The Biggest Pros and Cons of the NHL's Current Salary-Cap System

Lyle Richardson@@SpectorsHockeyFeatured ColumnistMay 28, 2015

The Biggest Pros and Cons of the NHL's Current Salary-Cap System

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    Brian Babineau/Getty Images

    Since 2005-06, the NHL has operated under a salary-cap system. It has had a substantial impact upon how the league and the NHL Players Association conduct business. 

    The cap system, and its adjustments under the 2013 collective bargaining agreement, has affected league parity, team payrolls, player movement and the way rosters are built and maintained. Its positive and negative aspects will remain a topic of debate.

    The following slideshow lists the biggest pros and cons of the NHL's current salary-cap system. Feel free to voice your opinion in the comments section.

Pro: Mandatory Upper and Lower Salary-Cap Limits

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    Matt Slocum/Associated Press

    Before the implementation of the salary cap, there was a wide disparity in spending between the “have” and “have-less” NHL franchises. In 2003-04, the Detroit Red Wings' $77.8 million payroll led the league, while the Nashville Predators brought up the rear with a lowly $21.9 million. 

    Under the current cap system, an upper and lower limit (frequently referred to as the cap "ceiling and "floor") was established based upon annual league revenue. For 2014-15, the upper limit was $69 million, and the lower limit was $51 million.

    Including salaries, bonuses and players on long-term injured reserve, the Philadelphia Flyers led the league this season at over $75.5 million in cap payroll. The Arizona Coyotes had the lowest at around $57.5 million. That's a significantly narrower gap between the free-spending and frugal clubs compared to what it was before the salary-cap era.

Con: Few Player-for-Player Trades

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    Glenn James/Getty Images

    Before the implementation of a salary cap, a player's salary was rarely a concern in the NHL trade market. Player-for-player swaps during 2003-04 (the final season before the salary cap) were a common occurrence.

    Under the salary cap, however, such moves were rare during this season. General managers must now carefully manage their cap space. Player-for-player swaps are more likely to be dollar-for-dollar deals. Trades involving players being dealt for each other usually occur in the offseason, when teams have more cap space.

    Under the current collective bargaining agreement, teams are now allowed to retain a portion of a player's annual average salary (up to 50 percent) to facilitate a trade. While that has somewhat improved the trade market, regular-season “hockey deals” remain scarce. 

Pro: Cap Limits Tied to League Revenue

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    Marianne Helm/Getty Images

    The NHL's salary-cap limits are tied to league revenue fluctuations. If revenues increase, so do the cap's upper and lower limits. Should revenue stagnate or decline, it has the same effect upon cap limits.

    Due to the steady rise of league revenue, salary-cap limits have significantly increased since its implementation a decade ago. In 2005-06, the cap ceiling was set at $39 million and the floor at $21.5 million. For 2014-15, the ceiling was $69 million and the floor $51 million.

    The constant increase has had a positive effect upon player salaries and team payrolls. On Jan. 27, TSN reported the average salary for 2013-14 was $2.58 million. Teams have had more cap space each season to invest in their rosters. 

Con: The Canadian Dollar

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    Image Source/PERRY MASTROVITO/Associated Press

    Revenue generated by Canadian NHL teams has a significant effect upon the salary cap. On Nov. 29, 2014, the New York Times' Jeff Z. Klein reported the seven Canadian clubs by most estimates contribute about 35 percent of revenue.

    The recent decline in the Canadian dollar is having an adverse effect upon league revenue and projected cap limits for 2015-16. On Dec. 8, 2014, NHL.com's Corey Masisak reported commissioner Gary Bettman predicted next season's cap ceiling could reach $73 million. The Associated Press (via USA Today) recently reported Bettman now estimates it could settle in at around $71 million.

    Fluctuations in the Canadian dollar show no sign of abating. Its current decline makes it difficult for teams that spend to the upper limit to find sufficient cap space necessary to maintain competitive rosters next season.

Pro: Limits on Player Contracts

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    Jim Mone/Associated Press

    The current salary-cap system has several limits upon player contracts. This levels the playing surface between big- and small-market clubs, as all must now work under the same guidelines when signing players.

    In a nutshell, teams can only spend up to 20 percent of cap payroll on any one player. There are limits on base salaries, bonuses and contract term for entry-level and veteran players. The latter can receive a maximum eight-year term when re-signing or seven years when signing with a different club. 

    Contract term limits were implemented to prevent cap circumvention by signing a player to a long, front-loaded contract in order to garner a lower average cap hit. Salary-variance rules (no more than 35 percent year over year, and no less than 50 percent of the highest year) are another measure to prevent cap circumvention.

Con: Cap Circumvention Still Exists

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    Justin K. Aller/Getty Images

    Following the salary cap's implementation, it didn't take long for teams to discover loopholes. Under the previous collective bargaining agreement, some teams signed several players to ridiculously long, heavily front-loaded contracts to garner a lower salary-cap hit. The new CBA implemented term and salary-variance limits to close that loophole.

    One form of existing cap circumvention involves players who suffer career-ending injuries remaining on long-term injured reserve rather than retiring. Instead of being charged the full amount of his remaining salary, the team receives cap relief by placing him on LTIR for the entire season. Examples include Philadelphia's Chris Pronger and Boston's Marc Savard

    The Hockey News' Ken Campbell cited the Toronto Maple Leafs trading David Clarkson in February to the Columbus Blue Jackets for Nathan Horton as cap circumvention. Horton might never play again, which allows the deep-pocketed Leafs to get cap relief by placing him on long-term injured reserve. The Blue Jackets receive a serviceable player in Clarkson while shedding a player they didn't want to keep on LTIR.

Pro: Encourages Better Management

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    Bruce Bennett/Getty Images

    Before the salary cap, NHL general managers (especially big-market ones) could spend as much as their ownership was willing to invest in top talent. In 2001-02, most of the top-spending teams were at or near the top of the division standings

    In today's salary-cap system, however, general managers cannot simply try to buy themselves a Stanley Cup contender. The constraints on salaries and payrolls force them to invest wisely or risk saddling themselves with too many expensive contracts that eat up valuable payroll space.

    GMs now place more priority on retaining their best talent. There's greater emphasis on scouting, drafting and player development to maintain a steady pipeline of affordable talent. Those with plenty of cap space can also bolster their rosters by targeting cap-strapped teams in need of shedding salary.

Con: Bad Contracts Still Happen

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    Mark Humphrey/Associated Press

    While the NHL salary-cap system forces general managers to invest wisely, it hasn't prevented some of them from overrating a player's value. Despite the cap constraints, some players over the past decade were signed to questionable deals. Many were unrestricted free agents. 

    Two notable examples occurred last summer. The Florida Panthers raised eyebrows by signing checking-line center Dave Bolland to a five-year deal worth $5.5 million annually. The Minnesota Wild only got 21 goals and 52 points from Thomas Vanek this season after inking him to a three-year deal worth an average cap hit of $6.5 million.  

    The cap system has reduced the instances of players being paid far more than their value. Still, last year's signings prove that no system can fully prevent a general manager from overestimating a player's worth.

Pro: Improved Parity

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    Mark J. Terrill/Associated Press

    ESPN.com's Pierre LeBrun reports the cap system has ensured little separation in depth of talent and placement in the standings between the eight playoff clubs in each conference. Instances where a conference or division leader easily dispatches lesser postseason opponents have become rare.

    Parity among the teams has significantly improved. As LeBrun points out, the Los Angeles Kings (2014 Stanley Cup champions) and Boston Bruins (2014 President's Trophy winner) missed the 2015 postseason. He also notes perennial playoff clubs like Pittsburgh and Detroit barely qualified this season, while San Jose missed the cut. 

    The NHL is no longer a place where the teams that spend the most become Stanley Cup contenders. The cap ceiling forces a general manager to invest his payroll wisely or risk hurting his team's competitive depth. 

Con: It Punishes Successful Teams

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    Gene J. Puskar/Associated Press

    Prior to the salary cap, it was easier for free-spending teams to maintain their championship rosters. In today's NHL, however, it's become increasingly difficult to keep a winning lineup intact.

    Thanks to cap constraints, every Stanley Cup champion since 2009 has struggled to maintain its roster depth. The Pittsburgh Penguins, Chicago Blackhawks, Boston Bruins and Los Angeles Kings have all paid the price in varying degrees, losing key players to free agency or trading them in cost-cutting deals.

    Maintaining a Cup champion becomes expensive as players become eligible for substantial raises. Even the most well-managed championship team risks being gutted to remain cap-compliant. While the salary cap has improved league parity, it seems to punish successful franchises. 

    Stats via NHL.com. Salary cap and collective bargaining information via NHL.com and NHLPA.com. Historical salary information via USA Today. Trade histories via NHLTradeTracker.com. Player salary information via NHLNumbers.com

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