Today, the NHL announced that for the seventh consecutive year since the lockout and new CBA, the salary cap will increase. Teams will be able to commit up to $64 million in player salaries for the 2012/2013 season, up an astounding $25 million from the original cap of $39 million from 2005/2006. The CBA is structured in such a way that the salary cap grows only when total league revenue does, so this increase would appear to be a sign of financial and operational success. However, aggregate revenue totals hide a concerning dichotomy in the league: as the rich teams get richer, the poor are becoming much, much poorer.
One of the primary objectives of the new CBA was to establish parity in a league that was dominated by big-market, high-spending teams. On the ice, this success is undeniable; the winners of the Stanley Cup since the lockout have been seven different teams of small, medium and large markets. Dynasties have been eliminated and there's reason for all fans to feel as though their team can be successful (well, almost all fans). Despite this balancing of the on-ice product, much disparity exists between the teams in terms of earning power. Though total operating income of the league was up to $160 million during the 09/10 season, almost all of this amount is attributable just a few, bread-winning teams. Combined, the Toronto Maple Leafs, New York Rangers and Montreal Canadiens had an operating income total of $177 million -- in total the remaining 27(!) teams lost $17 million.
If you group together the top seven teams (Toronto, NYR, Montreal, Detroit, Philadelphia, Chicago, Vancouver), you get an aggregate operating income of $241 million. Sixteen teams -- greater than half of the league -- lost money throughout the course of the season. The seven lowest earners (Phoenix, Florida, Washington, Buffalo, Tampa Bay and recently deceased Atlanta) managed to lose a total of $63 million. Despite total revenue rising for the fourth consecutive year, most teams in the league are not even earning one dollar of profit.
Like most problems in the league, it's easy to pin this failure on Darth Lord Bettman but the owners, GMs and the NHLPA all agreed to the same terms. NHL hockey just hasn't caught on with many fans in certain US cities. Phoenix, Washington, Buffalo, Nashville, and Tampa Bay have all experienced varying degrees of success the past few seasons (including a President's Trophy for the Capitals and a run to the ECF for the Lightning), but fan interest remains stagnant. These teams continually bleed money from the league, which is fully supported by just a few large and established markets.
Further exacerbating the problem is the salary cap floor -- the minimum amount each team must spend each year. That number increased as well this year to $48 million. This lower limit is a non-factor for big market teams or those with deep-pocketed owners, but for teams struggling on and off the ice it's another complication. Teams like Florida and Phoenix have enough problems with ownership and financing without being forced to spend millions of dollars more to reach the cap floor. The Panthers in particular are stuck in a horrible position heading into next season. They have 11 roster players signed at a total $18 million, meaning they need to sign 12 more players at a minimum of $30 million. It's situations like this that cause small market teams like Atlanta to offer players like Ron Hainsey contracts worth $4.5 million a year. Or, it could force them to trade for underachieving players with front-loaded, cap heavy contracts whose cap hits exceed the dollar amount they are due.
Clearly, contending with the rising cap floor and dwindling revenue numbers was deemed no longer in the best interests of Thrashers owner Atlanta Spirit LLC, as they sold the team to Winnipeg-based TNSE. What will happen if the same happens to Sunrise Sports and Entertainment, owners of the Panthers? The NHL was forced to approve the relocation to of the Thrashers to Winnipeg because there was no other suitable market. Where can they retreat to next?
With no other cities yet available for relocation, the NHL has no choice but to contemplate contraction the next time a team folds. Yeah, the concept has a negative stigma and it would be a tacit admission that the NHL's southern expansion has failed, but contraction would have some really great benefits. Fewer teams would increase the profitability of the league and increase the talent pool available for the remaining teams. This would increase the quality of play throughout the league and eliminate the need for certain, um, "types" of players.
Just something to consider.
No comments:
Post a Comment