NHL salary cap to stay flat at $81.5M; bad news for big spenders, free agents

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With the CBA extended through 2025-26 as part of the NHL’s larger return-to-play plan, we now know that the salary cap will remain flat at $81.5 million for at least the 2020-21 NHL season.

From there, most signs point to a snail-like pace for the NHL salary cap ceiling, if it moves at all. Much like many other factors, that’s subject to change. If the NHL’s finances can bounce back quickly from the impact of COVID-19, then who knows?

But … most likely, a flat $81.5M NHL salary cap (and a slowly rising one) looks like bad news for both the league’s biggest spenders and free agents hoping to cash in.

The two sides took these measures to try to mitigate the impact of COVID-19. In trying to roll with those punches, certain sacrifices must be made. And that means that some big market teams will need to tighten their belts, rather than wielding the full power of fat wallets.

Let’s jump into some of the details

Flat $81.5M salary cap for 2020-21 NHL season; Limited movement after that

As a reminder, the 2019-20 salary cap ceiling sits at $81.5M. The NHL’s salary cap could remain flat at $81.5M for some time; it’s penciled in that way for at least 2020-21.

Here’s the breakdown:

  • Upper Limit = $81.5 Million
  • Midpoint = $70.9 Million
  • Lower Limit = $60.2 Million

So, for at least a while, the salary cap will not be tied directly to a 50-50 split in revenue. This is a change from how business operated (and the salary cap was calculated) for NHL teams.

This may only be temporary because the NHL and NHLPA agreed to a point where the salary cap could rise instead of being flat: $4.8 billion in revenue. (That was the projected revenue for 2019-20 before the COVID-19 interruption.)

Granted, there are some ins and outs that might allow minor tweaks, but that’s where things get really granular. If you want to dig deep on the new mechanics that might or might not keep the NHL salary cap flat, check out the full release. Make sure you have your glasses and contacts (and maybe smelling salts).

Flat NHL salary cap could present challenges for plenty of NHL teams, free agents

One would think this might also make it tougher for players to land big second contracts, but we’ll see. Plenty of signs point to a flat/barely climbing salary cap squeezing the NHL’s “middle class” even more than before.

At this point, fans of high-spending teams might beg for “amnesty buyouts.” Unfortunately for those teams, that won’t be a way to get out of salary cap jail.

If the NHL salary cap stays flat or barely moves for years, it could absolutely cause some carnage. Think of how well Seattle could leverage cap-challenged teams during the expansion draft, for example. (You might even pledge that there will be a climate for chaos.)

Salary bonuses, contract terms, and other financial details from NHL CBA extension

Consider the flat $81.5M NHL salary cap the biggest detail of the CBA extension. There are plenty of other elements to consider, including:

  • If all goes to plan, NHL free agency is set for mid-October. Estimates include Oct. 9 or Oct. 11.
  • Players will defer 10 percent of their salaries to make up for pandemic-related financial losses.
  • No-trade and no-movement clauses will “travel” with the player, even if said player gets traded before the clause kicks in. TSN’s Frank Seravalli reminds us of P.K. Subban‘s situation. The Canadiens traded Subban right before his clause kicked in. From there, the Predators weren’t responsible for such a clause, and they eventually traded Subban to the Devils.
  • Salary bonuses will go untouched, which was a sticking point for owners. On the other hand, the NHL took measures to limit “front-loading” contracts.
  • Escrow – a huge sticking point for players, boring for the rest of us — will be limited. The cap for escrow is set at 20 percent for 2020-21, then the plan is to eventually drop it to six percent.
  • The CBA extension very marginally bumps up minimum NHL salaries. Some might say comically so.
  • The CBA extension tweaks cap recapture penalties. Via Michael Russo of the Athletic, there is “no longer a charge greater than the contract’s AAV in any year, but charge continues until the full overage is paid off.”
  • As discussed earlier, prospects like Kirill Kaprizov of the Wild won’t be able to participate in the 2020 Stanley Cup Qualifiers or any part of 2019-20. There is the option, however, to sign them in a way that burns a year off of their entry-level contracts. Sportsnet’s Chris Johnston reports that teams would get a small window to do so (Monday afternoon through Wednesday afternoon), but it’s unclear if they’d be allowed to participate in training camps if such contracts were signed.

Closing thoughts on the NHL having a flat salary cap for 2020-21

Overall, every bargain contract will be that much more crucial, and every mistake will hurt much more. Which teams do you think will weather these storms, and which ones are in big trouble?

Better make sure you have a good capologist or three, NHL teams.

MORE ON THE NHL RETURN TO PLAY

James O’Brien is a writer for Pro Hockey Talk on NBC Sports. Drop him a line at phtblog@nbcsports.com or follow him on Twitter @cyclelikesedins.