefits. Or why most stars are taking max extensions if they intended on fighting for a mass cap increase in two years.

 

[Tawnos]

If the cap is kept artificially low and the player debt from COVID has been paid off, then isn't the cap being kept low like stealing from the players? Will the owners have a debt to pay back at that point?

If the players share is under 50%, they get made whole in the same way that escrow goes to the owners when the players are over 50%. There's no such thing as stealing from the players. Mechanisms exist to ensure that BOTH sides are keeping 50%. The Covid debt was a separate thing, where the players saw no salary reductions despite the league's revenues dropping precipitously.

Keep in mind, the players paid 6% into escrow last year and got about half of that back. In other words, despite revenue jumping so much and the cap being artificially low, the players salaries were *still* over 50% of HRR.

 

[Soundwave]

If you give players a choice between a higher cap and a lower cap that moves up more gradually (which is likely the choice that's going to be presented to the NHLPA after the 2026 season), say what you want but unless there is some emergency situation (like a global pandemic or World War III), players will I would bet 9/10 times chose the higher cap.

We saw this entire situation unfold in the NBA just a few years ago. You give players the option for a higher cap, and you can explain to them all day the pros/cons of both, but 9/10 times they're going to chose the highest possible cap they can get.

 

[Golden_Jet]

The 5% only applies to next season as a set rate, and even that I'm not sure is set because the NHL technically allowed more than 5% last year.

Yes 5%, both sides can ageee to go slightly higher if they think necessary. That’s why it was rounded up to the nearest million..

The cap has risen by over 9 million (inflation adjusted) in multiple years in the past for example.

You were already made aware that was a bad calculation on your part, based on using 50/50 not 57/43
That was inflation adjusted number, which is useless as well. It’s based on HRR minus costs. Any inflation is already in HRR.

 

[Mr Positive]

If the players share is under 50%, they get made whole in the same way that escrow goes to the owners when the players are over 50%. There's no such thing as stealing from the players. Mechanisms exist to ensure that BOTH sides are keeping 50%. The Covid debt was a separate thing, where the players saw no salary reductions despite the league's revenues dropping precipitously.

Keep in mind, the players paid 6% into escrow last year and got about half of that back. In other words, despite revenue jumping so much and the cap being artificially low, the players salaries were *still* over 50% of HRR.

So is there no danger of the difference of what's owed surpassing escrow?

 

[Larry Hanson]

They get 50% of HRR minus direct costs. They do not get 50% of revenue.

Correct but I'm just trying to keep it simple and get the guy to understand that the cap going up a bunch doesn't change the players overall compensation.

 

[Tawnos]

So is there no danger of the difference of what's owed surpassing escrow?

The longer the limit on cap increases (5%) stays behind the increases the revenue, the more likely it will become. 3% going back to the owners is already a super low number. It'll be interesting to see what happens after this season.

 

[Golden_Jet]

If you give players a choice between a higher cap and a lower cap that moves up more gradually (which is likely the choice that's going to be presented to the NHLPA after the 2026 season), say what you want but unless there is some emergency situation (like a global pandemic or World War III), players will I would bet 9/10 times chose the higher cap.

Ya the chose that already by using the 5% inflator, when Revenues didn’t justify it, and it just meant a 5% increase on their already existing escrow payments

 

[Soundwave]

Yes 5%, both sides can ageee to go slightly higher if they think necessary. That’s why it was rounded up to the nearest million..


You were already made aware that was a bad calculation on your part, based on using 50/50 not 57/43
That was inflation adjusted number, which is useless as well. It’s based on HRR minus costs. Any inflation is already in HRR.

There is no limit under normal years on what the cap can rise by as far as I know.

You would have to sell to the players that they should impose some kind of limit when they probably don't have to do this.

Why should they agree to that when COVID is long over? I can understand the players made concessions for the Return to Play agreement, everyone was scared shitless how the NHL was supposed to operate with no fans.

But if anything revenue numbers show the league has returned from that not only stronger, but way stronger than before. 6.4 billion? That ain't play money, that's actually shockingly close to league's like the NBA and MLB considering the TV deal disparity.

 

[Tawnos]

If you give players a choice between a higher cap and a lower cap that moves up more gradually (which is likely the choice that's going to be presented to the NHLPA after the 2026 season), say what you want but unless there is some emergency situation (like a global pandemic or World War III), players will I would bet 9/10 times chose the higher cap.

We saw this entire situation unfold in the NBA just a few years ago. You give players the option for a higher cap, and you can explain to them all day the pros/cons of both, but 9/10 times they're going to chose the highest possible cap they can get.

The NHLPA literally rejected a higher cap just a few months ago.

 

[Golden_Jet]

Correct but I'm just trying to keep it simple and get the guy to understand that the cap going up a bunch doesn't change the players overall compensation.

every poster is trying to get through to poster but just ignores it, and replies with a double down on repetition

 

[FriendlyGhost92]

If you give players a choice between a higher cap and a lower cap that moves up more gradually (which is likely the choice that's going to be presented to the NHLPA after the 2026 season), say what you want but unless there is some emergency situation (like a global pandemic or World War III), players will I would bet 9/10 times chose the higher cap.

We saw this entire situation unfold in the NBA just a few years ago. You give players the option for a higher cap, and you can explain to them all day the pros/cons of both, but 9/10 times they're going to chose the highest possible cap they can get.

This is not as simple as a choice.

This is do you want to fight and potentially lose a portion or all of a season so that a fraction of the players benefit, or do you want to just sign the CBA with the gradual increases where everybody gets paid in full to not fight for a few players benefit.

 

[Tawnos]

There is no limit under normal years on what the cap can rise by as far as I know.

You would have to sell to the players that they should impose some kind of limit when they probably don't have to do this.

See, this just shows further issues in your understanding of how this works. The "normal" years you're referring to are actually just years where a CBA doesn't yet exist at all. It'd be as true to say that "there isn't even a cap in normal years."

 

[Soundwave]

The NHLPA literally rejected a higher cap just a few months ago.

Because it was a ploy.

The NHL was hoping the PA would be stupid and take the bait of a small temp rise and thus would take longer to pay the COVID debt off.

Why? Because then they could have the Return to Play stipulations extend a year longer, it's right there in the agreement, if the players don't pay off the COVID debt by a certain date the RtP agreement would auto-renew itself for the 26-27 season.

The PA knew what was up and didn't go along with that, they paid off their COVID debt way faster than expected to prevent that from happening. Now the Return to Play rules expire with the 25-26 season.

That also tells me 5% is a no go for 26-27 ... that shit ain't happening. The PA went out of their way to avoid that exact scenario. The next CBA is going to have to pony up a lot more than 5% cap increase for 26-27 and beyond.