Since the new Collective Bargaining Agreement (CBA) (read the latest NHL CBA here on The Biz of Hockey) was adopted in July of 2005, the way NHL executives administer their franchises has changed dramatically, especially with the salary cap that was agreed upon during the long and difficult negotiations that canceled the 2004-2005 season.
With a salary cap of $39 million in 2005-2006, $44 million in 2006-2007 and a reported $50.3 million this season, it is easy for a General Manager to hit-and-miss when awarding a pricey contract, reducing his room to manoeuver to fill the remaining roster spots to build a contender. Here is a breakdown of how the cap is set every year:
- The salary cap is set at $39 million per team in 2005-06. There is also a floor, with each team required to spend at least $21.5 million on player salaries in 2005-06. The cap figure covers salaries and bonuses.
- The salary cap is defined as the amount of real money a team pays out in a single season.
- Clubs are not permitted to exceed the mamximum or drop below the minimum. But a team can exceed the cap to replace a player with a long-term injury (a minimum of 24 days and 10 games). When the injured player is reactivated, the team must get back under the cap.
- The 2005-06 cap is based on projected NHL revenues of just under $1.8 billion for the season. In future years, the players are guaranteed 54 percent of "hockey-related" revenues, with the salary cap adjusted each year to meet that figure. The players' share increases if revenues rise. They get 55 percent when NHL revenues hit $2.2 billion, 56 percent at $2.4 billion, and 57 percent at $2.7 billion.
- To ensure the correct revenue split, a percentage of player salaries could be placed in escrow. When total league revenues are determined at the end of the season, the escrow account will be divided among players and owners to ensure that the target has been met. Payrolls will be evaluated at several points during the season to determine whether the escrow account is needed
While making some research for a future article that will appear on The Biz of Hockey, I found a few links where you can examine player contracts for 2008 and beyond.
- NHLSCAP.com offers an impressive spreadsheet detailing all player salaries and cap numbers until 2014-2015.
- The USA Today has also a good database for hockey player salaries.
- Wikipedia presents salaries from the 1989-1990.
When looking at the $10 million contract for periods upwards of ten years, the fact that the average salary in the NHL in 1994-1995 was $572,00 seems like such a distant memory.
Look at this: in 1996, Pittsburgh Penguing captain Mario Lemieux earned $11,35 M. This season, the highest paid players are offered $10 M (Daniel Briere, Scott Gomez and Thomas Vanek).
Anybody still think the salaries back then made any sense?