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06-21-2009, 11:48 AM
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Operating in the Era of a Falling Salary Cap

Now that word has apparently leaked about the salary cap the next two years ($54-$56 mm in 2009-2010 and $48-$50 mm in 2010-2011 according to Jeff Solomon), what implications does this have for the way teams are operated. I believe this to be hugely significant with the potential of changing the entire paradigm on how Cups are won. There are three main implications that I see.

1) The falling cap - teams that have relied on free agency to build their core, NYR, Philadelphia and Boston come to mind, and others that have spent a lot of money to keep their core together, Detroit, Pittsburgh, San Jose and Washington among others, are in real trouble. These teams have loaded up on big contracts assuming they could fit players in as long as the cap stayed the same or continued to rise. Now, the only way that can continue to afford a roster of 22 to 23 players is to cut loose a high priced player or two or three. The problem is that there are not enough teams with the cap space to absorb them (see #2). You can send players to the minors, but some of them have no movement clauses and filling your minor league team with unhappy veterans is a recipe for disaster long term. I suspect the answer will be to package players along with draft picks and prospects to entice teams to take salary off their hands.

2) The falling floor - since the salary floor is based on the cap, it will fall as well. Teams that are losing a lot of money, Nashville, Phoenix, Tampa, Florida and Atlanta, now are going to be able to spend less on salary and lose less. The idea that these teams will now spend to the cap is a fallacy. They are affected by the economy just as everyone else and are looking to survive. The ability to cuts costs might just save them.

3) Locker room dynamics - Superstars like Kovalchuk and Nash will still get paid. But then there is the second tier of players to consider. Do you really want o pay Mike Cammalleri 12.5% of of your 2011 cap? Do you really want the Sedin twins to tie up 22% of your cap space? Guys like Briere, Drury and Gomez hit the jackpot by becoming UFAs at a time of a rising cap. Other players of equal or even superior ability are not going to be paid as much. That will set up some interesting situations that coaches are going to have to deal with.

At the end of the day, I still believe contraction is the only way to deal with the significant financial issues the NHL is dealing with, but as long as this is not addressed, salary structure is going to remain a significant part of competitiveness.

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