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Booming NHL business a double-edged sword for low-revenue teams

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Yesterday, the NHL announced a 12-year Canadian broadcast agreement with Rogers worth almost $5 billion in U.S. dollars.

Yeah, it was a pretty big deal.

Immediately after the news broke, people started to wonder what it would mean for the league’s 30 franchises. And in particular, they wondered about the clubs that aren’t considered among the financial powerhouses of the NHL, for which finances are always a concern.

For example, Yahoo! Sports columnist Nicholas Cotsonika was thinking about the Phoenix Coyotes, a team that very nearly relocated this past summer before finally finding new ownership.

Say you’re the Coyotes. You have been at or near the bottom of the league in attendance in recent years. You want to win, draw fans and make the business work on your own. But the cap and floor are more manageable. You don’t have to hit attendance targets to receive revenue-sharing anymore. Your cut of the Canadian TV revenue now is $4.75 million a year at the current exchange rate, but it will shoot up to an average of about $13.8 million a year over the next dozen years – a $9.05 million difference per year. Now factor in revenue from the American TV deal, the outdoor games, a World Cup, other international events, et cetera.

And now consider this: If the NHL does expand – to, say, Quebec City and Seattle – the owners will split hundreds of millions of dollars in fees between them, and they won’t have to share any of that money with the players.

That’s the positive spin. But here’s the potential negative side, from the CBC’s Elliotte Friedman:

The only thing to worry about here is the salary floor, if you love a low-revenue club. Article 50.5 b (i) of the CBA states “the magnitude of the Team Payroll Range shall never be less than $16 million … or greater than $28 million.”

The promise of this new agreement allowed Bettman to stabilize his three biggest trouble spots: Florida, New Jersey and Phoenix. No doubt the owners of those teams, like Leonsis in Washington, are thrilled by the television bonanza and updated revenue-sharing formula.

The true test of the new CBA will be how many teams can’t afford to go much higher than the floor because you know the revenue powerhouses can’t wait to flex their financial-steroid muscles.

That’s the only concern I see. It’s at $44 million this season, and a $60-million base – with the upper limit approximately $20 million higher – is not out of the question in the near future.

The Globe and Mail’s James Mirtle conservatively estimates the salary floor/cap will rise as follows throughout the course of the CBA:

source:

It’s impossible to say for sure how current low-revenue teams like the Coyotes, Panthers, Predators, and Blue Jackets will fare in the next few years. Yes, there will be more national TV money coming in, and yes, there’s more revenue sharing under the new CBA. But paid attendance will still matter greatly for individual clubs, meaning much will continue to depend on their win-loss records.

Shattenkirk on Blues trading him: ‘That’s out of my hands’

ST LOUIS, MO - MAY 23:  Kevin Shattenkirk #22 of the St. Louis Blues skates against the San Jose Sharks in Game Five of the Western Conference Final during the 2016 NHL Stanley Cup Playoffs at Scottrade Center on May 23, 2016 in St Louis, Missouri.  (Photo by Dilip Vishwanat/Getty Images)
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In a vacuum, it’s confounding to imagine the St. Louis Blues trading Kevin Shattenkirk.

He’s a highly productive defenseman in the meat of his prime at 27, and his cap hit is a super-bargain at $4.25 million.

Of course, as is the case with many of the NHL’s biggest steals, the Blues will eventually need to pay up. In Shattenkirk’s case, his bargain deal ends after the 2016-17 season.

That’s a tough enough conundrum on its own, but consider the deals on the Blues’ cap that also expire after next season.

Now, there are also some areas of relief; some will be happy to see the Blues part ways with Patrik Berglund‘s $3.7 million cap hit (unless he plays out of his mind, naturally).

There are also some other things to consider.

A) What if the salary cap rises more than one might expect for 2017-18?

B) Would expansion help the Blues cut a little fat by losing a less-than-ideal contract?

C) Who are the Blues bringing back from this off-season?

Item C) dovetails with Shattenkirk. Will the Blues try to bring back David Backes and/or Troy Brouwer, possibly squeezing out Shattenirk?

There have been rumors about Shattenkirk being shopped around in the past, yet the summer is a great time to make deals. Teams get salary cap leeway, owners may want reboots and new coaches could really value Shattenkirk’s in-demand skills.

For what it’s worth, Shattenkirk would prefer to stay:

There’s a strong chance that Blues GM Doug Armstrong may bide his time, whether he’s inclined to trade Shattenkirk during the season or re-sign him.

Still, the talented defenseman’s situation shows that the Blues have big decisions to make even regarding situations that do not technically demand immediate choices.

One thing seems certain: it won’t be any easy call.

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Blues face tough questions

David Backes wants to stay

So does Troy Brouwer

It sounds like Troy Brouwer would love to return to the Blues

DALLAS, TX - MAY 07:  Troy Brouwer #36 of the St. Louis Blues celebrates with Robby Fabbri #15 of the St. Louis Blues after scoring a goal against Kari Lehtonen #32 of the Dallas Stars in the second period in Game Five of the Western Conference Second Round during the 2016 NHL Stanley Cup Playoffs at American Airlines Center on May 7, 2016 in Dallas, Texas.  (Photo by Tom Pennington/Getty Images)
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How much is Troy Brouwer‘s magical postseason run worth to the St. Louis Blues or some other team in free agency? How important is comfort and familiarity to Troy Brouwer?

Those seem to be the most important bigger-picture questions, although from the sound of Brouwer’s comments, nuts-and-bolts issues may decide his future in or outside of St. Louis.

Brouwer raved about his time with the Blues as the team spoke with the media to close out the 2015-16 season. The power forward seemed very happy about his living conditions and the way his style fits with this blue collar team.

Even so, Brouwer also admits that “it’s a business.”

That’s typical talk, yet it was more interesting when he went a little deeper, acknowledging that he understands that GM Doug Armstrong must ask questions about more than just the 2016-17 season.

His playoff production was fantastic, but a smart GM will realize that it probably wasn’t sustainable. Case in point, facts like these:

Even so, Brouwer brings considerable value if you keep expectations in check.

While he fell a little bit short this season with 18, he generally falls in the 20-goal range each year. He’s one of those players who can bring some grit to the table without totally taking away from your team in other ways.

Brouwer was one of the Blues’ top penalty-killing forwards to boot.

It wouldn’t be the least bit surprising for Brouwer to enjoy a healthy raise from his expired $3.67 million cap hit, yet you must wonder how much. Maybe most importantly, what kind of term is he looking for?

That last question might just be pivotal regarding a possible return to the Blues. Would he sacrifice some stability to try to make another run with St. Louis?

Even if he isn’t that old at 30, his rugged style might mean that this is one of his last opportunities for a big payday.

Both sides face a tough call, yet it sounds like a reunion is at least plausible.

Related

Tough questions await the Blues

David Backes would prefer to return, too

Trio of Pens forwards take maintenance day on Saturday

TAMPA, FL - MAY 24:  Chris Kunitz #14 of the Pittsburgh Penguins shoots the puck against the Tampa Bay Lightning during the first period in Game Six of the Eastern Conference Final during the 2016 NHL Stanley Cup Playoffs at Amalie Arena on May 24, 2016 in Tampa, Florida.  (Photo by Mike Carlson/Getty Images)
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The Pittsburgh Penguins are about as healthy as you can be at this stage of the game. Outside of Trevor Daley (ankle), who’s done for the playoffs, the Pens have their desired roster at their disposal. That doesn’t mean that certain veterans don’t need a little bit of time to recuperate from the grind of the first three rounds.

On Saturday, Nick Bonino, Matt Cullen and Chris Kunitz didn’t participate in practice. Coach Mike Sullivan confirmed that each player had taken a maintenance day.

The 36-year-old Kunitz and 39-year-old Cullen have surely picked up some bumps and bruises throughout the postseason, while Bonino might still feel the effects of a shot block from Game 7 of the Eastern Conference Final.

Not to worry Penguins fans, Sullivan says that each player should be available for Game 1 of the Stanley Cup Final on Monday night.

Related:

Pens enter Stanley Cup Final as favorites: online bookmaker

Need for speed: Sharks, Pens brace for ‘fast hockey’ in Stanley Cup Final

Pittsburgh’s run fueled by ‘Baby Pens’

‘No question,’ David Backes wants to stay in St. Louis

ST LOUIS, MO - MAY 17:  David Backes #42 of the St. Louis Blues looks on in Game Two of the Western Conference Final against the San Jose Sharks during the 2016 NHL Stanley Cup Playoffs at Scottrade Center on May 17, 2016 in St Louis, Missouri.  (Photo by Jamie Squire/Getty Images)
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We don’t always get what we want…but we try.

In David Backes‘ case, he’d like to remain a member of the St. Louis Blues going forward. It might be difficult to make the numbers work, but the two sides will give it a go.

Backes, who is set to become an unrestricted free agent on July 1st, scored 21 goals and 45 points in 79 games in 2015-16. The 32-year-old added seven goals and 14 points in 20 postseason games before the Blues were eliminated by the Sharks in the Western Conference Final.

Re-signing their captain will likely interest the Blues, but can they make it work under the salary cap? St. Louis also has to re-sign RFA Jaden Schwartz and fellow UFA Troy Brouwer this off-season.

The Blues might have to pick between keeping Brouwer or Backes and that might not work in Backes’ favor. Brouwer is younger, and the fact that St. Louis gave up T.J. Oshie for him just last year could also play a factor in their decision.

Even if St. Louis doesn’t bring back role players like Steve Ott, Kyle Brodziak and Scottie Upshall, they still need to have other players fill those spots on their third and fourth lines, which will eat into their limited cap space.

If they want to make room for Backes and/or Brouwer, the Blues may have to part ways with a defenseman like Kevin Shattenkirk (one year left at $4.25 million).

It looks like the Blues might be looking for a new captain in 2016-17.