Jared Crozier: Expansion's Effect on The Salary Cap - Not Quite What Some Are Thinking

is there a way for you to email this to tanner? because he doesn't seem to understand this. well done.

Good summary. Really, expansion teams will probably have below average league revenue and have slight downward impact on the cap.

Sure seems like the escrow issue will be coming to head shortly.

The other thing still working against the salary cap is the circa $.80 CAD dollar.

Because the nhl converts revenue throughout the year and not at the end of the year, simply not seeing an increase in the CAD this year will have a downward effect on the cap. A continued decline could a very significant downward impact.

I'm pretty sure that signing bonuses are counted in escrow. It does however protect him from losing a lot of his money when the inevitable lockout occurs in a few years.

I'm pretty sure that signing bonuses are counted in escrow. It does however protect him from losing a lot of his money when the inevitable lockout occurs in a few years.
- mmcclatchy

Yes, you are correct, fixed in article. Thanks. I read articles with conflicting statements.

Even though he is a floater and friggin sucks - I wonder if the Sens have an incling to sign Semin to a 1 year/$1 million contract - they don't ever seem to scared off by players who float and have a past (Latenderness, Kovalev, Filatov, Ryan)

I don't think they do it, but based on their history I think they might be tempted

I have a bit of an issue with when you say teams need to be careful spending superstar money on borderline star players.

7.5 mill is no long superstar money. Sorry. The Towes and Kane contracts changed that. 10+ mill will be the new going rate for superstars. 7.5 is going to get you a very solid player. The past growth of the cap has caused this shift. Ignoring that past trend while talking about the current and future cap is short sighted. It was only a few years ago 4-5 mill seemed exorbitant, but now it's close to the going rate for a top 4 d-man or top 6 forward. With expansion, these salaries will only increase. I believe you even touched that in the blog. While the cap may not jump as some might expect (it will increase, history is there to support that), salary increases will and change the landscape of what the going rate for superstar, stars, and decent players are.

I have a bit of an issue with when you say teams need to be careful spending superstar money on borderline star players.

7.5 mill is no long superstar money. Sorry. The Towes and Kane contracts changed that. 10+ mill will be the new going rate for superstars. 7.5 is going to get you a very solid player. The past growth of the cap has caused this shift. Ignoring that past trend while talking about the current and future cap is short sighted. It was only a few years ago 4-5 mill seemed exorbitant, but now it's close to the going rate for a top 4 d-man or top 6 forward. With expansion, these salaries will only increase. I believe you even touched that in the blog. While the cap may not jump as some might expect (it will increase, history is there to support that), salary increases will and change the landscape of what the going rate for superstar, stars, and decent players are.
- Gord_Wilson_2.0

Only 20 players are making $7.5 or more next season. Not all are "superstars", but most are top end guys, and that is still superstar money. Not the top end of the scale for sure, but superstar dollars nonetheless. Stamkos will still come in at 10+, but the limit is approaching.

I have a bit of an issue with when you say teams need to be careful spending superstar money on borderline star players.

7.5 mill is no long superstar money. Sorry. The Towes and Kane contracts changed that. 10+ mill will be the new going rate for superstars. 7.5 is going to get you a very solid player. The past growth of the cap has caused this shift. Ignoring that past trend while talking about the current and future cap is short sighted. It was only a few years ago 4-5 mill seemed exorbitant, but now it's close to the going rate for a top 4 d-man or top 6 forward. With expansion, these salaries will only increase. I believe you even touched that in the blog. While the cap may not jump as some might expect (it will increase, history is there to support that), salary increases will and change the landscape of what the going rate for superstar, stars, and decent players are.
- Gord_Wilson_2.0

Ryan makes $7.25 and he's not even on our top line and is probably our 4th best winger and 6th best forward - you're right, $7.5 is top 6 money, not top 3

Only 20 players are making $7.5 or more next season. Not all are "superstars", but most are top end guys, and that is still superstar money. Not the top end of the scale for sure, but superstar dollars nonetheless. Stamkos will still come in at 10+, but the limit is approaching.
- JaredCrozier

Why are you ignoring the upward trend? Probably in the next couple of seasons that 20 will turn into 40 and the guys making 10+ mill will grow as well. You can't have a continually growing cap and expect players not to get paid more. The shift works for both.

Ryan makes $7.25 and he's not even on our top line and is probably our 4th best winger and 6th best forward - you're right, $7.5 is top 6 money, not top 3
- tuna99

on so many levels. See post above....less than 1 player per team is getting $7.5M next year. O'Reilly is the only one moving into that level so far for the year after. (Stamkos is already there but will increase). And say what you will about Ryan, that is an exception rather than the rule.

Why are you ignoring the upward trend? Probably in the next couple of seasons that 20 will turn into 40 and the guys making 10+ mill will grow as well. You can't have a continually growing cap and expect players not to get paid more. The shift works for both.
- Gord_Wilson_2.0

The whole point of this article, is the upward trend is slowing and is a couple of years away from stopping altogether. Why are you ignoring that?

EDIT: Out of the lockout it was an arbitrary 60M starting point (but teams could spend up to $72). It went up 7.2%, then 8.1% and now it is 3.5%...slowing quickly and like I said in the article, the appetite for the players to artificially increase it is also dying, because they each potentially lose more money on their own contracts as the overall pot increases, if the revenue doesn't increase accordingly.

Even though he is a floater and friggin sucks - I wonder if the Sens have an incling to sign Semin to a 1 year/$1 million contract - they don't ever seem to scared off by players who float and have a past (Latenderness, Kovalev, Filatov, Ryan)

I don't think they do it, but based on their history I think they might be tempted
- tuna99

Hopefully the Sens do not sign Semin. Big time floater.

The whole point of this article, is the upward trend is slowing and is a couple of years away from stopping altogether. Why are you ignoring that?
- JaredCrozier

I said in my original post post that I also see the upward trend not going up as much as some have speculated.

You also mentioned more jobs and more players getting paid. More money for mediocre guys. Better players will deserve more in light of that.

The cap will always continue to grow. History has shown that. If the cap doesn't grow, the dollar is a bigger issue than hockey and the NHL will be heading to another lock out (which it may either way).

10+ mill will be the new mark for superstar players. 7.5 will soon be very common.

Even though he is a floater and friggin sucks - I wonder if the Sens have an incling to sign Semin to a 1 year/$1 million contract - they don't ever seem to scared off by players who float and have a past (Latenderness, Kovalev, Filatov, Ryan)

I don't think they do it, but based on their history I think they might be tempted
- tuna99

the fact that you put ryan in a list with kovalev, guyet, and filatov shows how UN-(frank)ING-BELIEVABLY clueless you are.

Awesome article. Fantastic. Something actually worth reading so long as you're the type of fan who understands and shares these concerns. I feel the same way here. We have fans who are going "WHY AIN'T WE GETTIN' SHARP!" (I may have made them hicks for some reason)... it's because we have guys like Huberdeau, Barkov, Kulikov, and Petrovic who will soon need raises. We have well over $20 million coming off the books after this season assuming we don't bring back Jagr, Thornton, Campbell, or Mitchell. But you can't just toss that at a free agent unless you're sure the right home-grown talent is sewn up. Next years' free agent class is ridiculous and I honestly hope many of these players (the Kopitars and Staals) just re-sign with their current teams midseason. The amount of money getting tossed around right now is leading us right down lockout road. Many times we see fans and GM's even think about next year. Well, in today's NHL, you have to look 2-3 years down the road.

But, again, great article.

Ryan makes $7.25 and he's not even on our top line and is probably our 4th best winger and 6th best forward - you're right, $7.5 is top 6 money, not top 3
- tuna99

It's definitely true that you have to be careful who you give that money too. In the past the decision was close to a no brainer. With the trend of contracts going, there is much more room for debate. Who wants to waste 7.5 mill on a guy who produces like a 3-5 million guy? Not many I'm sure.

To say you have to be careful where you spend your money now and not acknowledge the upward trend of contracts is silly. The whole reason you have to be more careful now is because of this upward trend. Cap or no cap.

It's definitely true that you have to be careful who you give that money too. In the past the decision was close to a no brainer. With the trend of contracts going, there is much more room for debate. Who wants to waste 7.5 mill on a guy who produces like a 3-5 million guy? Not many I'm sure.

To say you have to be careful where you spend your money now and not acknowledge the upward trend of contracts is silly. The whole reason you have to be more careful now is because of this upward trend. Cap or no cap.
- Gord_Wilson_2.0

See Bolland, Dave.

Edit:

I seem to recall Bill Daly commenting that they would want expansion fees spread out over several years to lessen the impact on the cap. This was the first time I had heard that relocation/expansion fees could be counted against the cap.

He also mentioned that the expansion fees get divided among all teams, meaning that if 2 teams are added, fees are divided by 32.

His suggestion was if 2 teams were added, they would ask for 100 million per team per season for 5 seasons to prevent the cap from spiking heavily and then resetting the following season.


Just to toss it out there as well...

It was reported that last year players put ~16% of their salary into Escrow. A player earning 7.5 million last season gave up upwards of 1.2 million dollars to escrow. I don't believe escrow affects players under a certain salary.

It really feels like the NHL and NHLPA have hit the edge of the bubble and are dancing a bit to prevent it from breaking. They rode a hot CDN dollar through 2 lockouts and cranked up the cap, but didn't properly prepare for the market to re-adjust.

I look at cup winning Chicago spending 21 million on 2 players and think that is the high water mark. Looking at deals signed this summer being a little more moderate, I don't see as many mega deals (big dollars long years) happening going forward until the cap and escrow is balanced and healthy.

Oh, and a second (or third) thought.

With expansion slated tentatively for 2017-2018 do you think teams are considering expansion drafts, and what rules will be used? Remember that typically existing teams protect a certain number of players and the expansion teams can draft from the leftovers.

That will likely change the context of contracts for players over the next few years as teams get prepared to protect that which they want.

I said in my original post post that I also see the upward trend not going up as much as some have speculated.

You also mentioned more jobs and more players getting paid. More money for mediocre guys. Better players will deserve more in light of that.

The cap will always continue to grow. History has shown that. If the cap doesn't grow, the dollar is a bigger issue than hockey and the NHL will be heading to another lock out (which it may either way).

10+ mill will be the new mark for superstar players. 7.5 will soon be very common.
- Gord_Wilson_2.0

If the cap doesn't continue to go up, there won't be enough money to keep handing out large deals. Teams will end up buying out more players which creates dead cap space. We're headed for another lockout within 3 years is my guess.

I seem to recall Bill Daly commenting that they would want expansion fees spread out over several years to lessen the impact on the cap. This was the first time I had heard that relocation/expansion fees could be counted against the cap.

He also mentioned that the expansion fees get divided among all teams, meaning that if 2 teams are added, fees are divided by 32.

His suggestion was if 2 teams were added, they would ask for 100 million per team per season for 5 seasons to prevent the cap from spiking heavily and then resetting the following season.


Just to toss it out there as well...

It was reported that last year players put ~16% of their salary into Escrow. A player earning 7.5 million last season gave up upwards of 1.2 million dollars to escrow. I don't believe escrow affects players under a certain salary.

It really feels like the NHL and NHLPA have hit the edge of the bubble and are dancing a bit to prevent it from breaking. They rode a hot CDN dollar through 2 lockouts and cranked up the cap, but didn't properly prepare for the market to re-adjust.

I look at cup winning Chicago spending 21 million on 2 players and think that is the high water mark. Looking at deals signed this summer being a little more moderate, I don't see as many mega deals (big dollars long years) happening going forward until the cap and escrow is balanced and healthy.
- mungozen

Expansion fees are not included in hrr and do not affect the cap.

Expansion fees are not included in hrr and do not affect the cap.
- Isles_since_6

Yes, I almost second guessed for a second, but like I said....

Expansion fees all go to NHL owners, not included in HRR. Players benefit from additional jobs. @NoHockeyLockout @NYP_Brooksie

— Allan Walsh (@walsha) November 12, 2014

Yes, I almost second guessed for a second, but like I said....

Expansion fees all go to NHL owners, not included in HRR. Players benefit from additional jobs. @NoHockeyLockout @NYP_Brooksie

— Allan Walsh (@walsha) November 12, 2014

- JaredCrozier

It makes sense too, otherwise the cap would skyrocket the first year, and then plunge back down the year after. You'd have to make an inflated floor and then get rid of multiple players the following year and no one would be able to take them.

great piece, and didn't get lost in the #s.