NHL 2016-17 Salary Cap is Staying Flat

[TBLeafer]

Per Deputy Commissioner Daly on TSN.  It just got harder for Stamkos to remain in Tampa...

NHLPA decided against using an escalator this year.

 

[Britishbulldog]

That's interesting for a few teams.

 

[Kin]

I'd think that the cap staying flat and possibly even shrinking in the next couple of years makes the signing of any upper-tier free agent more risky for any team. Especially if the thought process for this year's free agent class is to lock in a big contract now.

The rapid growth of the cap over the last 10 years has largely been fueled by the local rights boom and the strength of the Canadian dollar. With both of those things on the wane any projection that assumes a level of growth in the cap in the future has to be looked at skeptically.

 

[TBLeafer]

Meh.  The NHLPA won't decide against usuing the cap escalator every year.  The dollar is bound to rise again and more Canadian team should be in the playoffs next season, thus helping ratings.

 

[Kin]

Meh.  The NHLPA won't decide against usuing the cap escalator every year.  The dollar is bound to rise again and more Canadian team should be in the playoffs next season, thus helping ratings.

Ratings don't really translate into revenues for the NHL in that sense. Selling ads is what gets networks revenues and regardless of how many Canadian teams are in the playoffs, Sportsnet's deal with the NHL is locked in. The final 4 could be entirely Canadian next year and Sportsnet is paying the NHL the same.

The issue is local rights deals and those being as high as they were is largely a product of the unsustainable explosion of sports rights fees across the board, as we're seeing with ESPN and Sportsnet's cost cutting though that bubble bursting is being felt and felt big by networks right now.

The dollar going up is certainly possible but it's pretty unlikely, barring some sort of massive worldwide shift in the price of oil, that it'll get back to the heights it was at over the last 10 years. Given the size of our respective economies it's not super realistic to think the Canadian dollar can or should be on a par with the US dollar.

So given that, and the fact that I think the decision not to use the escalator is largely tied to the stagnant revenues(and players losing the entirety of their escrow payments), you're probably going to see a relatively static cap until the league finds a big new revenue stream. Their deal with MLBAM could be that, I suppose, but it's not something I'd tie a team-building strategy to.

 

[TBLeafer]

Meh.  The NHLPA won't decide against usuing the cap escalator every year.  The dollar is bound to rise again and more Canadian team should be in the playoffs next season, thus helping ratings.

Ratings don't really translate into revenues for the NHL in that sense. Selling ads is what gets networks revenues and regardless of how many Canadian teams are in the playoffs, Sportsnet's deal with the NHL is locked in. The final 4 could be entirely Canadian next year and Sportsnet is paying the NHL the same.

The issue is local rights deals and those being as high as they were is largely a product of the unsustainable explosion of sports rights fees across the board, as we're seeing with ESPN and Sportsnet's cost cutting though that bubble bursting is being felt and felt big by networks right now.

The dollar going up is certainly possible but it's pretty unlikely, barring some sort of massive worldwide shift in the price of oil, that it'll get back to the heights it was at over the last 10 years. Given the size of our respective economies it's not super realistic to think the Canadian dollar can or should be on a par with the US dollar.

So given that, and the fact that I think the decision not to use the escalator is largely tied to the stagnant revenues(and players losing the entirety of their escrow payments), you're probably going to see a relatively static cap until the league finds a big new revenue stream. Their deal with MLBAM could be that, I suppose, but it's not something I'd tie a team-building strategy to.

I don't think the deal with MLBAM was all that big a revenue stream.  The economy will stabilize.  It always does.  this is just the second year I believe since that came about that it has remained flat.

I do think it will increase more modestly now, though.  Probably about an average of 2.5-3% per annum over the next 10 years.

 

[Kin]

I don't think the deal with MLBAM was all that big a revenue stream.  The economy will stabilize.  It always does.  this is just the second year I believe since that came about that it has remained flat.

The Canadian economy is actually pretty good. The issue is we're not likely to see oil prices driving the dollar to where it was. Most of the projections I've seen re: the Canadian dollar have it rebounding but just to about 80 cents or so.

Again, I wouldn't rule anything out but a contraction of the cap is a definite possibility. Smart teams will prepare for both possibilities.

 

[bustaheims]

Again, I wouldn't rule anything out but a contraction of the cap is a definite possibility. Smart teams will prepare for both possibilities.

Contraction is definitely a possibility, and, if not, marginal growth is almost a certainty.

 

[Tigger]

Friedman reporting the PA has been told the cap could fall under 70 mil.

 

[bustaheims]

Friedman reporting the PA has been told the cap could fall under 70 mil.

Likely means they'll vote to use the escalator, which will mean a marginal increase, but definitely is an indication we shouldn't expect the cap to rise in any meaningful way over the next couple years.