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McKenzie: Uncertain economic times ahead for the NHL?

Bob McKenzie
3/11/2009 9:14:35 PM
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Judging by comments made at Wednesday's annual general managers' meetings, there's no question that there is a new world economic order coming to the NHL.

I don't want to say that they've been in a Fool's Paradise for the last three or four years in this new salary cap world, but in some ways that's what it has been. The cap has gone from $39 million to almost $57 million. Whatever difficulties teams have had in terms of navigating around the cap have been negligible compared to what they're going to face going forward.

Take a team like the Philadelphia Flyers. Depending on whose sources you use and what numbers you use, 14 to 19 players under contract for next season have $50 million to $54 million already committed to salaries for next year. The bottom line is that the Flyers have a lot of players to sign and not much money to sign them.

So how do they do it?

Well, people are going to say they have to trade Daniel Briere because he's the expendable guy. They have Jeff Carter and Mike Richards, so move Briere. But he has a long-term contract with big money and is coming off an injury-plagued season, so he might be untradable at this point. Some hard decisions will have to be made and teams are going to find it really difficult to build their clubs going forward.

A team like the Detroit Red Wings knows that they can't sign Marian Hossa, Johan Franzen, Mikael Samuelsson and Jiri Hudler, so they're going to have to make hard decisions and say goodbye to some of these players. There's going to be some real pain and suffering for NHL teams as they try to build their clubs going forward.

And an affected salary cap can only mean one thing - affected salaries. And it's already happening.

In this new salary cap world, the players never really lost an appreciable amount of their salary to the escrow tax. But because the owners are guaranteed a percentage (43 percent of all hockey-related revenue), and if they spend over 57 percent of revenue, then the players have to give it back.

This season, the players are taking a 15 percent pay cut. That's what it will end up being at the end of the year with 15 percent of their salaries going back to the owners. That number can only grow over the next year or two - or it could stay the same. But again, it will be double digits - 15 or 20 or even 25 percent - down the road, depending on how badly the economic crisis affects the league.

The upside for the NHL is that the teams are actually going to get some of that money back that they overspend. It's expected that each NHL team - all 30 of them - will get at least $4 million at the end of this season as the players hand back money that was overspent by the owners.

Bob McKenzie


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