How will it happen & what does it mean for the Toronto Maple Leafs?
In a memo released in September of this year, the Chief Operating Officer of the NHL notified all league employees of initiatives and staff changes to take effect during the 2013-2014 season. In the memo the league identified a plan to increase annual gross national revenue by $1 billion dollars by the end of three years, or in other words, in time for the 2016-2017 season. To put that type of increase in perspective, it had previously taken the league from 2005-06 to 2011-12 – or 6 years – to attain the same revenue growth. Forget linear growth, we’re talking exponential revenue growth here, folks.
Even with news breaking this afternoon of Ilya Kovalchuk’s new $60 million contract extension (potentially) with the New Jersey Devils, this 2010 free agency period has been one of the most uneventful and slow-developing offseasons in recent memory. The reason being? Despite a mediocre at best free agent group, there simply isn’t enough money to pay these guys what they’re probably worth. As one unnamed NHL General Manager put it last week: “The teams with cap don’t have cash and the teams with cash don’t have cap”. The Maple Leafs however, are fortunate enough to have both, and have the opportunity to exploit the market to their advantage.
Bad news. According to the fine folks over at CapGeek, the Chicago Blackhawks aren’t the only team facing cap penalties next season. Here are the basics: a team is allowed to surpass the official salary cap by a “bonus cushion” maxmium of 7.5% for performance bonuses, such as those written into virtually every rookie contract. However, this number is then deducted from your maximum salary cap allowance for the following season.
For example, since winning the Cup, the Blackhawks received plenty of media attention when it was pointed out that Toews’ bonus for the Conn Smythe, among others, would push them well over the cap limit. As a result, the Blackhawks will face a $4.157 million penalty for this upcoming season. The Maple Leafs meanwhile will also have $1.4 million deducted from their limit this coming season, thus setting an internal budget at $58 million rather than the league wide $59.4 million.
Maple Leafs’ GM Brian Burke, per the Toronto Star:
“We intend to be pushing the cap every year. We want to spend the money intelligently. We’re Big Blue, we’re going to spend to the cap.”
Now, your initial reaction to that is probably one of surprise, given Burke’s previous statements about a potential cap decline. Â Â Does that mean his statement today runs counter to the theory of a rebuilding effort?Â Â Â Â Not at all.
This proposed offer to purchase the struggling Phoenix Coyotes by Jim Balsillie may be a better possibility this time around. It may seem impossible to fathom another NHL club so close to its flagship franchise, the Leafs and the Buffalo Sabres, but it’s not jurisdiction that’s at the heart of the issue here.
It’s the salary cap, revenue and a return to the dead puck era.
When it comes to trade rumours, generally the first thing we look at is the salary cap, and how much cap space the teams in question have available.Â But how important is the cap, in order for potential trades to become reality?
Just six months ago many a grapevine was carrying rumor of NHL expansion while I lamented the integrity of a revenue bound salary cap. Even into the new season few had foreseen the sheer gravity of the global economic downturn and its impact on jobs, housing, businesses and every facet of life down to sport. Now as international markets stutter into a depression that many an analyst believe could change the face of modern capitalism forever, the NHL seems to remain steadfast in addressing itâ€™s minor successes as opposed to itâ€™s crippling and potentially devastating financial model.