Apart from the season following the last NHL lockout, the salary cap has increased each year since its implementation in 2005. Thanks to the combination of rising league revenue (fueled in part by a once-robust Canadian) and the NHLPA approving its annual five-percent cap escalator, It’s become an article of faith that the cap will increase every year.
Occasionally, a fan, blogger or pundit will muse over the possibility of the cap flat-lining or declining. That was certainly the case last season, when there was some speculation suggesting the PA might vote against their cap escalator owing rising escrow clawbacks from their salaries.
This season, there’s hasn’t been as much pondering over this topic, perhaps because its assumed the PA will once again approve another five percent escalation despite the rising cost of escrow.
Then came the following tweet on Feb. 12 from BruinsDaily.com’s Jimmy Murphy, citing sources from the league and the PA claiming the salary cap could actually decline by $4 million for 2016-17. That would mean a decrease from the current level of $71.4 million to around $67 million.
Murphy wonders what effect that could have upon the NHL trade deadline. I’m assuming he’s speculating that more NHL GMs than usual might begin shedding salaries now, rather than waiting until June, when the league officially sets the following season’s salary-cap limits.
The sharp decline of the value of the Canadian dollar over the last two years has adversely affected league revenue and its salary-cap projections. Indeed, last December’s projected cap increase by $3 million over the current ceiling for 2016-17 was met with skepticism. With no sign of a significant improvement in the “loonie” on the horizon, some GMs could be nervously eyeing their payrolls for next season.
While an increase in salary-dumping deals at the trade deadline is possible, I anticipate most GMs still prefer waiting until June for the finalized numbers and the PA’s escalator vote before deciding if they need to start selling. With so many teams this year in playoff contention, many of the bubble clubs might be unwilling to become sellers by the deadline.
And unlike the forced cap reduction coming out of the 2012-13 NHL lockout, most of the general managers probably aren’t as prepared for a decline this time around. Shedding salary will be more difficult, especially given the high number of clubs that could be looking to do so.
If the salary cap drops by $4 million, it will certainly have an effect 21 of the NHL’s 30 clubs. Those already carrying over $60 million in cap payroll for 2016-17 (Chicago Blackhawks, Columbus Blue Jackets, Los Angeles Kings, Minnesota Wild, Montreal Canadiens, Philadelphia Flyers, Pittsburgh Penguins, San Jose Sharks and Washington Capitals) will find it very difficult to re-sign key players, let alone bolster their rosters via free agency or trades.
Even those with between $50-$59 million (Anaheim Ducks, Colorado Avalanche, Dallas Stars, Detroit Red Wings, Edmonton Oilers, Nashville Predators, New York Islanders, New York Rangers, Ottawa Senators, St. Louis Blues, Vancouver Canucks and Winnipeg Jets) will feel the pinch from a $4 million reduction in the cap ceiling. Of those clubs, the ones closer to $59 million will obviously feel it more.
Only nine clubs – Arizona Coyotes, Boston Bruins, Buffalo Sabres, Carolina Hurricanes, Calgary Flames, Florida Panthers, New Jersey Devils, Toronto Maple Leafs and Tampa Bay Lightning – won’t feel the pinch as badly as the others. Of course, that depends upon their own self-imposed cap ceilings or how much they invest in re-signing star players.
A lower cap ceiling also means a reduced cap floor, dropping below the currently level of $52.8 million. Teams which tend to stick close to the cap floor will certainly welcome that. While they’ll all exceed it, by how much will also have an effect upon next summer’s trade and free-agent markets.
With so many teams that could attempt to dump salary via trade, those with the most salary-cap space stand to benefit. For rebuilding clubs like Coyotes, Sabres, Hurricanes, Devils and Leafs, being able to add quality talent otherwise unavailable under a rising cap ceiling stands to substantially advance the timetable of their roster overhauls. At some point, however, those few clubs with lots of cap room will use up whatever they’re willing to spend.
A lack of willing trade partners could lead to an increase in contract buyouts this summer. Teams desperate to free up cap space could look at shedding players with one or two years remaining on their contracts.
The free-agent market could significantly feel the impact of a lower cap ceiling. For the first time in years, there’s considerable depth of quality talent potentially available via free agency, but a $67-million salary cap means far fewer clubs able to competitively bid for their services. Those pending UFAs could find lucrative new contract difficult to find. It’ll get even worse if the UFA market becomes flooded with bought-out talent.
Of course, it’s entirely possible the salary cap could marginally increase over its current level, perhaps with the help of the PA’s escalator clause. But if the cap drops as much as Murphy suggests, this summer could become a headache for general managers and free agent players.