Thursday, November 20, 2008

Salary Cap Could Drop 15%

"[B]arring a miraculous recovery by the economy, players stand to lose all their escrow money, which would essentially drop the salary cap from $56.7 million this season to about $48 million next season." [Link]

If I understand things correctly, however, the cap (in terms of a salary ceiling for planning purposes) will drop, "but only to about $55 million."

In case you're wondering, here's a look at what the Caps already have on the books for the 2009-2010 season (including only players who have made their NHL debuts, with one exception, and figures taken from here):

Alexander Ovechkin - $9,538,462
Michael Nylander - $4,875,000
Alexander Semin - $4,600,000
Chris Clark - $2,633,333
Nicklas Backstrom - $2,400,000
Brooks Laich - $2,066,667
Matt Bradley - $1,000,000
Tomas Fleischmann - $725,000
David Steckel - $725,000

Mike Green - $5,250,000
Tom Poti - $3,500,000
Brian Pothier - $2,500,000
Karl Alzner - $1,675,000
John Erskine - $1,250,000

Jose Theodore - $4,500,000

That's 15 players at $47,238,462 (but it includes Pothier).

Maybe I should have titled this post "Yet Another Reason Trading Nylander Makes Sense."


MacVechkin, fka JR said...

I think more to the point, the USD is suddenly back up to 1.30 CDN and that puts a noticeable dent in revenues.

Why do I have a feeling this will be 'solved' by putting hockey in Las Vegas and Kansas City. Ughhhhhh.

pepper said...

The article makes my head hurt. How can the salary cap only fall by $1 million? If the cap is based on a % of revenues earned in the prior season, and those revenues are expected to drop considerably this season vs. last (so much so that all of that escrow $ is lost), how can the salary cap not also follow suit and drop a whole lot more for 09-10?

DMG said...

I believe what the article is saying is that the official, on paper cap going into next season will probably be ~55 million but that it could wind up being ~48 million by the end of next season with the difference coming from the player's escrow accounts since the total amount of money that can be paid in salaries is linked to hockey revenue.

pepper said...

Right, so why doesn't the official cap drop to $48 instead of $55 million next season?

Is there some cap mechanism of which I'm not aware that would not allow the cap to drop that much from 08-09 to 09-10, even though revenues dropped precipitously (as a result of gates and USD/CDN exch rates) from 07-08 to 08-09?

DMG said...

I think it's that the sharp decrease in revenue isn't being projected for this season since season tickets, luxury boxes, and advertising contracts are set and thus revenue this year is more or less set so the cap for 09-10 won't go down that much.

However these major revenue sources should go down for the 09-10 season, but the salary cap number won't be affected until the escrow payments are made or until the 10-11 season's cap is announced