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

[Pablo El Perro]

I think these numbers originate from Forbes, But they aslo state. "incuding arena proceeds from non NHL events"
So who knows how much that is?

With some Southern teams, that can be a big chunk of revenue. In the dark times for the Panthers, non-nhl revenue was why a certain owner didn't care much about icing a competitive team for years. I'd guess concerts don't for revenue sharing.

 

[mouser]

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.

It already has happened at least twice, maybe three times now as I’m suspecting the players received a boost for 2023-24. Haven’t seen final figures yet though.

 

[mouser]

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?

Yes. The players get an extra x% of their contract paid to them by the teams to keep the 50/50 split.

 

[Larry Hanson]

It already has happened at least twice, probably three times now as I’m expecting the players receive a boost for 2023-24.

Really? what years?
Most of the teams are at or near the cap every year, the average would have to be closer to the floor than the ceiling.

 

[mouser]

Really? what years?
Most of the teams are at or near the cap every year, the average would have to be closer to the floor than the ceiling.

I don’t have my financial spreadsheet handy right now, but it happened twice between 2005 and 2011. May have been 2005 and 2008 iirc.

 

[mouser]

Compare to the NHL. Revenue has gone up 32% from 18-19 to 22-23 (pre/post COVID) in only 4 years. Yet the NHL cap has only gone up about 10.6%, versus 28% for the NBA. Even though the NHL has a higher increase in revenue.

The NFL cap has similarly increased by almost 29% in the same period of time (2020 versus today) including a record $35 million surge in the cap in the last season.

I'm sorry I know some people are going to twist themselves into a pretzel to say why this isn't a big deal, but I can't look at that and not feel like NHL players aren't getting totally hosed. NHL revenue is growing faster than the NBA, but the cap which is supposed to be tied to revenue is growing at about 1/3 the rate, lol.

At some point you are just abusing the "COVID emergency" excuse if you're the NHL.

Several important factors you may be overlooking:

A) The # of NHL teams increased from 31 to 32. Assuming an average revenue for Seattle that’s an “artificial 3.2%” revenue bump which doesn’t change the cap.

B) The players were routinely losing 10-12% of their paychecks to Escrow prior to Covid. The MOU instituted the cap lag formula to reduce Escrow. If the NHL and PA are successful in their goal to effectively eliminate Escrow that would essentially “remove” 10-12% of the revenue growth from the cap, instead purposing it to fix Escrow.

C) The non-salary benefits players receive has increased substantially with the 2020 MOU. The exact numbers aren’t public but I’d estimate 2-3% of additional HRR is now going towards those benefits vs pre-2020. Theses benefits count towards the players’ 50% share of HRR.

Those three categories tally up to 15-18% of the 32% NHL revenue growth you cite being eaten up, leaving a net 14-17% of revenue growth to increase the salary cap.

 

[Soundwave]

Several important factors you may be overlooking:

A) The # of NHL teams increased from 31 to 32. Assuming an average revenue for Seattle that’s an “artificial 3.2%” revenue bump which doesn’t change the cap.

B) The players were routinely losing 10-12% of their paychecks to Escrow prior to Covid. The MOU instituted the cap lag formula to reduce Escrow. If the NHL and PA are successful in their goal to effectively eliminate Escrow that would essentially “remove” 10-12% of the revenue growth from the cap, instead purposing it to fix Escrow.

C) The non-salary benefits players receive has increased substantially with the 2020 MOU. The exact numbers aren’t public but I’d estimate 2-3% of additional HRR is now going towards those benefits vs pre-2020. Theses benefits count towards the players’ 50% share of HRR.

Those three categories tally up to 15-18% of the 32% NHL revenue growth you cite being eaten up, leaving a net 14-17% of revenue growth to increase the salary cap.

Yeah I looked at the Seattle difference, the cap should still be over $100 million even now, just not quite as high (I believe the Reddit poster states it should be $104 mill cap or something against 6.6 billion project revenue). My estimate was around 102 million minus Seattle.

I don't think C is going to sway players on a lower cap.

B being the escrow that will be an issue but even on that I don't agree that the players are going to handcuff themselves to a massive lower cap ceiling for half a decade more.

Probably I can see something like the NHL allowing a 5.75% increase next year (they allowed 5.38% last year) and then the players agreeing to some setup where they get about 8% rise from there on for another two years.

That would bring them to $108 million, still likely below what the cap should be as revenue could likely be over $7 billion.

The NHL and players honestly deserve some props here for amount of revenue. $6.4+ billion for a league that doesn't have a huge US TV deal is really quite strong. The NBA is only $10.58 billion or thereabouts, the way people talk about the NBA you would think it's 3-4x the size of the NHL in revenue when that's not the case at all.

NBA players get paid so much more than NHL players too, now yes I recognize the NBA rosters are smaller (12 players generally) and it's a soft cap league, but still with the disparity in star salaries you would think the NBA was making 3-5x the NHL.

I think COVID actually helped the NHL, lol, the rampant inflation basically has cornered the NHL market to its premium customer base who are fairly wealthy and/or simply willing to spend a lot of money particularly for gate revenue.

 

[Soundwave]

I know it's not a 1:1 comparison, but it's f***ing hilarious that a bench player on an NBA team like Riu Hachimura (for non-basketball purists, this is the equivalent of like a 3rd/4th line player), a guy who is not even in the top 100 NBA salaries makes more than any NHL player, lol.

For next season

Hachimura - $17 million
Matthews - $16.7 mill actual salary (13.25 mill cap hit)
MacKinnon - $15.7 mill actual salary
McDavid - $10 mill actual salary

I mean that's just laughable. I know the NBA is a higher revenue league but it's not *that* much higher revenue.

The top paid NHL player shouldn't be below the 100th paid NBA player. NBA players should definitely get more but that is ridiculous.

 

[mouser]

I don't think C is going to sway players on a lower cap.

You’re misunderstanding, this has nothing to do with “swaying the players”. The NHLPA negotiated an increase in non-salary benefits in 2020, knowing those additional benefits are expressly part of the player 50% share and thus reduce total salary compensation available to the players and the salary cap.. The cap formula is fully defined in the CBA/MOU, subtracting non-salary benefits when calculating the cap.

 

[Soundwave]

You’re misunderstanding, this has nothing to do with “swaying the players”. The NHLPA negotiated an increase in non-salary benefits in 2020, knowing those additional benefits are expressly part of the player 50% share and thus reduce total salary compensation available to the players and the salary cap.. The cap formula is fully defined in the CBA/MOU, subtracting non-salary benefits when calculating the cap.

I don't think we can use the MOU from 2020 as a basis for anything. What specifically are the non-salary benefits?

There was a massive emergency situation in play at that time. The players to their credit basically did whatever the NHL told them to do and they wanted extra security at that time, because who even knew 2020 how long COVID would go on for.

I'm sure the NHL would love to operate under COVID like conditions forever while they make massive revenues and try to lock the players out of that revenue, I just don't see the NHLPA just going along with that.

There's just no way to spin that a 32% increase in revenue (some of the highest in pro sports) while there being only a 10.6% increase in the salary cap is A-OK. The players only tolerated that because of an emergency once in a century situation and frankly looking at other pro sports leagues, they kinda got taken to the cleaners.

My personal feeling is 8% increase coming out of the CBA in 25-26 is the minimum NHLPA will accept, followed by another 8% the next year (instead of the 5% that is there now) and if the NHL can get that they should probably take it and run. That would bring the cap to about $108 million for the 27-28 season.

5.5%-ish next year followed by two years at 8% isn't unreasonable. That may actually be low, I'm not sure if the NHLPA would agree to even that, but if the NHL can get that, they ought to take it and not make too much of a stink. The PA will probably want assurances around 9%-10% increase in cap, the cap has gone up by as much as 12.7% in some years, so it's hard to argue 9%-10% is unprecedented.

 

[mouser]

I don't think we can use the MOU from 2020 as a basis for anything. What specifically are the non-salary benefits?

There was a massive emergency situation in play at that time. The players to their credit basically did whatever the NHL told them to do and they wanted extra security at that time, because who even knew 2020 how long COVID would go on for.

I'm sure the NHL would love to operate under COVID like conditions forever while they make massive revenues and try to lock the players out of that revenue, I just don't see the NHLPA just going along with that.

There's just no way to spin that a 32% increase in revenue (some of the highest in pro sports) while there being only a 10.6% increase in the salary cap is A-OK. The players only tolerated that because of an emergency once in a century situation and frankly looking at other pro sports leagues, they kinda got taken to the cleaners.

The 2020 MOU is effectively the same as a new CBA. The only difference being instead of writing up a completely new CBA the NHL and PA instead agree to extend the existing 2013 CBA with a lot of modifications detailed in the 2020 MOU.

Non-salary benefits includes things like:
- health insurance (not just for the players but for their families as well),
- life insurance, for example Gaudreau’s CBA mandated life insurance policy is set to pay his family $7.5m
- Disability insurance, including post-playing career disabilities
- pension contributions (probably the biggest total amount of non-salary benefits)
- probably some other things I’m overlooking

 

[Tawnos]

It already has happened at least twice, maybe three times now as I’m suspecting the players received a boost for 2023-24. Haven’t seen final figures yet though.

Crap, you’re right. The article that I read saying they were getting back half of the 6% was from March. The same writer (Seravelli) revised that in June to say they’re likely getting all of it back and might even get those top up payments.

He also mentioned that the last time that happened was 2011-12

 

[Soundwave]

The 2020 MOU is effectively the same as a new CBA. The only difference being instead of writing up a completely new CBA the NHL and PA instead agree to extend the existing 2013 CBA with a lot of modifications detailed in the 2020 MOU.

Non-salary benefits includes things like:
- health insurance (not just for the players but for their families as well),
- life insurance, for example Gaudreau’s CBA mandated life insurance policy is set to pay his family $7.5m
- Disability insurance, including post-playing career disabilities
- pension contributions (probably the biggest total amount of non-salary benefits)
- probably some other things I’m overlooking

The 2020 MOU was written with a gun to players' heads, they really had no bargaining power because COVID was completely unprecedented, there was even questions about how well the vaccines would work at that time and who knows when fans would be allowed back into arenas.

A lot of people on this board didn't think there would be any kind of season period in 2020 at all, I remember I think I suggested a bubble city in Edmonton for summer 2020 and a lot of people here thought the idea was crazy.

I really wonder too if these so-called bonuses are worth what the NHL claims in the long run. NBA players get medical coverage for life for example for every player that plays 3 years and they get much better salaries. NBA players also get life insurance and a very generous pension. How much better is the NHL package and how much % of their revenue are NHL players supposed to give up.

I don't think you can expect the PA to be as timid with the next CBA. Everyone and their grandma knows COVID is over, the NHL cannot use that to bully the PA into giving away massive chunks of revenue owed to them anymore. The only way that's going to work is if there's another virus and even in the extremely low chance of that happening, I don't think you'll get compliance on everything again.

 

[KevinRedkey]

Well we live 2 hours away from LA so gas is considerably more, I have a long bed truck so parking is limited and expensive, I’m not going to a game 2 hours each way, not to sit center lower level. So yeah you’re as wrong as you could get.

So you're unwilling to make the drive in your gas guzzler. You're also begging for premium seats at a bargain price.

But yes, it's the NHLs fault your kids don't like hockey. Absolutely pathetic.

 

[Soundwave]

So you're unwilling to make the drive in your gas guzzler. You're also begging for premium seats at a bargain price.

But yes, it's the NHLs fault your kids don't like hockey. Absolutely pathetic.

In fairness to the guy, it was suggested that $320 USD was a pretty good "budget" price, lol, I mean that's a lot of money for a lot of households for a few hours of entertainment.

 

[KevinRedkey]

In fairness to the guy, it was suggested that $320 USD was a pretty good "budget" price, lol, I mean that's a lot of money for a lot of households for a few hours of entertainment.

It is, but it's also nowhere near $800 which he said.

You can also go for $200 if you don't live nowhere near LA. Lol

 

[Soundwave]

It is, but it's also nowhere near $800 which he said.

You can also go for $200 if you don't live nowhere near LA. Lol

Well I believe he wanted lower bowl seats, in that range I don't know if it would get quite up to $800, but you're probably looking at north of $400-$500 quite probably. For one night out, that's not a trivial amount of money.

EDIT: The lower bowl row 15 (so not exactly up against the glass) tickets he posted were $217 each, that's well over $600 for three tickets.

What's a Lakers game go for these days? I really ought to go see one of those for once. I'm guessing it'd make these Kings prices look tame. I remember being in LA years ago and you could at least get Clippers or Kings tickets for fairly dirt cheap.

 

[Djp]

Still you can't hide a whopping 32% increase in revenue from pre-COVID (18-19) to 22-23 season, an amount that's likely rising more every year that passes.

I can totally understand why guys like Swayman and Shesterkin aren't willing to take pennies on the dollar even though they're getting dragged through the mud in public over it. The 88 million cap is basically a phony mirage, any top agent with any basic math skills could quickly figure out the salary cap should be at least $10 million higher than where it is even with all the little variance you want to throw in there.

That money has to come back onto the cap, it's owed to the players, sooner likely than later given that the current CBA is up soon and the PA isn't just going to bend over.

Again...there is uncertainty with team revenue with issures around broadcasts and RSNs,

 

[DJJones]

Don't think they'll crank up the cap to quickly. 5-6 percent a year seems fine.

 

[Soundwave]

Don't think they'll crank up the cap to quickly. 5-6 percent a year seems fine.

If they wanted to do 5% they could have just paid the COVID debt slower and allowed the existing CBA MOU to auto re-new for an extra year. Clearly the PA did not want that. 5% is way too low.

 

[Pierce Hawthorne]

Don't think they'll crank up the cap to quickly. 5-6 percent a year seems fine.

Yep. There's a bunch of uncertainty coming up in the next couple or years. Quite frankly a 5-6% increase is already an optimistic expectation.

 

[mouser]

I really wonder too if these so-called bonuses are worth what the NHL claims in the long run. NBA players get medical coverage for life for example for every player that plays 3 years and they get much better salaries. NBA players also get life insurance and a very generous pension. How much better is the NHL package and how much % of their revenue are NHL players supposed to give up.

I don't think you can expect the PA to be as timid with the next CBA. Everyone and their grandma knows COVID is over, the NHL cannot use that to bully the PA into giving away massive chunks of revenue owed to them anymore. The only way that's going to work is if there's another virus and even in the extremely low chance of that happening, I don't think you'll get compliance on everything again.

You appear to have a fundamental misunderstanding how the Player 50% share of HRR works.

- If the players are paid more than 50% of HRR they surrender the overage amount back to the NHL via Escrow clawback.

- If the players are paid less than 50% of HRR then the NHL teams have to make the Players whole for their 50% share. After final HRR is calculated and they determine how much the players were underpaid—every player receives extra payments in proportion to their compensation to bring the cumulative total up to 50% of HRR.


Simple hypothetical example:

- HRR is $6.6B
- Players were only paid $3B (including non-salary benefits)
- The Players are owed 50% of that $6.6B = $3.3B.
- The Players were underpaid by $300M ($3.3B minus $3B)
- The NHL teams now have to pay that $300M to the Players after the season.
- Every Player will be paid another 10% of their contract compensation (salary + bonuses) after the season when final HRR is calculated. ($3.3B / $3B = 110%)

 

[Soundwave]

Yep. There's a bunch of uncertainty coming up in the next couple or years. Quite frankly a 5-6% increase is already an optimistic expectation.

The only uncertainty really is how fast HRR is going to hit 7 billion. Ads on jerseys, gambling sponsorships, sky high ticket prices, sky high concession prices, still 2-3% inflation, 5 Nations Tournament, new Canadian TV Deal, new US deal even not too long after.

Unless there is another wunder virus the NHL business is incredibly healthy and has record breaking revenue.

5-6% is a number from the current Return to Play CBA ammendments designed for the COVID era, there's virtually 0 chance the players are dumb enough to accept that rate in the CBA post COVID.

 

[CheckingLineCenter]

who got the interest on the big amount in escrow the past few years? Chance it wasn’t insignificant with how much these guys make.

 

[mouser]

who got the interest on the big amount in escrow the past few years? Chance it wasn’t insignificant with how much these guys make.

Interest in the NHL Escrow account goes to the Players. Reducing or eliminating the final escrow clawback by the NHL.

Interest earned on money in Escrow by default goes to the party depositing the money into Escrow. Unless there’s a very rare agreement otherwise, which the NHL/PA didn’t do.