NEW YORK — The numbers will boggle the mind. After a banner season for the NHL – a record six outdoor games, a record 93 playoff games – the league and the players’ association are about to settle on a final 2013-14 revenue figure and the 2014-15 salary cap.
Expect the revenue figure to hit about $3.7 billion, a record. Expect the salary cap to be announced before the first round of the draft Friday and land in the high $60-million range to the low $70-million range, perhaps a record.
Expect the Chicago Blackhawks’ Jonathan Toews and Patrick Kane to receive contract extensions with eight-figure average salaries, and expect free agents to make a lot more than they seem to be worth once the market opens July 1.
Expect to hear a lot about the lockout, too.
Didn’t the NHL just have another lockout in 2013-13? Isn’t the league destined for another?
Just know the business is booming and the system is working largely as the owners wanted, and if not for the lockout and the changes to the labor agreement, the money flying around would be even worse (for the owners) or better (for the players).
“We have a system where the amount of money we pay is not only predictable, it’s directly tied to what our revenues are,” said NHL commissioner Gary Bettman after the board of governors met Thursday at a Manhattan hotel. “And so whatever’s flying has to be consistent with the system. And as long as it’s consistent with the system and the system is working, everybody should feel comfortable.”
The owners paid the players 57 percent of league revenues under the old labor agreement. They cut that to 50 percent in the new labor agreement, while limiting the length of contracts, limiting the amount salaries could vary from year to year and bolstering revenue sharing, among other things.
The league returned from the lockout virtually as if there had been no work stoppage. It soared to new heights this season, and it is expected to keep growing and growing in the future. A new Canadian TV deal starts next season, and some think that will help push the cap to about $75 million in 2015-16. Some think the cap will hit $80 million before long.
No wonder both sides wanted as much of the pie as possible and fought so hard for it.
The cap went from $39 million in 2005-06 to $64.3 million in 2011-12. After the lockout ended in 2012-13, the cap was $70.2 million pro-rated for the 48-game schedule. The cap was reduced to $64.3 million for 2013-14 under the terms of the new labor agreement.
It will be around $70 million again already. Imagine if the players were still receiving 57 percent of league revenues. Imagine if teams and players could still sign long-term, back-diving contracts. Imagine if there were no cap at all – it was only a decade ago that battle was fought – and the owners could get themselves into real trouble.
“The way it is today, it’s a better situation than when it was wide open,” said New York Rangers GM Glen Sather. “When the books were wide open and you could pay anybody what you wanted to … I mean, we determine our own destiny by some of the things we create ourselves.”
Toews and Kane are asking for contracts that would average about $12 million per year and could receive contracts that average more than $10 million per year, according to TSN’s Bob McKenzie.
That’s eye-popping, considering the highest average salaries in the league belong to the Washington Capitals’ Alex Ovechkin ($9.53 million) and the Pittsburgh Penguins’ Evgeni Malkin ($9.5 million). But that could set the new standard for stars under the new labor agreement, considering the rising cap and the new restrictions.
Contract lengths are limited to seven years – or eight to re-sign – and salaries can vary only so much from year to year. Stars will still get paid. If GMs can’t stretch out deals and tack on smaller salaries at the ends, the average salaries will go up. We have to adjust expectations accordingly. We cannot compare contracts signed under this labor agreement to those signed under the old one.
Free agents will still get paid, too, whether they’re stars or not. With teams locking up their stars, fewer top players are hitting the open market. With the cap rising, teams have more money to spend. With the floor rising, teams have more money they have to spend. We have to look past the dollar figures and at other things – the percentage of the team’s cap, the length of contract, etc.
“We might decide to spend what some people think is goofy money,” said Dallas Stars GM Jim Nill. “That’s our business, and if it works for us, fine. But you can’t worry about it, because it’s getting spent somewhere, anyways. If I make some bad decisions, it’s going to hurt our team. Those are the decisions you have to make. But it’s getting spent.”
All of this could lead to heavy trade activity before, during and after the draft Friday and Saturday in Philadelphia. This free-agent class is thin, particularly on defense. The new labor agreement included a five-day interview period, which gives teams and players time to make important decisions – but also might help players drive up prices.
In short, there is little supply, a lot of demand and a lot of danger.
“That’s always a risk, if you’re going to pay A-level prices for B-level players,” said Minnesota Wild GM Chuck Fletcher. “There’s not a lot of quality players. So the players in this free agent group are going to do well.
“I think you’ll see a lot more trades that don’t involve draft picks, just hockey trades. There’s so much parity in the league, everyone’s trying to get ahead and again, I think some teams are looking at free agency as not an ideal route. I think there will be a lot of movement.”
Where will all this lead in a few years? Good question.
For now, clip and save this quote:
“When you have a system as all-encompassing and as complicated as ours, at any particular point in time anybody could point to one thing that they would prefer to see differently,” Bettman said. “But when you look at the system overall, it’s functioning exactly the way we hoped it would, and frankly I attribute the fact that the game is so competitive and that the product on the ice is as strong and as entertaining as it is to the fact that we have a system that works.”
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