• NHL Commissioner Ernie Eves

    by Tyler Dellow • May 24, 2009 • Uncategorized • 7 Comments

    Gary Bettman, March 2, 2009:

    This will be our fourth consecutive year of record revenue growth and, because our attendance historically increases month by month, 2008-09 also likely will be our fourth consecutive season of record attendance.

    There was a story that appeared in the Globe shortly after that quote that I picked up on in which David Shoalts estimated that the NHLPA would be paying back 13% of their salaries to the NHL this year. I ran the numbers and figured that Bettman’s comments didn’t make any sense – revenues couldn’t be that high if the players were going to be paying back 13% of their salaries. Bill Daly appears to have confirmed this in the New Jersey Star Ledger yesterday:

    As they compile their wish lists for the start of free agency beginning July 1, GMs will likely be facing the first decrease in the salary cap since it was instituted for the 2005-06 season.

    The cap could drop by as much as $2.5 million for the 2009-10 season from its current $56.7 million figure, according to NHL deputy commissioner Bill Daly. Although Daly couldn’t say, it is not inconceivable that the figure could fall to $50 million for the 2010-11 season.

    “At this point, we don’t really have a good estimate of where the cap will be,” Daly wrote in an e-mail to The Star-Ledger. “If the NHLPA wants a 5 percent inflator, and we agree, the cap should be relatively ‘flat.’ If there is no inflator applied, the cap will be down $2-$2.5 million.”

    People who follow this stuff more closely than me were saying that the CDN dollar didn’t make a big impact either way. If it didn’t, then I’m a little curious as to how the league went from record revenue growth in March to what seems to have become a drop in revenue of more than $100MM by May. For what it’s worth, my guess is that the NHLPA decides to go with the 5% escalator and that the salary cap is flat for next year.

    As a complete aside, I’m really looking forward to see what this does to the Chicago Blackhawks. Their strength this year really seems to have been in their goaltending and the fact that they had two lines up front that could get it done offensively. With Martin Havlat and Nikolai Khabibulin both needing new contracts and the Hawks’ cap problems this year, I could easily a see a situation in which one of those areas is less of a strength next year. Neither Patrick Kane or Jonathan Toews are yet dominant ES players and it would be up to them, plus whoever the Hawks replaced Havlat with to pick up the slack. In the salary cap NHL, and particularly with a declining cap, the force pulling teams towards the middle is ruthless.

    From an Oilers perspective, I sure hope that the PA props up the salary cap. They’re at about $47MM for 18 guys, with no starting goaltender and no significant money other than Fernando Pisani’s coming off the cap for 2010-11, which is when fiscal Armageddon is supposed to really hit. As far as next year goes, the entire season probably rests on three things: a) who the starting goalie is and whether he’s at least at the level Roloson played at this year, b) whether some of Gagner, Cogliano and Nilsson can make the leap to being ES players and c) whether the new coach can figure out how to fix the penalty kill.

    Steve Tambellini has no room to do anything, unless Darryl Katz is willing to eat some contracts to create some breathing space and Katz is comfortable burying some guys like Pisani, Moreau, Staios and/or Penner in the AHL. As much as I wish it was different, I’m not overly optimistic about the chances of the 2009-10 Oilers at this point in time.

    Even less tangentially related to this topic: Steve Mason posted a .939 save percentage through his first 23 games and .899 thereafter. I know he had mononucleiosis and such but that number should concern Scott Howson and Ken Hitchcock. I wonder what kind of odds I could get on “Steve Mason plays at least 10 games in the AHL in 2009-10″.

    OK, there’s really no theme to any of this now: Sorry to see that Chuck Fletcher got the job in Minnesota – I was really pulling for Pierre McGuire or Doug MacLean. One of my great regrets with this site is that I never published my post mocking Pierre’s 2008 trade deadline freakout, which related to Pittsburgh trading for Marian Hossa. McGuire couldn’t believe that the Penguins were foregoing the joys of Colby Armstrong and Angelo Esposito and went absolutely nuts, comparing what Pittsburgh was doing to the Tampa Bay Big Three of Vincent Lecavalier, Martin St. Louis and Brad Richards. That never really made sense to me, as both Malkin and Crosby are, in my opinion, better than any of those guys. With the Pens about to return to the Stanley Cup finals, it’d be interesting to hear McGuire explain how he thinks that this is happening.

    Update: Looking at my site history for tonight, I see I’m not the only guy thinking about this – someone ended up here from this Speeds post at Vic Ferrari’s site, which was talking about the same trade.

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    7 Responses to NHL Commissioner Ernie Eves

    1. Gerald
      May 24, 2009 at

      It seems pretty simple, actually.

      Last year, the cap was set with a built-in escalator of 5%. What that means is that it assumes that revenue will increase by 5%. If it does not grow by that prescribed amount, then the cap was higher than it should have been at that level of revenue.

      If you then forego the escalator next year, you are taking that 5% out of the equation. The cap goes down accordingly.

      A simple example:

      Year 1: Assume your revenues for a given year are $100.

      Year 2: In determining your cap for next year, you assume revenue growth of 5%. accordingly, your salary cap is based on revenues of $105.

      However, let’s say that, instead of going to $105 as planned, your revenues for year 2 are only $101 (still more than year 1, but not as much as planned).

      Year 3: So, for year 3, you look at the economic landscape and say “well, we are not going to get 5% growth in this market; we thought so in year 2, and look where it got us”. Accordingly, you set your salary cap based on the $101 in revenue, which is lower.

      I hope that clarifies matters.

    2. speeds
      May 24, 2009 at

      Unbelievable how badly typed that article was, I should go back and correct it.

      I think that trade looked like a good bet at the time, and worked out exceptionally well. The Oilers trade for Roloson the year before worked out just as well (maybe better?), but I don’t think it had the same positive expectation at the time of the trade as did the PIT trade.

      Even if both Dupuis and Hossa left via UFA (Dupuis stayed with his 3 year, 1.4 mil per cap hit deal), they didn’t give up a ton to gain as many home dates as they did. Whatever savings they gave up on Christensen and Armstrong (in terms of their salaries vs. the UFA replacement cost) they more than earned via extra home dates and (probably) thru increased ticket prices going forward. The season ticket price gains may be hurt by the recession, but having gone to the final last year and very likely this year should help retain their revenues as much as a hockey team can in Pittsburgh at the moment. Can’t forget the prospect Esposito and the 1st, but the huge run made that 1st a late one (#29 OV) and Esposito is not without a wart or two.

    3. May 24, 2009 at

      To quote Aaron Portzline of the Columbus Dispatch:

      Former Blue Jackets president and general manager Doug MacLean was never a candidate to replace Doug Risebrough as GM of the Minnesota Wild. He never was granted an interview, sources tell The Dispatch. Why? Wild owner Craig Leopold owned the Nashville Predators from 1998 to 2006, so he has full knowledge of MacLean’s days in Columbus.

    4. Brian
      May 25, 2009 at

      Gerald is correct. Daly’s comments about a drop in the cap of $2-2.5M would mean that revenues this year would be flat. In essence he has removes the portion associated with the escalator.

      Here is a rough estimate of how the drop in the $CDN has impacted the league. From rough estimates of the portion of league revenues realized in $CDN one can deduce that each penny the $CDN drops this year costs the league about $8.5M. The July 1- June 30 average of the $CDN last year was just under $.99 US. At this point this year it is at about $.854 US. This is a drop of about 13.5 cents which gives a revenue hit of somewhere around $115M US. This should be accurate to within about $10M either way.

    5. David Staples
      May 25, 2009 at

      Excellent clarification Gerald on what is meant by the escalator or “the inflator,” as Daly put it, a term I had never heard before.

      For a moment there I thought I was in the middle of a Seinfeld episode:

      Daly: “We have got certainty in the NHL, so the cap must drop as revenues drop, except, of course, for The Inflator!”

      Bettman and Paul Kelly: “Ah, The Inflator!”

      NHL Fans and poor NHL teams: “The Inflator?”

      Rich NHL teams and NHLPA: “Yes, The Inflator!”

      Poor NHL teams: “Please, not The Inflator! We’re dying here.”

    6. David Staples
      May 25, 2009 at

      And while Minny let us down, the Avs have some very good news, that the team is offering the GM job to Patrick Roy.

      A most excellent idea.

    7. Vic Ferrari
      May 26, 2009 at

      “my guess is that the NHLPA decides to go with the 5% escalator”

      Why do you think this, MC79? I have no idea, myself. If I was a player and had a couple of years left on my deal I’d be hoping for a low escalator. If I was a player and was heading into free agency I’d be hoping for a high escalator. But for the NHLPA as a whole, I’m not so sure what is best. Or for NHL owners as a whole, for that matter.

      And is this really just the NHLPA’s call? At last reading, probably two years ago, I thought that the CBA wording on this was ambiguous and/or incomprehensive. I also didn’t see any evidence to suggest that 5% was a default figure (beyond the first season or two, I think leaguewide HRR was a trigger to eliminate this 5% default position, iirc).

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