Saturday, August 13, 2005

Another Rollback on the Horizon

I was listening to Canucks Lunch on MOJO 730 yesterday. An interesting topic came up regarding team-by-team salaries and how most teams, when including their qualifying offers, have already spent $30 million in salaries. (I called in and actually got through... haha!)

Anyway, the salary cap is based on 54% of an optimistic $1.7 billion in league revenues - or an average of $30 million for each of the 30 teams. This of course is the median point, after which the league and the NHLPA then also negotiated a salary range of $17.5 million for this season... which is how they came up with a salary floor of $21.5 million and a salary cap of $39 million.

If most teams are already above the $30 million median, then it is easy to assume that the average team salary will be over the average salary that the league and the NHLPA set for this season. In fact, if current trends continue the average team salary this season may be as much as $33-34 million - or 60% of league revenues. And this is based on the optimistic $1.7 billion in league revenues. If league revenues decline to even $100K to $1.6 billion, players salaries will then equal 64%; a $200K decline to $1.5 billion and players salaries will equal 68%.

At $1.6 billion, players will need to pay back approximately $156 million from the escrow account to get to the magic 54% number. Because the escrow will be applied to each player proportionate to their own salary and their team's total salaries, for some players, this would mean giving up another 15% of their salary towards escrow. At $1.5 billion, the escrow increases to $210 million or 20% of some players' salary towards escrow.

I wonder if the NHLPA saw this second "rollback" coming?
posted by J.J. Guerrero, 3:16 PM