NHL’s cap floor plan wouldn’t count bonuses, would make AHL players rather sad
Rookies carry some baggage when they arrive in the NHL, and not just because they're rookies and hence have to carry their teammates' bags. There are expectations for success; the promise of a bright future; and, of course, the millions of dollars built into their contracts that they'll never see, but that will allow their cap floor-challenged teams to reach the mandatory minimum for spending in this financial system.
[Related: What will NHL refuse to concede to union in lockout stalemate?]
Pop quiz, hot shot: How many rookies scored over 20 goals last season? That would be two: Matt Read (24) and Gabriel Landeskog (22).
How many had 35 assists? That would be one: Adam Henrique (35).
How many defensemen hit the 40-point mark? That would be zero.
These are all performance clause triggers in an NHL Entry Level Contract, giving young players bonus money on top of their base salary. Granted, many players will likely clear their hurdles in the next two years of their ELC deals; but as rookies, the most they'll get out of the bonus money is watching their team use it to reach the cap floor.
The New York Islanders' Nino Niederreiter, for example, had a base salary of $900,000 last season and bonuses that would have paid him $1.925 million according to Cap Geek. Alas, he played 55 games with the Islanders and scored a single goal. He didn't earn his bonus money, but the Islanders had his $2.795 million cap hit apply to their payroll.
Among the many issues being debated in this lockout: The salary cap floor and the "creative accounting" we've seen by teams to either get under the cap or to reach the floor. Things like … oh, you know … counting against the cap bonus money that a young player will never unlock, like it's an unattainable achievement on a video game.
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David Shoalts of the Globe & Mail believes that the practice could come to an end in the next CBA … and that there are some dire implications for AHL players in the fallout.
According to Shoalts, Gary Bettman presented the idea that teams wouldn't be able to us bonus money to reach the floor and that all player salaries "above $105,000 (all currency U.S.), even those on a team's minor-league roster, would now be included under the salary cap."
This alarmed two groups. One is a lot of NHL owners, many of whom were considered moderates, who are not happy that under this proposal they could no longer include on their payroll bonus money that would likely never be paid in order to get to the salary floor, which was $48.3-million in the 2011-12 season. This means they will have to pay real cash to get to the floor, a daunting prospect for clubs operating on razor-thin margins.
The other unhappy group is all of the players in the AHL, who would effectively see their salaries capped at $105,000 under Bettman's offer. This is alarming because a veteran can make as much as $300,000 on an AHL contract, which is currently not included in the NHL team's cap payroll.
Let's inspect both of the impact craters here …
The decision to eliminate bonus money from the cap means teams are going to be forced to spend real dollars to reach the floor, which speaks to the inequity of the floor in the cap system. Larry Brooks of the NY Post wrote an interesting piece about the future of the floor last weekend, including this:
If the cap reaches $88 million — and it will at 50-50 before all that long if revenues continue to increase at historical rates—then the $72 million floor will represent 81.8 percent of the ceiling.
Forcing teams to hit the floor increases escrow and complicates make-whole. The answer is to set the floor at a percentage rate of the cap — say, 65 percent rather than the $16 million hard number — which would thus minimize escrow and diminish the make-whole gap to a workable number.
And thus making it easier for teams that can't inflate ELC salaries with bonus dollars any longer.
The other impact of this change is a little direr, at least for the AHL.
Shoalts is right: Salaries in that minor league are going to capped under whatever number would make them count on the NHL cap.
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What would that mean? Well, let's say you're a hockey in-betweener: At the top of the AHL, not really on an every night NHL level. Are you sticking around for some wage that is designed to just be low enough so as not to count on the cap? Or are you hauling ass to the KHL or Sweden where they'll pay you an un-tethered wage?
So we'll see a mass exodus of good to very good players from the AHL in theory. Which probably isn't good news for those rookies looking to cut their teeth in the AHL before getting promoted to the NHL to then not collect their bonus money. What a vicious cycle.