Salary Cap Likely To Drop Next Two Years

[DA_Champion]

http://www.globesports.com/servlet/story/R...ortsHockey/home

At least according to that globe and mail article; they see it going to 55 million next year, a small drop because most revenues were already declared before the financial crisis hit and the canadian dollar dropped 20%. The bigger drop will occur the year after that. The NHL executive predicted 55 million next year and 48 million the year after that.

One thing that should be kept in mind, aside from the 6 Canadian teams, the Detroit Red Wings will likely see a huge revenue drop if the Automakers file for bankruptcy and all those pensioners and UAW workers can no longer afford such luxuries. I imagine the california and NY teams might also do badly with the collapse of high tech and the financial sector. They say the Canadian teams account for 30% of league revenue, and once you add Detroit you probably end up with ~38-39% of league revenue, which means a huge chunk of the league will take massive fall in revenues, whereas the other 60% are unlikely to even perform on par.

I don't think the NHL qualifies for a government bailout

******

As for how this will affect the Habs, I don't think it will be that bad. All of the best teams are very close to this year's salary cap of ~57 million and so they will have a hard time poaching our players in the summer of 2009 when they themselves have to reduce their salaries. And if they poach ours that means we can poach theirs. Actually I think this will be good for the Habs as we don't have any ridiculous long-term contracts... Markov and Hamrlik make 5.75 and 5.5 through 2010-2011, which is the season the executive cited as the 48 million dollar year - other teams are much worse off. Gainey has signed a lot of our young players (Gorges, Kostitsyn, Lapierre, Halak, O'Byrne) to medium-length contracts for low rates; and we have a whole bunch of hardworking talented $850, 000 guys available in Hamilton.

[Elie]

http://www.globesports.com/servlet/story/R...ortsHockey/home

At least according to that globe and mail article; they see it going to 55 million next year, a small drop because most revenues were already declared before the financial crisis hit and the canadian dollar dropped 20%. The bigger drop will occur the year after that. The NHL executive predicted 55 million next year and 48 million the year after that.

One thing that should be kept in mind, aside from the 6 Canadian teams, the Detroit Red Wings will likely see a huge revenue drop if the Automakers file for bankruptcy and all those pensioners and UAW workers can no longer afford such luxuries. I imagine the california and NY teams might also do badly with the collapse of high tech and the financial sector. They say the Canadian teams account for 30% of league revenue, and once you add Detroit you probably end up with ~38-39% of league revenue, which means a huge chunk of the league will take massive fall in revenues, whereas the other 60% are unlikely to even perform on par.

I don't think the NHL qualifies for a government bailout

******

As for how this will affect the Habs, I don't think it will be that bad. All of the best teams are very close to this year's salary cap of ~57 million and so they will have a hard time poaching our players in the summer of 2009 when they themselves have to reduce their salaries. And if they poach ours that means we can poach theirs. Actually I think this will be good for the Habs as we don't have any ridiculous long-term contracts... Markov and Hamrlik make 5.75 and 5.5 through 2010-2011, which is the season the executive cited as the 48 million dollar year - other teams are much worse off. Gainey has signed a lot of our young players (Gorges, Kostitsyn, Lapierre, Halak, O'Byrne) to medium-length contracts for low rates; and we have a whole bunch of hardworking talented $850, 000 guys available in Hamilton.

The problem will be revenue sharing.

Firstly I don't see why people in Montreal think we are immune to this whole mess. Yes our housing market is stable, but a lot of cash injected into our stock market is through foreign investment, which relies a lot on the American markets. Job loss in the states means less production here in Canada, everywhere is going to hurt because of this. The more teams down south making less means more money every other team shares to pick up the slack. On the hole, if the American NHL market dips significantly, the profits of the Canadian teams go with them, to the point of parity or even being in the red despite consistant sellouts (which may not last depending on how things unfold).

With Canadian teams accounting for more then 30% of all profits and revenue in the Entire NHL, perhaps the league should consider contracting the number of teams (thickening the talent pool) and relocation a couple to a broader more successful market like Canada (or bridging the pond even??)

Either way, the NHL will be the first to get hit and it will be hit the hardest. It's market security in the United States is already laughable, these fans will go and go fast.

[Wayne-1]

Habs boss says loonie threatens Canadian clubs

By Andy Blatchford, THE CANADIAN PRESS (Nov 19)

MONTREAL - Montreal Canadiens president Pierre Boivin fears that the sagging loonie could send Canadian NHL teams spiralling back into the dark economic days that preceded the lockout.

Boivin said Wednesday that the league's six Canadian clubs are thriving at the gate and bring in more than a third of the total revenue for the 30-team NHL.

But he identified the tumbling dollar and the league's revenue-sharing deal as threats to the continued viability of Canadian clubs.

"We better not return to a 78-cent Canadian dollar because we'll be in the same position we were before the work stoppage," Boivin told reporters after giving a speech to Montreal's board of trade.

"It's a reality for Canadian teams."

The Canadian dollar in fact closed Wednesday at 79.83 US cents, down 1.48 cents.

He said the NHL's Canadian organizations are not only at the mercy of the dollar's performance, but must still pay into the league's post-lockout revenue-sharing program to prop up weaker U.S. teams.

More than 150 straight sellouts at the Bell Centre have helped the Habs boost their payroll from $47 million US before the lockout to $55 million US this season.

But the team is also on the hook for another $18 million this year under the revenue-sharing deal, he said.

"If we calculate it against an 80-cent dollar, we're not any further ahead than we were before the lockout," said Boivin, who believes the loonie must be at par with the U.S. greenback for Canadian teams to remain competitive.

He did not suggest turfing the shared revenues, but said the next agreement must include mechanisms to offset the disparities.

"I think we have to look at how Canadian teams can continue to stay competitive," said Boivin, who spoke to the business audience to discuss the famed hockey club's centennial season.

"We must not get into the same mess we were in before."

Boivin said Canadian teams each lost tens of millions of dollars in the years leading up to the NHL lockout, a period when they had difficulty piecing together competitive squads.

He referred to it as an era when many Canadian fans had lost hope.

The NHL lost the 2004-05 season to a labour dispute before the players and owners signed a new collective bargaining agreement, which included a salary cap.

Boivin, who took over as team president in 1999, called the lockout "absolutely worth it" because the league's salary cap is much better than the previous system.

However, he said there are still aspects of the cap that are "not working well."

"I think we have the greatest amount of competitive balance that we've ever had as a sport," he said.

"But I think like any other system - we have three years of experience at it now - we need to look at what's working well, what's not working well and get prepared for the next round (of negotiations)."

He said the players have an option to reopen the existing agreement this spring, but he doubts the union will touch it until it's about to expire, which is in about two years.

"I think the deal is good for them at the moment," Boivin said of an agreement that was widely believed to be a bad deal for the players when it was signed three years ago.

The Canadiens president also said the league has yet to feel the brunt of the global financial crisis.

"We are all aware that we are in an economic period that it is very, very difficult."

- 30 -

it's easy to talk about sending guys to Hamilton when you're not the one who has to pay them millions to play there and not for the NHL team...

[leafs_rock_go_mccabe]

You know what? I hope the salary cap does drop for the next two years. It will teach all of those silly G.M.s who signed the dumbest contracts in the history of hockey a lesson and Gainey will be laughing because he has a ton of felxibility going into next season.

It was also, hopefully for us, force players to sign for less money than they would have if the cap increased again. If Gaborik thinks he's getting as much money as Malkin or Crosby he had better think again.

[ruuvimeisseli]

Im overall ok with the cap going down.

[franck5890]

My question with the salary cap going down, is are salary-cap hits scaled back accordingly? I would tend to think not (as they're not inflated when the cap goes up), but this could cause some serious issues around the league.

[SteenIsThaFuture]

My question with the salary cap going down, is are salary-cap hits scaled back accordingly? I would tend to think not (as they're not inflated when the cap goes up), but this could cause some serious issues around the league.

Free agency definetly will be interesting, people may not get the lucrative deals they want due to people being stuck and with the cap projection in 2 years GM's will be wary to hand out long deals.

[Wayne-1]

My question with the salary cap going down, is are salary-cap hits scaled back accordingly? I would tend to think not (as they're not inflated when the cap goes up), but this could cause some serious issues around the league.

there is nothing in the CBA to allow for the reduction of a cap-hit if the cap ceiling goes down... the players may not get paid their full salary -- I believe the money in escrow is in jeopardy -- but the cap situation is the same...

btw, didn't I say this was a possibility before the season started and the feeling at that time was, at the absolute worst, the cap would stay at the same level but more likely it just wouldn't rise as fast?

[tmash]

My question with the salary cap going down, is are salary-cap hits scaled back accordingly? I would tend to think not (as they're not inflated when the cap goes up), but this could cause some serious issues around the league.

I'm 95% confident they aren't scaled back. Teams and players both take their chances with the cap.

This offseason will be interesting for sure, teams may finally be more careful, because that outrageous 8 million offer to a second line player may be equivalent to a 10 million offer in a couple of years.

[jl-1]

Soooo... Interesting... Being condemned for having that many UFA's next summer, Gainey might just know how to manage a team afterall?

[SteenIsThaFuture]

Soooo... Interesting... Being condemned for having that many UFA's next summer, Gainey might just know how to manage a team afterall?

Nope he sucks, got lucky thats all, that lucky bald genius.

[tmash]

Soooo... Interesting... Being condemned for having that many UFA's next summer, Gainey might just know how to manage a team afterall?

I don't agree with your conclusion here, the only way having that many UFAs this offseason is a good thing is if the cap drops significantly or if the slight drop is the cap bottoming out: neither of which seem likely. The issue is the large drop is expected the next offseason: and having that many UFAs this offseason puts us into a bad situation.

The problem is that with this many UFAs, locking up players will likely involve many multiple year deals, and since the cap is expected to continue dropping, the next offseason we'll find ourselves in a horrible mess. So, yes, Gainey does have the potential to maneuver, the problem is he won't be able to ice a competitive team next season because he'll have to spend way below the cap to keep that flexibility when we really need it.

I think this is a bit confusing, so let me give an example (some of the numbers will be fake for simplicity).

This offseason, Montreal wants to ice a competitive team for the next year, so we give Koivu a 3 year deal, Tanguay a 3 year deal, Komisarek a 5 year deal, Plekanek a 4 year deal, Higgins a 3 year deal, Latendresse a 2 year deal, etc. Let's say these moves put us right around the 58 million cap. The problem is now we have almost no contracts coming up in the 2010 offseason, yet we have almost 58 million committed: we have no room to maneuver if the cap drops.

So it may look like we're in good shape now, but unless we feel like tanking next season, or miraculously a bunch of players agree to one year deals, we're going to find ourselves in this same mess as well when the cap drops more than a million.

[jl-1]

I don't agree with your conclusion here, the only way having that many UFAs this offseason is a good thing is if the cap drops significantly or if the slight drop is the cap bottoming out: neither of which seem likely. The issue is the large drop is expected the next offseason: and having that many UFAs this offseason puts us into a bad situation.

The problem is that with this many UFAs, locking up players will likely involve many multiple year deals, and since the cap is expected to continue dropping, the next offseason we'll find ourselves in a horrible mess. So, yes, Gainey does have the potential to maneuver, the problem is he won't be able to ice a competitive team next season because he'll have to spend way below the cap to keep that flexibility when we really need it.

I think this is a bit confusing, so let me give an example (some of the numbers will be fake for simplicity).

This offseason, Montreal wants to ice a competitive team for the next year, so we give Koivu a 3 year deal, Tanguay a 3 year deal, Komisarek a 5 year deal, Plekanek a 4 year deal, Higgins a 3 year deal, Latendresse a 2 year deal, etc. Let's say these moves put us right around the 58 million cap. The problem is now we have almost no contracts coming up in the 2010 offseason, yet we have almost 58 million committed: we have no room to maneuver if the cap drops.

So it may look like we're in good shape now, but unless we feel like tanking next season, or miraculously a bunch of players agree to one year deals, we're going to find ourselves in this same mess as well when the cap drops more than a million.

I would venture that teams with high dollars tied up with few players are the ones in trouble. With the cap going down, it will also drive the market which, ultimately, will make the actual current salary look even more inflated.

[flamesgal1]

I would venture that teams with high dollars tied up with few players are the ones in trouble. With the cap going down, it will also drive the market which, ultimately, will make the actual current salary look even more inflated.

I would also think that way...teams paying one or two players around 7 or so are in big trouble they have to trim somewhere...and even though were faced with so many rfa or UFA other teams cannot gamble so much and throw out a wad of money just to get one player they will be more focused on selling then buying...I think we have better good chance to get some players signed at a reasonable price.

[tmash]

I would venture that teams with high dollars tied up with few players are the ones in trouble. With the cap going down, it will also drive the market which, ultimately, will make the actual current salary look even more inflated.

I would also think that way...teams paying one or two players around 7 or so are in big trouble they have to trim somewhere...and even though were faced with so many rfa or UFA other teams cannot gamble so much and throw out a wad of money just to get one player they will be more focused on selling then buying...I think we have better good chance to get some players signed at a reasonable price.

I think you're both missing the point: yes we are in amazing financial shape this summer, we have a ton of flexibility. But that flexibility isn't sustainable if we want to ice a competative team next season. The cap won't be dropping much for next season, it's the season aftewards we need to watch, and unless we sign a bunch of guys to one year deals, having all the UFAs this season does nothing to help. Whether the money is tied up in a couple expensive players or a number of mid-priced players is irrelevant. This is kind of a difficult issue to wrap your heads about, but just think about the flexibility we have: how can we keep that flexibility for the next couple of offseasons when we truly need it? We can't without letting the team tank next season.

As for what makes a smart general manager in this sense, well in hindsight the "smartest" GM will be the one who had the most contracts expiring the year the salary cap bottomed out and spent to the cap the next season (by smartest, I mean luckiest, since no one can reasonably predict this). But looking forward, if I were a GM the situation I'd want to be in to hedge the most possible situations would have a roughly even number of contracts expiring every season. That way you have flexibility each year and it's sustainable. Unfortunately it's too late for Montreal since one year deals are so rare on good players, so we will likely have a couple seasons with few contracts expiring.

[QbGamer]

Gainey knows what hes doing im not to worried about it

teams will continue to hang themselves by offerin 5+ million to guy who should be getting 1-2 million...

If it drops, it will drop drasticly

[tmash]

Gainey knows what hes doing im not to worried about it

teams will continue to hang themselves by offerin 5+ million to guy who should be getting 1-2 million...

And therein lies the problem: this summer if we want to keep the team competitive we will need to compete with those expensive contracts, and since most will be for more than one year, we find ourselves in the same mess the next offseason.

If it drops, it will drop drasticly

Actually, this summer it shouldn't drop much at all, a couple of million or so maybe. It's the next couple of years to watch.

[DA_Champion]

Gainey should be fine.

Kostopoulos, Begin, Dandeneault, Bouillon will all (hopefully) be replaced by 850, 000 guys next year, saving ~2.3 million.

We'll no longer have to pay those buyouts for the two guys we bought out after the Samsonov trade, saving another million.

Oh and we probably won't resign Brisebois, adding another 1.5 million in cap space.

And we had like 2 million in cap space next year, so all things being equal we'll have a 7 million cushion to start off with next year.

Plekanec, Komisarek and Higgins will be getting raises, if they get 2 million more a year each that will absorb that.

Carey Price needs to get a raise in two years, starting the year that the salary cap drops.

The answer? We won't be resigning Robert Lang, and we'll lose one of Koivu or Kovalev, probably Kovalev. Maybe we'll sign an aging star to a one year contract at that point.

**************

The Habs are in a good position because:

- Whatever long-term contracts we have on the book are at reasonable prices, and none of them are truly long-term.

- We have a ton of guys in Hamilton who will be qualified next year, to play at 850, 000.

[tmash]

Gainey should be fine.

Kostopoulos, Begin, Dandeneault, Bouillon will all (hopefully) be replaced by 850, 000 guys next year, saving ~2.3 million.

We'll no longer have to pay those buyouts for the two guys we bought out after the Samsonov trade, saving another million.

Oh and we probably won't resign Brisebois, adding another 1.5 million in cap space.

And we had like 2 million in cap space next year, so all things being equal we'll have a 7 million cushion to start off with next year.

Plekanec, Komisarek and Higgins will be getting raises, if they get 2 million more a year each that will absorb that.

Carey Price needs to get a raise in two years, starting the year that the salary cap drops.

The answer? We won't be resigning Robert Lang, and we'll lose one of Koivu or Kovalev, probably Kovalev. Maybe we'll sign an aging star to a one year contract at that point.

**************

The Habs are in a good position because:

- Whatever long-term contracts we have on the book are at reasonable prices, and none of them are truly long-term.

- We have a ton of guys in Hamilton who will be qualified next year, to play at 850, 000.

yes, we have lots of flexibility this offseason, that's been established.

What no one has explained to me yet when saying we're in good shape is how on earth we won't be in a mess the summer of 2010? Unless all these re-signings you speak of are one year deals (unlikely) we will have too many contracts that don't expire in the summer of 2010, whether they are 2 year deals or 10 year deals is almost irrelevant: the cap dropping in 2010 spells trouble.

[amp73]

Gainey should be fine.

Kostopoulos, Begin, Dandeneault, Bouillon will all (hopefully) be replaced by 850, 000 guys next year, saving ~2.3 million.

We'll no longer have to pay those buyouts for the two guys we bought out after the Samsonov trade, saving another million.

Oh and we probably won't resign Brisebois, adding another 1.5 million in cap space.

And we had like 2 million in cap space next year, so all things being equal we'll have a 7 million cushion to start off with next year.

Plekanec, Komisarek and Higgins will be getting raises, if they get 2 million more a year each that will absorb that.

Carey Price needs to get a raise in two years, starting the year that the salary cap drops.

The answer? We won't be resigning Robert Lang, and we'll lose one of Koivu or Kovalev, probably Kovalev. Maybe we'll sign an aging star to a one year contract at that point.

**************

The Habs are in a good position because:

- Whatever long-term contracts we have on the book are at reasonable prices, and none of them are truly long-term.

- We have a ton of guys in Hamilton who will be qualified next year, to play at 850, 000.

Komisareck is an UFA next year, he may choose to sign elsewhere

As for replacing those players with the " ton of guys in Hamilton " ......yea we could , but then we might be even worse than we are this year

The ton of guys in Hamilton have no experience

[jl-1]

yes, we have lots of flexibility this offseason, that's been established.

What no one has explained to me yet when saying we're in good shape is how on earth we won't be in a mess the summer of 2010? Unless all these re-signings you speak of are one year deals (unlikely) we will have too many contracts that don't expire in the summer of 2010, whether they are 2 year deals or 10 year deals is almost irrelevant: the cap dropping in 2010 spells trouble.

A lot can happen by 2010. Why don't we just look at 2009 instead and cross the bridge when we get to the river? We don't even know who will be under contract by 2010, so I don't see how someone could explain how we'll be in good (or bad) shape by then, or am I missing something here?

[Bourne]

Frankly with how little Kostopoulos makes and how much heart he is showing, the man deserves to rob Kovalev of his "A" at this point but at the very least I would resign him. He would be a decent, cheap veteran for the younger rookies when Kovalev and the lot walk.

Anyhow, that is a subject for another topic. If I am not mistaken was not the CPA or whatever it was called in need over revival at the conclusion of this season? Thus a new deal could result to help ease the league during this economical crisis.

[tmash]

A lot can happen by 2010. Why don't we just look at 2009 instead and cross the bridge when we get to the river? We don't even know who will be under contract by 2010, so I don't see how someone could explain how we'll be in good (or bad) shape by then, or am I missing something here?

Umm okay, so we're talking about multi-year contracts and the GM planning years in advance, but we aren't allowed to look at a year and a half from now? If you're going to make claims talking about the future you can't set arbitrary limits just to make your point when the next season is hugely important.

We don't know who will be under contract, but what I'm saying only depends on two assumptions:

- almost all players making over 1 million will be on multi-year deals

- in order to be competitive, we need to spend near the cap next season

Who the invidual players are doesn't matter, all that matters are those two assumptions that are almost guaranteed to come true. So this offseason we'll have two choices: don't spend close to the cap and ice a team that probably isn't very good, or put ourselves in a mess with no flexibility the next summer.

Is Gainey's "planning" here really that smart when you see these two options? Not that he's in worse shape than a lot of other GMs, but don't let all the UFAs fool you, this is by no means the ideal situation. The ideal situation would be having a good chunk of cap space being freed up every year, not all of it in one year.

[jl-1]

Umm okay, so we're talking about multi-year contracts and the GM planning years in advance, but we aren't allowed to look at a year and a half from now? If you're going to make claims talking about the future you can't set arbitrary limits just to make your point when the next season is hugely important.

We don't know who will be under contract, but what I'm saying only depends on two assumptions:

- almost all players making over 1 million will be on multi-year deals

- in order to be competitive, we need to spend near the cap next season

Who the invidual players are doesn't matter, all that matters are those two assumptions that are almost guaranteed to come true. So this offseason we'll have two choices: don't spend close to the cap and ice a team that probably isn't very good, or put ourselves in a mess with no flexibility the next summer.

Is Gainey's "planning" here really that smart when you see these two options? Not that he's in worse shape than a lot of other GMs, but don't let all the UFAs fool you, this is by no means the ideal situation. The ideal situation would be having a good chunk of cap space being freed up every year, not all of it in one year.

All I know is that we only have Andrei Kostitsyn, Laraque, Markov, Hamrlik, Gorges and O'Byrne signed for 2010. Some of those players may or may not be with us at that time and we'll have to way and see what Gainey does this summer before jumping to conclusions that we'll be in trouble by that time. We may have some key players signed by then and if the cap goes down, so will the market value of the players signed, most likely anyway. Time will tell, and that's why I'm preaching to wait to get to the river before thinking of crossing it.

[tmash]

All I know is that we only have Andrei Kostitsyn, Laraque, Markov, Hamrlik, Gorges and O'Byrne signed for 2010. Some of those players may or may not be with us at that time and we'll have to way and see what Gainey does this summer before jumping to conclusions that we'll be in trouble by that time.

Well one option would be to basically only keep those players and ice a team made up mostly of the Bulldogs, that would let us keep the flexibility, but the team will be awful next season. But if you want a good team, there are going to be way more to add to that list.

We may have some key players signed by then and if the cap goes down, so will the market value of the players signed, most likely anyway.

But here's the problem: the cap isn't expected to drop much this off season, it's 2010 that a big drop is expected. We're in a situation where we will be signing most of our players to 2009 values (which are likely to be roughly what they are) but they will be signed through 2010 most likely.

Time will tell, and that's why I'm preaching to wait to get to the river before thinking of crossing it.

So you'd agree saying "Soooo... Interesting... Being condemned for having that many UFA's next summer, Gainey might just know how to manage a team afterall?" was premature? I don't really know what the salary cap situation will be, but I certainly don't see our situation being the ideal one if you look beyond 6 months.