COLORADO SPRINGS — One shoe has dropped with the escalating salary cap. Salaries have soared in recent high-profile contract extensions for star players.
That part is clear. It’s a new world.
Now we await the other shoe dropping, one which may run counter to those escalating salaries to some degree.
The majority of NHL teams have been at or close to the upper limit of the salary cap for years, but the landscape is about to change drastically, with the cap jumping $8.5 million to $104 million next season and then jumping again to $113.5 million in 2027-28.
“Probably about 90 percent of the teams (historically) plan to go to the cap, but it’s going to change,” Minnesota Wild owner Craig Leipold told The Athletic this week at the Board of Governors meeting. “The cap’s going up, and it will cause us and other teams to look at, ‘Is this the right number for us?’ And if not, we’ve got to make the right decision.”
That’s coming from a Wild team that has routinely spent to the max. And they likely will continue to do so, but the higher cap will at least force teams to have a financial discussion internally based on team revenues.
How much more can some markets charge for tickets? The NHL is already an expensive night for fans. How much upward leeway will teams have there, with the rising salaries and salary cap?
It’s too difficult to predict for sure, but one does wonder about whether we’ll see fewer teams max out at the cap, especially once it gets to $113.5 million and beyond.
“You know, that’s to be determined, I think,” Montreal Canadiens owner Geoff Molson said. “Most of the teams pretty much end up there (right now). We went through the pandemic and the flat cap for three years, and now it’s sort of catching up, right? I’m as curious as you are in figuring out where it’s going to end up in two or three years when the cap is quite a lot higher.
“I know that we’ll do all that we can to have the best possible team as the Montreal Canadiens. I can’t speak for the other teams.”
Said Boston Bruins owner Jeremy Jacobs, the chairman of the Board of Governors, when asked whether most teams will keep spending to the max: “I think that’ll continue. I know we will.”
I’m not so sure about the majority of teams still spending to the max of the upper limit. Not when the cap goes beyond $113.5 million.
What about a long-standing cap team like the powerhouse Colorado Avalanche? What does the new cap landscape mean for them?
“It’s great — the league is doing strongly. If the cap keeps going up, then revenues are there, right?” Avs president and Hockey Hall of Famer Joe Sakic said. “But because it was pretty flat for so long, I think it’s going to allow teams to have a little breathing room when setting their lineups and have their cap. I don’t know all the teams that will go to the top, top of the cap — no one knows that yet — but you will have flexibility where you don’t have to be right there when you’re stressed about injuries and shouldn’t have an issue with only dressing 18 guys, for example?
“Teams should have that flexibility when the cap goes up there. But the cap going up is great for the league and great for the players.”
Joe Sakic says a rising cap is a good sign for the NHL, regardless of what it means for team spending. (Bruce Bennett / Getty Images)
That’s a good point on lineup flexibility by Sakic. It’s not actually a healthy thing to be right at the max, where you don’t have as much leeway when injuries hit. So maybe a higher cap will see some teams leave a $3 to $4 million buffer for a change.
What does the new salary cap landscape mean for smaller-market teams?
“It’s a real question,” Senators owner Michael Andlauer said. “It depends on what the ownership really wants. For me, when I bought this team, it was truly two goals: No. 1 is to win a Stanley Cup. It’s my passion — always has been — and the opportunity to do that is there. And two, long-term sustainability in a small market, where it’s had its ups and downs and various ownership and bankruptcies, etc.
“There’s a balance that needs to be had. There’s different ways to go about it. I think development is an important part. I’ve run a very successful logistics business which has allowed me the privilege of owning a hockey club today. But that logistics business hasn’t been necessarily about paying the highest amount but about caring more and creating an environment where people want to be there.
“And then sharing. Ultimately, thank goodness, the only way it can happen, is the way the revenue sharing program in the NHL happens. Otherwise small-market teams could never survive. So the cost-certainty environment that Gary Bettman and the NHL have put together is a blessing. And whether I want to make money or not, you look at the goals. It’s all about timing, too. We’re in a position right now as the Ottawa Senators where we have a window of opportunity. As a proud Ottawa Senators fan now, I want to take advantage of that opportunity.”
The revenue-sharing system in the NHL is a key component in helping clubs stay competitive. Maybe even more so now that the cap is escalating.
“I think maybe what’s not fully understood is the impact or the magnitude that revenue sharing has on all of this,” Winnipeg Jets chairman Mark Chipman said. “That was a focus of ours. And a number of other teams as well that are beneficiaries of that model that was put in place over 20 years ago.”
The revenue-sharing system got tweaked again in the new CBA.
“It did, and in a material way,” Chipman said. “So it’s just not a concern (whether or not as many teams will spend to the cap). The system is built, and you’re seeing the outcomes of it — I don’t think we’ve had this kind of competitive balance, at least not in the 15 years I’ve been in the league. And I think a good part of that can be attributed to: If you’re responsible and thoughtful about how you run your team, you should be competitive. You should be able to get yourself to the cap when you need to. I don’t see that changing at all. I think that’s inherent in the understanding of our agreement now with our partners, which is our players.”
Mark Chipman says revenue sharing should keep small-market teams like the Jets from getting left behind by a higher cap. (Bruce Bennett/Getty Images)
The league doesn’t divulge much on the revenue-sharing system. But I did ask NHL Deputy Commissioner Bill Daly how the system got tweaked:
“There’s two things: One is that the pool will be bigger, and two, it’ll be distributed a bit differently,” Daly said. “It’ll hit the middle class a little bit more than it’s been hitting the middle class.”
Are the biggest contributors in revenue sharing contributing more in the revamped system?
“A little bit, yes,” Daly said.
As to how clubs will react moving forward with the escalating upper limit of the cap?
“I wouldn’t know how to project that,” Daly said. “There’s a (payroll) range for a reason. That range stays even though our revenues are growing and the cap is growing. The range stays a fixed range so that the floor is being artificially inflated over time to keep all the clubs within that range. But what club behavior is? They’re allowed to be anywhere in that range.”
The natural hope from the players’ side would be that as many teams as possible spend to the cap. One veteran agent, who requested anonymity, said having 10 or so teams at the cap instead of 20 or so, with another 10 or so teams in the middle or upper middle and another 10 or so at the bottom would be fine as far as still having enough money being spent. He said it’d also benefit players’ escrow, referencing the 50-50 split of hockey-related revenue between owners and players.
In fact, Daly said after the Board of Governors meeting wrapped that players would “probably” be paid beyond their salaries in 2025-26 to ensure that 50-50 split.
Another agent, who also requested anonymity, thinks it will be closer to 15 teams, at least, still spending to the cap in two or three years. In his mind, it’s like teams on July 1 every year saying they will show more restraint — then not being able to resist when a certain free agent is available and overspending anyway. In this agent’s mind, a lot of teams are buying into this narrative that we won’t have as many max-cap teams, but he will only believe it when we see it.
The question remains, though: outside of the obvious huge markets, how will other teams react when the cap is at $113.5 million and beyond?
Los Angeles Kings president Luc Robitaille pondered the question.
“I’m of the belief that when you have a chance to win, every team will go for it,” the Hockey Hall of Famer said. “You’ve got to adjust the way you manage your team, whether you’re on a rebuild or whether you’re going for it. You could say this year, it looks like 29 teams are going for it. So I think it’s going to be different (moving forward). I do think agents negotiate on percentage of the cap. Funny enough, that might not change much of what’s going on if you really think about it. But I think when a team has a chance to win, they’re always going go for it (to the cap).”
