The ongoing decline in the value of the Canadian dollar continues to have an effect upon the NHL’s salary-cap projections for 2015-16.
During the NHL Board of Governors’ meeting last December, league commissioner Gary Bettman projected next season’s cap ceiling would be approximately $73 million. He acknowledged that, in addition to revenue growth projections, the figure was based on the value of the Canadian dollar, which at the time was at .88 cents US.
As the value of the Canadian dollar (otherwise known as the “loonie”) continued to slide in the early weeks of 2015, Bettman assured the hockey world that the drop wouldn’t have a major impact on the cap ceiling. On Jan. 25, with the loonie hovering at .80 cents US, the commish projected the ceiling would reach $72 million.
By the NHL general managers meetings in mid-March, the loonie slipped to .78 cents US. Bettman revised his projection again, saying if the loonie fell to .75 cents by season’s end the cap ceiling would be around $71. 5 million.
Those projections were also based also on the assumption the NHL Players Association will exercise its five-percent escalator clause, which it’s done every year but one since the implementation of the salary cap in 2005. Over the course of this season, however, there were rumblings many players weren’t pleased with having over 15 percent of their salaries clawed back in escrow payments. That’s given rise to concerns the players could vote against the escalator for next season, thus ensuring lower escrow payments.
If that happens, the assumption among fans and pundits was the cap might actually decline for next season to $68.5 million, down from this season’s $69 million ceiling. That would create a significant cap crunch for several NHL clubs with limited cap space counting on an increase for 2015-16. Some of them could be forced to shed salary to become cap compliant.
However, it appears a possible players’ rejection of the escalator for next season won’t be quite so traumatic. Sportsnet’s Elliotte Friedman points out the stipulation in the CBA which says if either the league or the PA “proposes a different growth factor based on actual revenue experience and/or projections,” the two sides would meet and agree upon an acceptable “new factor.”
In other words, the league and the PA could agree that the cap could rise to, say, $70.5 million instead of the recent projections of $71 – $73 million. Granted, that’s not much of an increase but it’s better than the alternative.
Of course, that projection won’t help all the cap-strapped teams. The Chicago Blackhawks, Philadelphia Flyers, Los Angeles Kings, Pittsburgh Penguins and Boston Bruins will still feel the pinch. A cap ceiling between $70.5 – $71.5 million means a loss of between $1.5 – $2.5 million from the original projection of $73 million. That could make a difference in determining which players they’re forced to move in the off-season to become cap compliant. It could also affect which pending unrestricted free agents they can afford to keep.
Bettman insists the declining Canadan dollar won’t send the salary cap tumbling over a cliff for next season, but for some teams it could feel like crashing into a ditch.