In last week’s Soapbox, I examined the potential effects another marginal increase in the NHL salary cap could have upon the 2016 free-agent market. This week, I wish to delve a little deeper into the potential effects upon free agency over the next couple of years.

What piqued my interest in revisiting this subject was a recent column by The Hockey News’ Ken Campbell. He suggested the current Canadian recession and the decline in the Canadian dollar was partially behind the delay in the Tampa Bay Lightning re-signing captain Steven Stamkos and the Los Angeles Kings re-upping first-line center Anze Kopitar.

A long-term decline in the Canadian dollar will affect NHL free agency in the coming years.

A long-term decline in the Canadian dollar will affect NHL free agency in the coming years.

Campbell spoke with Randall Bartlett, a senior economist at TD Bank, regarding projections for the “loonie” over the coming season. Bartlett speculates it could sink as low as .73 cents against the US dollar by the middle of 2016 before settling and eventually rebounding to between .80-.85 cents US.

Assuming that forecast holds true, the NHL won’t see a significant increase in the cap ceiling for 2015-16. That’s because the value of the Canadian dollar is largely responsible for fluctuations in the salary cap. With seven Canadian franchises accounting for between 35-40 percent of league revenue (I’ve heard it is rumored to be 38 percent), the league’s revenue is definitely affected by the value of the loonie.

As I’ve noted in previous articles on the topic, one doesn’t have to look back very far to see the impact of a low Canuck buck upon NHL revenue. During the 2008-09 season, which occurred when the world reeled from the effects of “The Great Recession,” the loonie’s value tumbled to as low as .77 cents USD by March 2009 before rallying back to .90 cents by season’s end. As a result, the salary cap for 2009-10 increased by only $100,000, from $56.7 million to $56.8 million.

Fortunately for most NHL clubs, that shock was short-lived. The loonie eventually increased to around par with the American greenback by the end of December 2010 and remained there for the next three years. As a result, the league’s cap ceiling climbed to $59.4 million for 2010-11, and $64.3 million for 2011-12. After being prorated at $70.2 million following a half-season lockout for 2012-13, the cap was lowered by mutual agreement between the league and NHLPA to $64.3 million.

When the 2013-14 season began, the Canadian dollar was worth around. .97 cents USD. By the time it ended, it slid to .91 cents USD. The cap ceiling increased by nearly $5 million to $69 million, but fell short of the original projection of $71 million.

As the 2014-15 campaign opened, the loonie was at .89 cents. It steadily fell over the course of last season, reaching .81 cents by June 2015. That led to fluctuating estimates for the 2015-16 salary cap, starting with $73 million in December before ending with the final, established figure of $71.1 million.

However, that marginal increase was due to the NHLPA voting to enact its annual five-percent escalator clause. Without it, the cap ceiling might have remained near $69 million. There was even talk of it falling below that figure. Rumors claimed the players, unhappy over high escrow payments, wouldn’t approve the clause. In the end, of course, they did, as ensuring more money for free agents trumped escrow concerns.

If Bartlett’s prediction is correct and the loonie bottoms out at .73 cents USD by next June, that won’t be good news for NHL general managers carrying expensive payrolls.

As I noted last week, half of the 30 NHL teams have over $50 million invested in payrolls for 2015-16. Most of those teams also have valuable players to re-sign, which will take significant chunks out of their cap space.

With a loonie valued at .73 cents USD, even with the players approving their annual five-percent escalator, the cap might increase to perhaps no higher than $73 million, and even that’s probably an optimistic prediction. Under that scenario, a number of teams will feel the squeeze to retain their best players. It’ll also make it difficult for them to bid competitively in the UFA market.

Top free-agent stars, like Stamkos or Kopitar, will certainly still receive top dollar if they hit next summer’s open market. Offers of between $10-$11 million annually are likely for those guys. However, where they could feel the pinch is in term. Instead of the maximum seven-year contracts they would normally receive as UFAs, teams might instead offer four- or five-year deals, fearful the Canadian dollar won’t rally back for the foreseeable future.

Of the teams that could afford big-money offers for the top UFAs, some of them might not be preferable destinations. For free agents seeking big bucks from playoff contenders, joining a club that is several seasons away from postseason qualification might be unpalatable.

Second-tier UFA players will certainly feel the pinch. Arizona’s Mikkel Boedker, Boston’s Loui Eriksson, Calgary’s Kris Russell, Detroit’s Justin Abdelkader, Montreal’s Tomas Plekanec, the New York Islanders’ Kyle Okposo, the New York Rangers’ Keith Yandle and Vancouver’s Dan Hamhuis and Radim Vrbata likely won’t receive the type of expensive, long-term deals they could’ve counted on in previous years.

The remainder of the UFAs, as always, will be left scrambling for what they get. They’ll also find the offers even less enticing than in the recent past. For an example, look no further than this summer’s UFA market. Notables like Cody Franson, Brad Boyes, Curtis Glencross and Jiri Tlusty remain unsigned as training camps approach, whereas in previous years they would’ve been signed up well before the end of July.

Some could follow the example of veteran defenseman Christian Ehrhoff and ink a one-year deal worth considerably less than last season’s salary. Several could end up accepting professional tryout contracts in hopes of earning a one-year deal in training camp. Others could follow the lead of Maxim Lapierre and Marcel Goc and continue their playing careers in Europe. The rest face riding the buses in the minors or retirement.

How much next summer’s UFAs receive will also be affected by how much teams invest in re-signing their top restricted free agent talent. Youngsters like Anaheim’s Hampus Lindholm, Colorado’s Nathan MacKinnon, Calgary’s Sean Monahan and Johnny Gaudreau, Nashville’s Filip Forsberg and Seth Jones, Tampa Bay’s Nikita Kucherov and Winnipeg’s Jacob Trouba will all be in line for significant raises.

If those teams are investing big bucks in retaining those RFAs, they’re unlikely to be major players in the UFA market. That means fewer destinations for UFAs pursuing lucrative long-term deals.

Assuming the Canadian dollar increases as Bartlett projects to between .80 – .85 cents USD through the 2016-17 season, that should provide a substantial bump to the cap ceiling for 2017. Even then, however, it’ll be interesting to see how many teams are able to bid competitively for possibly the likes of Dallas’ Jamie Benn, St. Louis’ Kevin Shattenkirk and Alex Steen, Tampa Bay’s Victor Hedman and Ben Bishop, Boston’s Brad Marchand and Washington’s T.J. Oshie in the ’17 UFA market.

Rising stars like Columbus’ Ryan Johansen, Tampa Bay’s Tyler Johnson and Ondrej Palat, Florida’s Aaron Ekblad and Montreal’s Alex Galchenyuk, who will be restricted free agents in 2017, could complicate the picture.  With a number of clubs carrying heavy payrolls beyond 2016-17, and with these key young players to re-sign, those eligible for UFA status in 2017 could also find lucrative long-term deals difficult to come by.

Should the Canadian dollar remain around .75 cents for the next two or three years, things will grow increasingly difficult for teams carrying large payrolls. Some of them could resort to contract buyouts or trades to free up cap room for other signings. It could lead to considerably more player movement leading up to the trade deadline and in the offseason. Buyouts will add more depth to the UFA pool, creating even more competition for the potentially limited dollars available.

Teams which won’t carry hefty payrolls in 2016 and 2017 could capitalize on this situation by signing free-agent stars that in years of robust cap growth would be unavailable to them, perhaps even at a lower cost than in previous years. Some of them undoubtedly will, but many are budget-conscious teams that usually keep payrolls deliberately low.

There’s no guarantee teams like the Arizona Coyotes, Carolina Hurricanes, Florida Panthers, Nashville Predators, Ottawa Senators and Winnipeg Jets will jump wholeheartedly into those UFA bidding wars. Even if they’re willing to spend, they could invest more in retaining their best players than in pursuing UFA talent.

Once a handful of teams with available cap space and the willingness to spend it make their signings, there could still be a number of quality players available in the market with limited options open to them.

Expansion could also become a factor, though it’s uncertain when that could be, let alone the full impact. According to NHL deputy commissioner Bill Daly, the earliest the league can take on expansion franchises is 2017-18. It could be another three, four or five years before that occurs.

For teams carrying heavy payrolls over the next two years, as well as the players eligible for free agency over that period, a strong rally in the Canadian dollar is vital. Without it, it’ll become increasingly difficult for teams with limited cap space to maintain competitive rosters, while potential free agents could find it hard to land contracts worth full market value.