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

[Soundwave]

Of course they were good with it, they still got paid when the league was crippled. Saying they paid off their debt? slow clap I guess.


You keep saying this over and over. The players will see the benefits of increased revenue, they get 50%.

The cap is tied to revenue though, you can't have like $6.7-$7 billion in HRR and have a salary cap that's like 95 million.

The PA will either have lost its mind if they allow that.

The fact of the matter is NHL business is booming. Probably should have known this when going to a game today everything is way, way more expensive then it was 5 years ago, and massively more than 10 years ago.

 

[Golden_Jet]

You should go by revenue as the base number. 6.43 billion 32% more than 4.86 billion that it was 4 years prior (pre COVID to post COVID).

I mean I would love to see the argument then why players should only expect a cap rise of maybe 15%, when your revenue is more than double that.

Didn’t address one point again, other than repeating yourself. You bring this topic up every few months, and are proven wrong on your assumptions each time.

How much do the ”expenses” in post 12 affect the cap calculation, regional network numbers down?

Take some time and read the MOU and CBA and try and understand it, instead of ignoring things that are in there,
Have you read either? as lot of us have to keep repeating what is in there.

@mouser has shown you reasons in the past, a lot of that have been brought up in here, I’m sure he had others, but every few months you create a new thread about it.
Players aren’t losing any money, and won’t be in the future.

Don’t forget escrow is maxed out at 5% or 6% now as well.
In 2 years we have a new CBA to replace the MOU.

 

[KevinRedkey]

That’s exactly what they are doing. Crates a disconnect between family’s going to games, which effects youth participation, which effects new fans. My kid has no interest in hockey whatsoever. It would cost us almost 800$ to watch a game in LA for the 3 of us after tickets food parking and gas. Seeing the game live is what gets the kids hooked! I’m not hard up for cash but at 800$ there are just better things to spend our money on and get more value. I mean shit we haven’t in a playoff round in a decade what are we really missing.

What a crock of sh!t...

I randomly chose dates on Ticketmaster for 3 seats (current starting price per ticket):
Oct 24 - $47.60
Nov 20 - $33.93
Dec 7 - $50.31

There's also seats in the 2nd level for under $100 each at many of the games. Parking is $30-$40 depending on the day. Gas is less than $20, and most liklely under $10. So you can get to a game in the nosebleeds for ~$200. Reasonably goos seats would be ~$320 to plenty of games.

Get over yourself.

 

[Soundwave]

Didn’t address one point again, other than repeating yourself. You bring this topic up every few months, and are proven wrong on your assumptions each time.

How much do the ”expenses” in post 12 affect the cap calculation, regional network numbers down?

Take some time and read the MOU and CBA and try and understand it, instead of ignoring things that are in there,

@mouser has shown you reasons in the past, a lot of that have been brought up in here, I’m sure he had others, but every few months you create a new thread about it.
Players aren’t losing any money, and won’t be in the future.

They're not losing money *now*, but it means the "cap is only going to increase 5%" shit is also going into the toilet the very minute the Return to Play deal expires, which is going to be 25-26 (the stipulation that could have extended that deal for an extra season was made void when the players paid off their COVID debt way ahead of schedule).

After that, the players are well within their rights to point to revenue and say the cap should be well over $100 million. There's no longer any 5% rule at all.

 

[Larry Hanson]

The cap is tied to revenue though, you can't have like $6.7-$7 billion in HRR and have a salary cap that's like 95 million.

The PA will either have lost its mind if they allow that.

The fact of the matter is NHL business is booming. Probably should have known this when going to a game today everything is way, way more expensive then it was 5 years ago, and massively more than 10 years ago.

Yes, you can. The players have been paying escrow forever because the total cap expenditure has been exceeding the actual revenue number.
Revenue is determined and then is reflected at the mid point between the cap ceiling and the cap floor. If every team spends near or to the cap ceiling, which they do, then salaries are reduced via escrow to compensate. If the cap is lower than it should be, and teams spend to the cap ceiling, then it just lowers escrow. In a few years when the cap balances out the players won't be seeing any more net dollars than they would if the cap stayed the same as today.

Anyway, have fun, I'm out.

 

[majormajor]

Unfortunately inflation sucks for consumers, but is good for corporate entities (which the NHL is basically). A big chunk of the cap rise is probably because of inflation in general, everything being more expensive = higher revenue.

A large chunk and there's also a large chunk that is just people being able to buy more and choosing to spend a lot on hockey games.

The price level is up 34% since 2014.
Consumer Price Index for All Urban Consumers: All Items in U.S. City Average

Hockey related revenues are up closer to 90% in that same period.
NHL league revenue 2023 | Statista

23 percentage points of that 37% increase in prices is since 2019.

HRR is up 40-50% since 2019.

Isn’t that poster pointing out that as costs increase for basic living expenses the average fan has less money to spend on the NHL? Yes, the cap goes up because of inflation but the fans, especially in Canada, who traditionally spend so much on the nhl spend a lot less. The league will need some non hockey markets in the US to make up the drop in Canadian revenues.

Prices are actually flat now in both U.S. and Canada, we've had little inflation since the big spike in 2022.

And real median incomes (adjusted for inflation) are rising markedly in the U.S. and flat in Canada (not declining).
Real Median Household Income in the United States

Median after-tax income of families and unattached individuals, Canada and provinces, 2018 to 2022 (2022 constant dollars) (I've seen the recent data but this is the closest "real" inflation adjusted data I could find on a quick statcan search).

The league already has soaring revenues and there is no drop in Canadian revenues.

What you can say is that renters in Canada (and coastal U.S.) are absolutely f***ed because of the housing shortage. They won't be buying a lot of tickets. But 2/3 of Canadians and Americans are homeowners and they've made an absolute fortune in the last few years because of the housing shortage had driven up their home values.

I suppose these people are less vocal about it, and it makes people think that the crisis is something everyone is experiencing. It's not, many have profited off of it. The median home price in Canada has gone up by $300k CAD since 2014, that's a lot of hockey tickets that your average homeowner can buy.

 

[Oilslick941611]

Inflation is down to 2% in Canada. Normal service has been resumed after the Pandemic.

Tell the CPC that.

 

[Soundwave]

A large chunk and there's also a large chunk that is just people being able to buy more and choosing to spend a lot on hockey games.

The price level is up 34% since 2014.
Consumer Price Index for All Urban Consumers: All Items in U.S. City Average

Hockey related revenues are up closer to 90% in that same period.
NHL league revenue 2023 | Statista

23 percentage points of that 37% increase in prices is since 2019.

HRR is up 40-50% since 2019.



Prices are actually flat now in both U.S. and Canada, we've had little inflation since the big spike in 2022.

And real median incomes (adjusted for inflation) are rising markedly in the U.S. and flat in Canada (not declining).
Real Median Household Income in the United States

Median after-tax income of families and unattached individuals, Canada and provinces, 2018 to 2022 (2022 constant dollars) (I've seen the recent data but this is the closest "real" inflation adjusted data I could find on a quick statcan search).

The league already has soaring revenues and there is no drop in Canadian revenues.

What you can say is that renters in Canada (and coastal U.S.) are absolutely f***ed because of the housing shortage. They won't be buying a lot of tickets. But 2/3 of Canadians and Americans are homeowners and they've made an absolute fortune in the last few years because of the housing shortage had driven up their home values.

I suppose these people are less vocal about it, and it makes people think that the crisis is something everyone is experiencing. It's not, many have profited off of it. The median home price in Canada has gone up by $300k CAD since 2014, that's a lot of hockey tickets that your average homeowner can buy.

The NHL is thriving in a high inflation environment ... the reason might be more obvious than we thought ... ice hockey in general is an expensive sport and it has a lot of high income fans.

It would make sense that the NHL has a large pool of high income fans. If you're a "hockey family" that could afford to put one of your kids in hockey instead of basketball or soccer, odds are you can also probably afford a $80+ ticket + $20 dollar hot dog and beer + $200 jersey.

All that's happening with higher pricing is the NHL is making even more money. Sure the bottom end of the fanbase is being priced out, but the richer portion is just making up for it. Business is good for Mr. Bettman.

 

[Tawnos]

If the cap jumps a lot higher and UFA's sign higher contracts that's fine but it just increases escrow, escrow was a thing long before Covid. In the end the players get their share regardless of what the cap is set at.

If you want to say that the cap should be higher you're likely right, and it will eventually catch up, but you keep framing this as the league making out like bandits and the players getting robbed, that is just incorrect.

Not only was escrow a thing before Covid, but the high level of withholding was setting up to be the main point of contention in the CBA negotiation.

Looking at salaries alone in the NHL pre-Covid, the players were well above 50% of HRR. They were losing a significant chunk of the contracts they signed to escrow. Most of that came from the vast majority of teams spending over the midpoint. Part of it was their own fault in using the escalator.

There is definitely a case to be made that having the cap lag behind revenue is a good thing for the players in the end. What good is a $10m salary when you’re losing $1m of it to escrow every year, compared to a $9m salary where you’re not losing anything to escrow? The $9m when you keep it all feels a ton better and allows players and their families to plan more confidently.

 

[Fatass]

A large chunk and there's also a large chunk that is just people being able to buy more and choosing to spend a lot on hockey games.

The price level is up 34% since 2014.
Consumer Price Index for All Urban Consumers: All Items in U.S. City Average

Hockey related revenues are up closer to 90% in that same period.
NHL league revenue 2023 | Statista

23 percentage points of that 37% increase in prices is since 2019.

HRR is up 40-50% since 2019.



Prices are actually flat now in both U.S. and Canada, we've had little inflation since the big spike in 2022.

And real median incomes (adjusted for inflation) are rising markedly in the U.S. and flat in Canada (not declining).
Real Median Household Income in the United States

Median after-tax income of families and unattached individuals, Canada and provinces, 2018 to 2022 (2022 constant dollars) (I've seen the recent data but this is the closest "real" inflation adjusted data I could find on a quick statcan search).

The league already has soaring revenues and there is no drop in Canadian revenues.

What you can say is that renters in Canada (and coastal U.S.) are absolutely f***ed because of the housing shortage. They won't be buying a lot of tickets. But 2/3 of Canadians and Americans are homeowners and they've made an absolute fortune in the last few years because of the housing shortage had driven up their home values.

I suppose these people are less vocal about it, and it makes people think that the crisis is something everyone is experiencing. It's not, many have profited off of it. The median home price in Canada has gone up by $300k CAD since 2014, that's a lot of hockey tickets that your average homeowner can buy.

Is that money in home equity liquid?

 

[Soundwave]

Not only was escrow a thing before Covid, but the high level of withholding was setting up to be the main point of contention in the CBA negotiation.

Looking at salaries alone in the NHL pre-Covid, the players were well above 50% of HRR. They were losing a significant chunk of the contracts they signed to escrow. Most of that came from the vast majority of teams spending over the midpoint. Part of it was their own fault in using the escalator.

There is definitely a case to be made that having the cap lag behind revenue is a good thing for the players in the end. What good is a $10m salary when you’re losing $1m of it to escrow every year, compared to a $9m salary where you’re not losing anything to escrow? The $9m when you keep it all feels a ton better and allows players and their families to plan more confidently.

I think the problem is the players fought tooth and nail to get 50-50 HRR split and they weren't even happy with 50-50 at the time and paid with it in blood (well a lost season in 2005 anyway).

I think there would be extreme push back from the PA members on allowing the NHL to push HRR split below 50-50 even in the name of escrow because once you let them have that, good luck ever getting it back.

Based on the Reddit user's posts in the mid-2010s the players did go to like 55% HRR in some years which incurred large amounts of escrow, that said I think they would be hesitant to ever cross the threshold of below 50 becoming a normalized thing.

They have to stick with 50/50 HRR no matter what and then figure out the escrow that comes with that if you're the NHLPA.

 

[Golden_Jet]

I think the problem is the players fought tooth and nail to get 50-50 HRR split and they weren't even happy with 50-50 at the time and paid with it in blood (well a lost season in 2005 anyway).

They have to stick with 50/50 HRR and then figure out the escrow that comes with that.

The split was 57/43 in the first cap CBA 2005, became 50/50 after the next lockout.

The last paragraph, is how the system has always worked.

 

[Larry Hanson]

Oh my god, I thought I was out.

I think there would be extreme push back from the PA members on allowing the NHL to push HRR split below 50-50 even in the name of escrow because once you let them have that, good luck ever getting it back.

You don't understand how escrow works. The players get 50%, escrow balances out the difference between that 50% and the dollar figure on their contract.

They have to stick with 50/50 HRR no matter what and then figure out the escrow that comes with that if you're the NHLPA.

That is what is happening now.

 

[Tawnos]

I think the problem is the players fought tooth and nail to get 50-50 HRR split and they weren't even happy with 50-50 at the time and paid with it in blood (well a lost season in 2005 anyway).

I think there would be extreme push back from the PA members on allowing the NHL to push HRR split below 50-50 even in the name of escrow because once you let them have that, good luck ever getting it back.

Based on the Reddit user's posts in the mid-2010s the players did go to like 55% HRR in some years which incurred large amounts of escrow, that said I think they would be hesitant to ever cross the threshold of below 50 becoming a normalized thing.

They have to stick with 50/50 HRR no matter what and then figure out the escrow that comes with that if you're the NHLPA.

Oh there would absolutely be pushback against going below 50/50. Just like there was pushback in 2012 against going below the original 57-43 split from the 2005 CBA. The players “fought tooth and nail” for the 50-50 split only in the sense that the league wanted to drop the players share well below 50%, though that was mostly a negotiation tactic. Honestly, it would be more accurate to say that the players fought hard against the 50/50 than for it.

The league seems pretty content with 50/50. There were no plans to ask the players to take less in the last round of CBA negotiations and I don’t expect it in the next round.

 

[Soundwave]

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:

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

*: 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:

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

 

[FriendlyGhost92]

The Return to Play rules were set and they signed it, what exactly are you going to complain about?

The current CBA is up though after next year. Then the players you can bet your ass are going to going hard on the fact that NHL revenue is through the roof the last 4-5 years.

There's no disguising that fact, even Bettman isn't even trying to hide it, he says straight up they expect large cap increases because he knows full well what he's seeing with revenue numbers.

So, just to be clear, the players are going to fight a CBA and potentially cause a lockout, costing them millions, to ensure the cap that's already going to rise over 3-5 years, rise over two years instead.

... Which, mind you, only benefits the players who are FAs in those one to two years.

Makes sense...

 

[Deadly Dogma]

Oh my god, I thought I was out.


You don't understand how escrow works. The players get 50%, escrow balances out the difference between that 50% and the dollar figure on their contract.


That is what is happening now.

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?

 

[Soundwave]

So, just to be clear, the players are going to fight a CBA and potentially cause a lockout, costing them millions, to ensure the cap that's already going to rise over 3-5 years, rise over two years instead.

... Which, mind you, only benefits the players who are FAs in those one to two years.

Makes sense...

I'm saying the players won't accept a mere 5% rise in 26-27 when they have no obligation to and when HRR is probably going to be north of 6.8 billion (see chart above). Even if the revenue stayed fixed at 6.43 billion, asking the players to accept only 5% more when they don't have to ... well I'll just put it this way, I doubt anyone would accept that at their work if they were in a similar revenue sharing agreement with their ownership.

They don't have to "fight" for anything anyway, the revenue is what it is, the Return to Play deal is what it is (it was designed only for the COVID era and it expires at the end of 25-26 making any other stipulations therein null and void).

 

[FriendlyGhost92]

I'm saying the players won't accept a 5% rise in 26-27 when they have no obligation to and when HRR is probably going to be north of 6.8 billion (see chart above). Even if the revenue stayed fixed at 6.43 billion, asking the players to accept only 5% more when they don't have to ... well I'll just put it this way, I doubt anyone would accept that at their work if they were in a similar revenue sharing agreement with their ownership.

They don't have to "fight" for anything anyway, the revenue is what it is, the Return to Play deal is what it is (it expires at the end of 25-26 making any other stipulations therein null and void).

Again, you're saying the players are going to risk only getting paid for a partial season, or no season at all, to fight over whether the cap returns to 50/50 in 1-2 years or 3-5 years...

Just making sure I understand that you're suggesting they blow their own leg off to spite the league for breaking their foot.

Nevermind the question of, if the players were really hell bent on fighting for a massive raise in 26-27, why the hell would all these young stars be signing 8 year deals like they are?

 

[Soundwave]

Again, you're saying the players are going to risk only getting paid for a partial season, or no season at all, to fight over whether the cap returns to 50/50 in 1-2 years or 3-5 years...

Just making sure I understand that you're suggesting they blow their own leg off to spite the league for breaking their foot.

Nevermind the question of, if the players were really hell bent on fighting for a massive raise in 26-27, why the hell would all these young stars be signing 8 year deals like they are?

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.

 

[Tawnos]

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:

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

*: 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:

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

I am absolutely not impressed by "salary cap as a percent of HRR" in this discussion.

First of all, 50/50 split is about salary, not cap hit.

Second of all, creating a percentage out of the hypothetical number that is the salary cap is meaningless. The league didn't spend $2.672B in salary last year. And if the number they spent was really around 40% of revenue, than the players got a pretty big payout from the league (or will, whenever the 24-25 numbers are fully finalized). So they're likely pretty happy about that.

 

[Larry Hanson]

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?

It'll never happen but in theory if the overall salaries were less than the mid point between the cap floor/ceiling then it should revert to reverse escrow where players get more than their contract amount.

 

[FriendlyGhost92]

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 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...

 

[Soundwave]

When the NHL hits 7 billion in revenue that will be pretty impressive honestly.

Unlike the NBA and NFL and MLB, they don't have the massive TV deals in the US that those leagues have, although the new US TV deal is much better than what was there before (believe it brings in like $433 mill/year).

The NHL is making a shit ton of money with gate revenue, probably not far off from the NBA.

 

[Lazlo Hollyfeld]

Of course they were good with it, they still got paid when the league was crippled. Saying they paid off their debt? slow clap I guess.


You keep saying this over and over. The players will see the benefits of increased revenue, they get 50%.

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