Should the NHL Eliminate the Salary Cap Floor?
NHL writer Jesse Spector of the Sporting News asks out loud if it would benefit the NHL—striving for profit certainty nowadays—to abolish the salary cap floor and let individual teams have individual cap numbers based on their revenues.
"If the NHL really wants profit certainty for all 30 of its clubs, and not just certainty of exceptionally high profits for its most powerful owners, it cannot treat all 30 teams as financial equals when they very clearly are not. This is not the NFL, where the main source of revenue is a massive national television contract, and local TV rights, one of the NHL’s greatest sources of both revenue and financial disparity, don’t exist outside of the preseason."
Spector gives some team examples...
"Obviously, there would be an enormous gap in payrolls. For the 2010-11 season, Forbes reported that the Toronto Maple Leafs brought in $193 million in revenue, compared to $63 million for the Islanders. The midpoint was $96 million for the San Jose Sharks Sharks and Edmonton Oilers. Applying a 50-50 split, you would be looking at a salary cap in the $96 million range for Toronto, $58 million in San Jose and Edmonton, and $31 million on Long Island for 2011-12."
... I think it's a good idea Spector poses: just not for the Rangers. According to Forbes.com, the Blueshirts made approx. $169 million for the 2011-12 season and, using a 50/50 HRR split, their individual cap number would be $84.5 million, roughly $14 more than what the cap would have been under the old CBA.
... I'm of the opinion the implementation of the salary cap is partially responsible for the Rangers resurgence since the 04-05 lockout. It forced Sather to build from within and hire people to develop that plan. Sure, he's still made financial blunders (Wade Redden? Scott Gomez?), but he has waved a magic wand to make them disappear and actually improve the team.
... Imagine now giving Sather more money to use? Scary. Not sure his spending ways are completely behind him. But he's nowhere near the maverick he used to be.
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I like the idea of getting rid of the floor, as there are teams right now being forced to spend more on payroll then they can afford. Every once in a while, this means a team like the Islanders or the Panthers gives a player a salary higher than they deserve in order to help meet their minimum. However that contract offer is then used as leverage in other markets, forcing clubs to give 4th line talent 2nd line money. This in turn is part of the reason why the salary CAP has risen every year since the last lockout: Teams can't afford to put a team on the ice that's within the cap regulations while still giving out the contracts the players are demanding.
Spector indicates that just getting rid of the floor and not adjust based on revenue would be a "band-aid over a bullet wound". I don't agree. If you allow the Panthers and the Blue Jackets to spend as little as they want on payroll, the natural evolution would be that these teams would become so irrelevant that they'd close up shop. (This is why it won't happen, Bettman doesn't want to lose his pet projects.)
The theory was that the cap and floor would create parity in the league, which its done, to an extent, with fewer repeats and newer teams getting in to the playoffs every year. But when a team goes from long shot to contender and still can't turn a profit, that's when you know you've got teams in the wrong markets.
