Thursday, July 5, 2007

CBA Could Eat Up Small Market Teams in Years to Come

Look out Buffalo. Look out Tampa Bay. The lower limit of the cap could be knocking on your front door in the next few years.

From Spector at Fox Sports:

Better get used to more surprises over the remainder of the collective bargaining agreement.

First, save yourself the shock of seeing the cap rise every year and just expect it to happen. It might not increase as much as it did this summer, when the NHLPA exercised its right under the CBA to boost the cap by five percent, but it will likely keep rising by various degrees over the remainder of the deal.

Canadian Press hockey columnist Pierre Lebrun recently said a team executive predicted the cap could rise to $62 million within the next four years. That might seem an unapproachable figure, but then again, few expected the cap to hit $50 million only two years into the current CBA.

League revenues could reach a point over the next four years where they level out and thus result in only marginal increases, but it seems unlikely the cap will decline in that time.

With a higher cap, of course, comes higher salaries and longer contracts for the players, especially the league's top unrestricted free agents.

Spector is right. I too noted that league revenues should continue to rise in the next few years. There are too many quick fixes for league revenues to take a dive, most notably expansion. Expansion will be kept in Gary Bettman's pocket for a rainy day... or shall I say when league revenues aren't projected to increase in an upcoming year.

Of particlar interest is Spector's mention of how the CBA could hurt small market teams trying to meet the lower limit of the cap, which next year will be $34.3 million next year.

It's even more interesting when you note the $62 million prediction in four years that was mentioned above.

Can you imagine what a base cap of $46 million would do to some small market teams? These are rough numbers of course; but when you consider the cap this past year was $44 million, you can't help but think we'll have some small market teams waiving the white flag in upcoming years.


Lyle Richardson said...

Thanks for the link...except my name's not Paul Spector, it's Lyle Richardson. Spector is merely my nickname.


Sig said...

Ha... I knew that Lyle. I go back and forth between your site and Paul Kukla's! Apologies... I will edit.


1) The real 'shock' will be if the Canadian dollar should shrink instead continue its recent escalation. The dirty not-so secret of the NHL is that the 6 teams up north generate 40% of all NHL revenue!!
2) The other 24 teams, 60%. If their Loonie should again sink to traditional values of 80-85% of the Greenback, the teams up north go from the stability of the NHL to the liability of the NHL and as such the salary cap would have to go DOWN!
3) Other than TO, the other 5 teams up there were close to or went bankrupt before the currency situation changed. Add to that, both countries have experienced relative prosperity recently, if the economy should turn the other way, even slightly, things could get down right ugly for many teams both in the states, and the great white north!


1) Also of note. Expansion fees distributed to all teams evenly does NOT count as cap-relevant revenue.
2) Meaning it would NOT be calculated as part of the 55% of league revenues that the players the are supposed to recieve. It just goes into the owners pockets, not to their 'partners' the players.