Cap On The Rise Says Bettman
December 16, 2005
SCOTTSDALE, Ariz. (CP) -- Life just changed for the Toronto Maple Leafs and all the other big-market clubs in the NHL.
They've got more money to spend next season.
Commissioner Gary Bettman, as expected, told owners at the board of governors meeting Thursday that current revenue projections will see the salary cap rise to somewhere between a low of $40 million US and a high of $45 million.
The cap was $39 million this season.
"It does provide a different landscape,'' Leafs general manager John Ferguson Jr., said after the two-day meetings wrapped up Thursday. "We negotiated some deals last summer and stayed out of some, frankly, because of that uncertainty.
"It doesn't sound like it's going up a whole lot if it ends up on the lower end but if it ends up on the higher end we'd have a little more room to spend providing our budget would permit us to go to that number.
"And I think it's safe to say we'd be approaching it.''
More precisely, Bettman told owners Thursday that current projections call for revenues to be just over $2 billion this season. Under the CBA, the next season's salary cap is based on the previous year's revenue total.
Revenues of exactly $2 billion for this year would correspond to a $41.6-million salary cap next season, $2.1 billion in revenue would give a $43.4-million cap, and $2.2 billion would bring on a $45.3-million cap. If attendance dips in the coming months and revenues instead total $1.9 billion, the cap would be $39.8 million next season.
"I know historically the projections we get at this point in the season, they could still be two, three, four per cent off,'' Bettman said after the four-hour session. "And so what we did is, with some degree of comfort and intuitiveness, said this is where we think we're going to be. But I think it looks pretty clear that it's going to start with a two ($2 billion or more).
"Clearly the cap is going up this year and that's good for everybody.''
It's certainly good news for the players. The maximum salary this season was $7.8 million under the $39-million cap because no player can earn more than 20 per cent of the cap figure. A $45-million cap would raise the maximum to $9 million.
But more importantly, the 12 per cent escrow payments the players have been forking over since the beginning of the season could all be coming back if revenues end up over $2.05 billion.
"It goes back to the players,'' said Bettman. "If you were making a million dollars and we had $100,000 or $60,000, you get it back with interest. The money's not just sitting in cash in a vault.
"The money is being appropriately invested.''
If revenues hit $1.9 billion this season, the escrow payment drops to 6.9 per cent and if revenue hits $2 billion, the escrow payment would only be 1.7 per cent.
Other issues on the agenda Thursday:
-- The owners ratified minor changes to the penalty shootout, allowing as of now a more expanded role for video review. This comes as a result of Jeremy Roenick's "double-hit'' earlier this season when he scored on what appeared to be two shots on goal. Now refs will do a video review on any controversial shootout goal.
-- Sources indicated a hot topic was revenue sharing, with some owners complaining about the way it's going to be decided although there's nothing that can be changed now that it's in the CBA. The top 10 revenue teams pay into the revenue sharing fund and the bottom 15 clubs share it.
-- There was no decision taken on expanding to 20 teams for the playoffs instead of the current 16.
"We made a lot changes this year and as it relates to the scheduling format as well, everybody said, `Let's take our time,''' Bettman said. "We'll keep it as a back-burner issue. We'll look at it, but not now.
"Let the season play out as it is and to the extent that we want to make any adjustments, we can do it in the future.''
-- Colin Campbell, the NHL's director of hockey operations, addressed owners on the new rules and crackdown on hooking and holding.
"Everyone wants us to stay the course,'' Campbell said. "It has been tough at times. There have been some tough calls and calls that have certainly decided games late but everyone wants us to stay the course.''
-- A report on the state of franchises in St. Louis (still for sale), Anaheim (new ownership) and Pittsburgh. The Penguins need a new arena within a year or they're gone. The Penguins are hoping to win a gaming licence for slot machines which they'll use to fund the new arena.
"We've been saying that for a long time and we have a plan that's tied to gaming,'' said Penguins president Ken Sawyer. "But it will be an unbelievable plan, the best in the history of Pennsylvania for the public sector. So we think it's a no-brainer. But it will take at least a year to find out if our gaming partner wins the licence.
"We're not leaving Pittsburgh until June 2007 at the earliest.''
But the big story of the meetings was the salary cap. GMs must now adjust to the new landscape. Most of them thought the cap was going to go down next season.
"I think everybody in this business was probably looking at next year the cap possibly coming down or staying the same,'' said St. Louis Blues GM Larry Pleau. "Now all of our thought processes looking forward is definitely going to be different.''
Not all clubs will use the new limit next season. Some teams have budgets and won't spend to the new maximum.
"That's absolutely correct,'' said Montreal Canadiens owner George Gillett. "We're operating in an economic reality. We're trying to recover from huge losses over the years. And I don't think that you recover by automatically going to the high end of the game.''
Much of the same from Ottawa Senators president Roy Mlakar.
"We've always worked under a budget,'' Mlakar said. "When you look at Ottawa, we've always produced a budget for ownership and tried to be responsible, understanding that we're a small-market team. We're trying to build our revenues, we're doing a pretty good job of that. We're probably in the middle of the pack. And now we're top 10 in attendance and that's good news.''
But spending up to $45 million next season is likely not in the cards, even if it means keeping free-agent star defencemen Zdeno Chara and Wade Redden.
"We're going to have to make a long run in the playoffs to be a financially successful franchise,'' said Mlakar. "So we've got some hard decisions for sure.''
Columbus Blue Jackets GM Doug MacLean said the new cap figure won't influence things too much in his case either.
"It's not going to affect us because we're not going to get there anyway. But it's always interesting to see what the competition is going to be though and what the gap (in payrolls) is going to be.''
But for a team like the Leafs, life is good again.
"Hopefully it will restore a little more of the competitive advantage we had on the financing side which will be nice,'' said MLSE president and CEO Richard Peddie.