Welcome back my Salary Cap-friendlies and I'd like to just say…happy New Year's! It didn't really feel like hockey season but once that first game started, we were all the way back. I was talking with a friend yesterday and the offseason felt like it went by quickly but that week-and-some-change between draft night and yesterday felt like a month and a half. Either way, we have some business to attend to. The salary cap is going to go up next season, let's talk about it.

Last week NHL commissioner Gary Bettman made a sort of state of the league address that covered a range of subjects that included things like Arizona's most recent iteration of a stadium plan, expansion (again), and then some general housekeeping of future Board of Governor's meetings (In Seattle Dec 4^th-5^th for those looking to attend). The one highlight to us here though is good news for all. Revenue is up, ownership is stable, the salary cap is expected to climb.

I think that's a good place to start, just what is revenue when it comes to the NHL and how it impacts the salary cap? That ranges from things like buying a ticket to a game, purchasing a $14 beverage at said game, maybe even an overpriced jersey because you've had one to many $14 beverages because when or where else could you possibly find an overpriced Duncan Keith Winter Classic jersey? There are different situations where a club has some sort of split of income on their building (or parking), but gate revenue is still king. Even outside of the stadium, if you pay for an NHL broadcasting subscription because of course none of us stream games illegally, that's also considered revenue. Maybe, just maybe, the NHL announces an expansion club in your hometown. That…is not revenue, at least as far as the salary cap is concerned. That check that was signed to give us Vegas and Seattle are split amongst the owners, but I do feel like it does eventually trickle back to the players. If the league is in a place where franchise evaluations rise, then player salaries come along with them. Rising tide lifts all boats.

So where are we right now and where do we except to be? Currently the upper limit to the salary cap is $83.5M with the floor at $61.7M, with the cap rising around a percent or so since the flat cap was put into place during COVID ($81.5M). At first there was speculation that the cap next season could get as high as $90 million but Bettman had said that the projection was somewhere between $87-88M. That is still a close to 5% increase from where we are now and as far as that $90M mark goes, well that could be reached as soon as the 2025-26 season. Again, for now this is an estimate, but CapFriendly projects the cap ceiling next year at $87.5M, which if true would be the largest increase since the lockout back in 2013. I don't think it's a coincidence that once this was "officially" announced (no way clubs weren't aware of a potential cap increase prior to Bettman's presser in New York), that we saw a few significant extensions get signed. Just looking at these numbers compared to the outlook we had during COVID is remarkable in my eyes thinking back of just how much money was lost across the NHL. 

As you're reading this, we're past the start of the NHL season for most clubs so these numbers aren't exactly 100% accurate now that a fair amount of teams have had a chance to implement their LTIR, but coming into the regular season this week nine teams were either above the cap limit prior to carrying salary over to LTIR or are right at the cap ceiling, with an additional ten clubs that have less than a million in cap space. Right now, only six of the 32 clubs have at least $5M in cap space available to them and you bet a handful of those six teams are going to be brokers for clubs with no salary cap space come trade deadline. The salary cap even going up marginally let alone a larger jump as we see projected is going to be a relief for teams with future big-ticket free agents as well as those who find themselves in dead money trouble either this season or very shortly down the road. If there's one thing that I can say here it's that organizations that try and get too creative with the salary cap ultimately get themselves in trouble sooner or later; it's the nature of how these things go. Things change season-by-season but let's say that the cap increase were to take place today and we're now within that $87-$88M range, now suddenly only four clubs are above the cap ceiling instead of ten.

Every season 32 NHL GM's (or thereabout) grumble about not having enough cap space, and every season almost all of them spend right up to the cap limit. However, I do think there's something to this. It’s hard, if not impossible, to really compete without spending much less make a run to the Stanley Cup. I have tried to go back on different sites to see just where different Cup winning clubs ended up cap-wise but that gets tricky as there's no salary cap come playoffs, just ask a Tampa fan. For fun though let's look at the past, we'll go five Cup winning clubs – Vegas, Colorado, Tampa twice, and St. Louis. All of these teams would have been over the cap the following regular season. Possible exception being that St. Louis club who had 12 future RFA's on their roster but you get the idea. Will the cap increase stop spending? No of course not, and that goes across the NHL. Even the clubs at the bottom of the standings will be looking to add a contract here or there just to get to the cap floor, and that goes for picking up a contract of a player who is not going to ever suite up for that team (Ben Bishop comes to mind for Buffalo last season), or a Club A trading for contracts on Club B (Chicago this season with Taylor Hall). I'm sure we'll revisit things come deadline, but I'm interested to see how clubs approach extensions in season and can only imagine there will be more teams trading with a third-party team come deadline.


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