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SBJ/October 23 - 29, 2006/This Weeks News
Salary cap snugger fit for clubs
Published October 23, 2006
As players gravitated toward the ice on opening day of the NHL season two weeks ago, teams continued their migration toward the upper limit of the salary cap.
|The Bruins and Devils would be over the cap
without the long-term injury exception list.
Also, every NHL club has spent more money on payroll this year than it did at the end of last season, according to team sources.
“Salary caps have proven to be a draw and there’s a lot of pressure to move to them,” said Doug MacLean, general manager of the Columbus Blue Jackets.
Payroll was up across the league from last year by 19 percent, from $1.017 billion to $1.210 billion, according to the NHL Players’ Association. A league spokesman said the NHL was not able to provide such information, but NHL Deputy Commissioner Bill Daly acknowledged that salaries had increased, saying he believed the rise reflected the $5 million increase in the salary cap this year from $39 million to $44 million per team, a 12.8 percent increase.
“The tendency of the cap to act as a magnet is something we anticipated and actually forecast during collective bargaining,” Daly wrote in an e-mail response for this story. “The significance of that is that it necessitates a higher escrow rate and a larger year-end escrow.”
The new collective-bargaining agreement, signed following the 2004-05 lockout, calls for players to receive 54 percent of league revenue if revenue is less than $2.2 billion and 55 percent if it’s more. That is enforced by placing a percentage of player salaries into escrow, money that the league may return depending on final revenue numbers.
Last week, the league set player escrow at 10 percent to start the season. It will revisit the escrow twice during the year and adjust it up or down depending on revenue projections. The initial 10 percent escrow is 2 to 4 percentage points less than the initial projections that the NHLPA made at the start of the summer. The drop was consistent with last season’s final revenue tallies, which rose from $2.1 billion to $2.178 billion after the complete numbers were determined at the end of the season, said NHLPA Executive Director Ted Saskin.
“It bodes well for continued revenue growth and further reducing escrow in the future,” Saskin said.
Agents praised the payroll increase and pointed to revenue growth as well as successful offseason arbitration as the likely culprits.
As teams continue to push toward the cap ceiling, some around the league anticipate a rise in the number of players moved to the long-term injury exception list. The cap does not include the salaries of such players, and if those salaries were included, three teams — Boston, New Jersey and Philadelphia — would be spending more than the cap.
New Jersey managed to slip under the cap just before the season opened when the NHL approved the Devils’ decision to place Alexander Mogilny on the long-term injury exception list, giving the team $3.5 million in salary cap relief. General managers do not anticipate similar moves becoming common.
“The rules are cut and dry,” the Blue Jackets’ MacLean said. “It won’t be exploited, and I don’t think it has been. The league’s been strong in policing it.”