It’s been ten years since the NHL locked out its players in a labor dispute which eventually killed an entire season before the two sides finally reached an agreement.
Much has changed for the NHL since then. As SI.com noted in a recent retrospective, league revenue, attendance and television ratings have significantly increased, along with overall franchise values. The game on the ice has also changed. Scoring has slightly increased while fighting has significantly declined.
The most notable result from that lockout was the implementation of a salary cap tied to revenue, which the NHLPA had strenuously resisted. The PA’s acceptance of the cap initiated several years of discord within the PA ranks, as well as in three changes in leadership.
Ultimately, the last change – hiring former MLB union head Donald Fehr – worked in the players’ favor during the half-season lockout of 2012-13. Fehr proved a worthy adversary for NHL commissioner Gary Bettman and his merry band of negotiators, forcing them to compromise and prevent the loss of another season to labor strife.
It did nothing, however, to weaken Bettman’s power as league commissioner and the most dominant person in the sport. While Bettman’s critics cite the three lockouts on his watch have stained his legacy, that’s overshadowed by the implementation of the salary cap and the tremendous increase in the league’s revenue and popularity.
Bettman and the team owners sought a salary cap as a measure of cost certainty. They claimed it was necessary to prevent runaway spending on player salaries, which was supposedly making it difficult for smaller markets to ice competitive teams, as well as making it more expensive for the fans.
Upon its implementation, the salary cap (along with an initial 20 percent reduction in existing contracts) at first slowed the increase of player salaries. That’s because the cap was tied, and remains tied, to league revenue. If revenue rose or fell, so would the cap. But league revenue steadily increased since 2005-06, when the cap was initially $39 million. Entering 2014-15, the cap is $69 million and the cap minimum, which was $21 million in 2005-06, is $51 million.
As SI.com observed, in 2004 the average salary was $1.8 million. While that figure dropped to $1.3 million in 2005-06, today it’s reached $2.4 million. In 2004 the NHL’s highest-paid players in a single season were Peter Forsberg and Jaromir Jagr, who each earned $11 million. Following the ’04-’05 lockout, Jagr topped the list at $8.36 million. Entering this season, Nashville Predators defenseman Shea Weber will earn $14 million.
The best players, of course, will always earn the top salaries. The rest of the players, however, also did well over time. While they took a hit in the early years of the cap, their salaries have also increased over time. Following the 2013 lockout, The Globe And Mail’s David Shoalts noted the NHL’s median salary was $1.4 million, meaning half the NHL’s 740 players earned less than that figure.
Did the salary cap actually save small-market teams? It seemed so in the early years of the cap’s existence. Its limits during the initial season following its implementation were very affordable ($39 million ceiling, $21 million floor). The league’s growth over the past decade, however, once again created a widening gap between the wealthy big-market clubs and the more economical small markets.
The big markets have no problem keeping pace with a rising salary cap, while several small markets routinely keep their payrolls near the cap floor. Granted, that gap is limited by the cap, but it still hasn’t significantly helped the smaller markets, who find it difficult to keep pace with a steadily rising floor. Don’t be surprised if that becomes a significant issue in the next round of labor negotiations.
Fans in once-struggling Canadian market initially rejoiced over the cap, believing it actually saved their franchises from folding or relocating. In fact, it was the improved value of the Canadian dollar, not the salary cap, which enabled Canadian franchises to thrive over the past ten years. During that period, most had little or no difficulty keeping pace with the cap ceiling, including some supposedly small-market clubs (Edmonton, Calgary) thought to be in danger of relocation over 10 years ago.
The claim that cost certainty would make the game more affordable for fans proved false. That’s because individual markets, not player salaries, determine the cost. One need only compare last season’s attendance figures to Team Marketing Report’s NHL Fan Cost Index for November 2013 to see that correlation. Teams charge what their market can bear, not by what they’re paying their players.
As SI.com noted, in 2004 the average NHL ticket price was $43.57 US, with the Detroit Red Wings charging the most at $57.11. Today, the average ticket cost is $61.62, with the Toronto Maple Leafs the league leader at $122.20.
The salary cap certainly hasn’t saved NHL owners and their general managers from themselves. Once the salary cap was implemented, they went about finding loopholes to work to their advantage. Under the previous CBA, it was commons practice to sign star players to very long term, heavily front-loaded contracts, which is now banned under the current CBA. It hasn’t prevented them from overpaying their players, though at least they must work within its parameters. Teams still overpay for talent, but they must now be a little more careful in how they do it.
Despite the NHL’s record revenue, popularity and on-ice changes, fans look at the escalating prices of attending the games, see the players salaries still rising, note the gap still existing between big- and small-market clubs and wonder, “What was the point of the lockout?” But as long as the fans keep forgiving the league and its players for its labor sins, it’s a question the NHL won’t worry about addressing anytime soon.