Over the past several weeks, the topic of conversion has been the salary cap. The Toronto Maple Leafs and Tampa Bay Lightning had to manipulate the rules to sign players under the salary cap. Not to mention the Ottawa Senators trading for Ryan Callahan’s contract just to get to the salary cap floor. What better time to get back in the two-part series on how the NHL has created a false sense of parity. In part two of the two-part series, we take a look at how the NHL has created a false sense of parity through a hard salary cap.
NHL False Sense Of Parity: The Hard Salary Cap
One of the things the owners fought for during the 2004-05 lockout was a hard salary cap. They felt that salaries had gotten too high and the only way to get the league back in check was to institute a salary cap. The owners also felt the small-market teams were at a disadvantage as the could not spend as much money as bigger market teams. Under then NHLPA boss Bob Goodenow, the players prepared for an 18-month battle to get what they wanted. The players wanted a soft salary cap or a luxury tax. Unfortunately, the foundation in the players’ stance began to crack and the owners would get a hard salary cap along with escrow instead.
With the institution of a salary cap, the league saw significant growth in revenue and investment. Since 2005, there are 17 new owners on the board of governors that weren’t there previously. The NHL expanded from 30 to 31 teams. From 2007 to 2017, the average value of an NHL franchise rose from $220 million to $598 million.
On the players’ side of things, the average minimum salary in 2005 was $450,000; last season, it was over $700,000. The top salary in 2005 was capped at $7.8 million; in 2017-18, it was capped at $15.9 million. The only issue bugging the players was the topic of escrow.
Things could not be better if you Commissioner Gary Bettman. Smaller market teams were able to compete with bigger market teams. Not to mention all the money the league was making from new events like the Winter Classic and Stadium Series Games. In the eyes of the Commissioner, there was Parity or a “Competitive Balance.”
However, general managers still fell into the same pattern as before with overspending. Over time GMs would figure out ways to circumvent the cap to sign players to these back-diving long-term contracts. The league would see another lockout in 2012-13 to address those contracts. Out of that lockout, teams could only sign their free agents to eight-year max deals and any unrestricted free agent could get a max seven-year deal.
Soft Salary Cap And Luxury Tax
Through the salary cap era, there has been a false sense of parity created by the NHL. Teams who win by drafting and developing their talent often have to pay the price for their success. Instead of being able to keep their talent on the roster, teams often have to pick and choose which players they want to keep by moving vital players to fit under the salary cap.
In this current system, the bigger market teams have to pay a penalty for wanting to spend more. As outspoken player agent Allan Walsh tweeted out by on July 23.
NHL teams are twisting themselves into pretzels to figure out a way to spend $92 million on payroll with a $81.5 million Upper Limit. As I’ve been saying for years, the salary cap is a farce and the idea that the cap promotes parity is an illusion.
— Allan Walsh (@walsha) July 23, 2019
But what if there was a way to solve that problem and still generate the revenue the league wants. The answer is simple a soft salary cap with a luxury tax. Not to the extent that MLB or the NBA has it. But finding a middle ground where bigger market teams spend more money keeping their team intact instead of worrying about how to fit players inside a hard salary cap. And if teams went over the salary they have to pay a luxury tax. The revenue generated from the luxury tax could be distributed to smaller market teams.
How about letting teams spend over the cap but charge them a luxury tax that gets distributed to the small market teams as meaningful revenue sharing? https://t.co/s4eG8mT0ZT
— Allan Walsh (@walsha) July 23, 2019
Take for example the problem facing the Toronto Maple Leafs. The Maple Leafs want to sign Mitch Marner to a long-term deal to keep the core intact. As it stands right now, they can’t because of the hard salary cap. General Manager Kyle Dubas had to manipulate the cap in his favor. The Maple Leafs acquired David Clarkson’s contract for the only purpose of putting his money on LTIR. Like Nathan Horton, David Clarkson will not see the ice ever again.
Once the Maple Leafs put Clarkson’s and Horton’s contract on LTIR to begin the season, this will free up $10.55 million in cap space. The team will be able to sign Marner and maybe even Jake Gardiner. However, these moves would not be necessary if there was a luxury tax in place. The Maple Leafs could just pay a penalty for going over the upper limit of the cap. And instead of having RFAs holdout to start the season, deals would be done a lot sooner.
Under the current system, the small market teams have to spend to the cap floor. As we saw with the Ottawa Senators picking up Ryan Callahan‘s contract. And even with that contract the Senators still have not reached the floor in total dollars. This is another example of how general managers make a mockery of the system in place. Once again Allan Walsh took to Twitter blasting the NHL for the illusion of parity.
The illusion of parity in the NHL’s salary cap system on display. Note- this has nothing to do with Ottawa. This is about the fact any team (within parameters of the CBA) can have an actual payroll $45 million below the club with the highest payroll. #LuxuryTax #RevenueShare https://t.co/kFcZDF4aV2
— Allan Walsh (@walsha) July 30, 2019
Imagine if these smaller market teams could spend to the upper limit of the salary cap. With a soft cap and luxury tax, they can. They would be forced to spend money to put a competitive team on the ice. Not every team under the current system has a shot to win the Stanley Cup. This fact is already known in the summer.
Hard Cap Era Playoff Results
Right now the only reason there is a sense of parity is due to the hard salary cap and propaganda that is in place. If the NHL was being honest with the honest, they have failed miserably in their plan to execute a league where every team has an opportunity to win. Since the dawn of the hard cap era in 2005-06, more times than not teams will miss playoffs for longer stretches than win playoffs rounds.
Have a look. The Wild have won two playoff rounds in 12 years. The Islanders have won two playoffs rounds in 13 years while missing the playoffs eight times. The Flames have won one round in 13 years while missing the playoffs six times.
The Maple Leafs have failed to win a round in 13 years. The Panthers have failed to win a round in 13 years while missing the playoffs 11 times. The Oilers have won one round in the past 12 years while missing the playoffs 11 times.
The Canucks have not won a round in six years. The Jets/Thrashers did not win a round in 12 years while missing the playoffs 10 times, before their 2018 run to the Conference Final. The Flyers have not won a round in five years.
The Devils won three rounds in 2012, the last time they advanced to the Stanley Cup Final. Since then the Devils have missed the playoffs five out of six years. The Blue Jackets won one round in 13 years. The Sabres have not won a playoff in the past 10 years.
The Stars have won two rounds the past 10 years. The Avalanche one round the past 10 years. The Coyotes won two rounds in 2012, the only time in 12 years they advanced. The Hurricanes have missed the playoffs the past eight years before returning in 2019 and marched to the Eastern Conference Final.
If you think the salary cap has brought parity than think again. All the salary cap has done is put restrictions on the good teams from getting even better.
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