Is The NHL Facing A Money War?

Interesting times in the world of money indeed. Let’s not talk about the world markets here, it is enough everywhere else. However, the Globe is running a pretty interesting story on the hockey $ markets, and it has me thinking, that this could get ugly….

“According to information compiled by The Globe and Mail from various sources, the six Canadian NHL franchises contributed more than $40-million (all figures U.S.) to their fellow owners last season, and about $50-million when playoff revenues are taken into account.And at the other end of the spectrum, several teams are becoming increasingly frustrated at the skyrocketing salary cap, which now forces teams to carry a minimum payroll of $40.7-million.”

It is amazing how the times have changed and how different things are in the various leagues. The Blue Jays rely on revenue sharing in MLB. Yet in the NHL, the Leafs (12m) Habs (12.5), Canucks (10), Flames (6) Senators (1)and Oilers (800k) are the ones shelling out the dough.

“Another part of the problem is that some teams build their business models around their revenue-sharing windfall and strive to keep their own revenues below the threshold where they will have to contribute. The Buffalo Sabres and Nashville Predators, like other teams who spend near the midpoint of the salary-cap range, are often singled out as examples.”

So, lets get this straight, you plan on making just under the limit to ensure you get the handout from the league????? What a great way to run a business… No wonder the PA is suspicious….

“”The cap was supposed to solve everyone’s problems, but all it’s done is prevent six or seven teams from spending $80-million,” said an ownership source who exchanged candour for anonymity. “Some folks are pretty upset: We sat out a whole year to get the cap, and some people are saying, ‘Well, why?'” As one long-time executive with an Eastern Conference team pointed out, the bottom of the NHL salary scale now exceeds the top-end figure from the first postlockout year ($39-million).”

Next to the “player to be named later” the “anonymous source” is my favorite sports character of all time. It is wild when you think that the league floor on salaries already exceeds the first year cap.

“”Some teams are pretty pissed off at the whole thing: We didn’t manage to get rid of salary arbitration, and some teams just can’t afford to pay their restricted free agents or arbitration-eligible players,” the executive said. “There are probably 10 to 12 teams that can’t afford a $40.7-million payroll,” added a source with extensive knowledge of league operations.

So, one has to ask the question then, what now???

The Canadian dollar exploded today (so much for a soft landing). The Canadian NHL teams will be taking in a devalued Cdn dollar and paying out in USD. Ouch.

You know who is going to pay for this???

“For example, Daniel Briere and Scott Gomez each earned US$10 million last season. They’ll both get back the $950,000 they paid into escrow plus interest and an additional $48,000 or so to cover the shortfall in overall salary payments.”

Remember, the league witholds, almost like a tax a certain % of each player’s paycheck as an escrow to ensure “cost certainty”, that is that salaries don’t exceed the threshold of hockey revenue…So guess what will happen when the canadian dollar heads south and the Canadian teams don’t make as much money or gulp, lose money? Guys like Daniel Briere and Scott Gomez aren’t going to be getting their 950k back. That will be a big issue when Paul Kelly contemplates re-opening the CBA…

So we are clear, the owners aren’t happy, the players certainly aren’t going to be happy, why did we have this lockout again??????

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