Salary Cap to Drop

http://www.nj.com/devils/index.ssf/2009/05/nhl_general_managers_preparing.html

It appears as though the cap will be flat, or it will drop by around 2.5 million, depending on what the NHLPA does.

Interesting news indeed...thanks Denny for posting this!

Very interesting.

Ottawa has $50.545M committed for next year without Comrie, Neil, Bell, or Elliott. The year after, it drops to $38.5M.

It isn't inconceivable that Murray is hoping for the NHLPA to choose not to invoke the inflator clause, as he may be able to squeak through this year in decent shape, and then be in a position to take advantage of teams in the year or two ahead.

In any case, this certainly reduces the number of teams who will be able to bid on the UFAs available, and perhaps increases the value of some of the excess mid-range defensemen that Ottawa has suddenly accumulated.

For everyone's information, the full text of the article from the Newark Star Ledger. Thanks again to Denny for posting this thread.

NHL general managers preparing for decrease in salary cap as free agency approaches

On the topic of free agents, Devils GM Lou Lamoriello says: 'Players are willing in a lot of cases to take less to stay, but it's a question of how much less.'

Rich Chere/The Star-Ledger, Saturday May 23, 2009

NHL general managers are preparing for a hit that could be every bit as painful as anything former Devils captain Scott Stevens delivered during his Hall of Fame career.

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."

That has GMs very worried about how much they should pay to keep their own players and what would be prudent in signing unrestricted free agents.

"It will affect everybody's philosophy and everyone's decisions," Devils general manager Lou Lamoriello predicted. "Because, if you're signing any long-term contracts of two years or more, you don't know what potentially can happen and how far down the cap will or can go."

Some pessimists have suggested it could drop as low as $48 million for 2010-11.

In simple terms, the economic downturn is catching up to the NHL. And it very well could get worse before the 2010-11 season.

"The problem with the salary cap is it backdates reality by as much as 12 months," Toronto Maple Leafs GM Brian Burke explained. "It doesn't reflect current economic conditions. So, given that our selling season concludes by about Labor Day, most of the NHL's money was in the till by Labor Day. That's all your season-ticket money, sponsorship money, suites, big ticket stuff.

"We had collected most of our revenues before the hard news hit. So this year's revenues won't reflect the changing conditions and therefore the cap won't reflect them."

Some GMs, like Lamoriello, and many player agents choose to be optimistic.

"I think the cap might go down maybe a million dollars or thereabouts," said agent Don Meehan, who represents Devils unrestricted free agent Johnny Oduya. "I don't think it will have a significant effect. I think next year is the year in question. Most teams, agents and players will be concerned where the cap is at in a year's time."

Of course, because of the fears for 2010-11, GMs are likely to be more cautious this summer.

"It could cripple you," Burke said. "Obviously, the best for all of us is if it doesn't go down, because that means the industry is stable. But if it does go down, part of our job as managers is we have to be prepared for that. So we are taking a real hard look at anything we do that impacts on the 2010-11 season.

"I'll be shocked if it's not a $2 million decrease this year. But I think all of us are alarmed about what it's going to be for the 2010-11 season because that will reflect what has happened. That will be a more accurate indicator of the times we are in."

Among Lamoriello's own tough decisions: How high is he willing to go to keep Oduya and, if Brian Gionta comes back, will it have to be for significantly less than his current $4 million salary?

"It's always going to be difficult, depending on what the market value is," Lamoriello said. "I've always respected this with free agents when they get to that point. If there is someone willing to give them money you can't afford, you have to respect that.

"Yes, players are willing in a lot of cases to take less to stay, but it's a question of how much less. In our case, we feel very strongly about the players we have. I don't think this team needs any major overhaul. I just feel you might not be able to afford them. Who knows what other people can and cannot afford? How much can anybody afford?"

The potential cap decrease could take some teams out of the running for unrestricted free agent's like Jay Bouwmeester or Mattias Ohlund.

And making trades has become more difficult because of the salaries involved.

"Once you make decisions, you have to live with them," Lamoriello said. "You can't make lateral transactions the way you used to make them to maybe improve yourself in one area and help somebody in another area. It's extremely difficult because of the cap. A little variance of money makes it impossible to do. The money has to be totally equal. It has nothing to do with the value of the player."

In the opinion of some, the cap has had a major impact on parity, and that may be hurting the game.

"I think it changes the game big time," suggested former NHL center and current radio show host Jim Dowd. "My problem is you're not going to have great teams anymore. Every team will be just okay. Everyone will be the same.

"Brian Burke got Scott Niedermayer and Chris Pronger when he was in Anaheim. That's not going to happen anymore. There won't be any underdogs. The best thing about baseball is that everybody still hates the Yankees. Who in hockey is there to hate anymore? That's gone."

Some have suggested teams like Montreal, Detroit and Philadelphia could be in for tougher times over the next few seasons. But a significant decrease in the salary cap will hit everyone hard.

"I can't speak for the rest of the league. I know for the Toronto Maple Leafs, long-term deals make me nervous and anything that impacts big dough on the '10-11 season makes me nervous," Burke said. "The Toronto Maple Leafs intend to be careful with salaries and term."

If players take less money, it will likely mean shorter deals, cause they'll want to look to get raises once the economy stabilizes. Not implausible to imagine Bouwmeester, Hossa, Gaborik, etc sign 1-3 year deals, at 5-7 million/yr.

"The Toronto Maple Leafs intend to be careful with salaries and term."

Does that mean that previously, he hadn't been careful?

I wonder if "cripples" the GMs as much as people think - those that have always been truly careful in drafting, signing, and retaining key players will still act that way. Detroit comes to mind as a perfect example.

It's those that haven't been (cough, cough, ... Rangers ... cough, cough) who might get into trouble.

Cough cough:
Flyers
Avalanche
Bruins
Calgary

Poor Avalanche :^^^^: . Can you imagine having 11.5 million invested in Hannan, Salei and Foote. Barf. How about over 2 million in Tyler Arnason? 6.2 for Smyth? Good luck not sucking for the next few years.

504Heater wrote:Poor Avalanche :^^^^: . Can you imagine having 11.5 million invested in Hannan, Salei and Foote. Barf. How about over 2 million in Tyler Arnason? 6.2 for Smyth? Good luck not sucking for the next few years.

Foote could be easily traded, Hannan could maybe be traded, and Smyth is a long shot, but not impossible.

The others? say hello to my friends in Lake Erie for me

The Guy With The Mustache wrote:
Foote could be easily traded, Hannan could maybe be traded, and Smyth is a long shot, but not impossible.

The others? say hello to my friends in Lake Erie for me

The problem with Hannan, Smyth and Foote are that they all have NTC (NMC for Hannan).

Arnason will be bought out I'm sure. Useless...Salei might be a guy they can move though, he's okay and his salary isn't catastophic.

Still...bad times. No goalie either.

504Heater wrote:Poor Avalanche :^^^^: . Can you imagine having 11.5 million invested in Hannan, Salei and Foote. Barf. How about over 2 million in Tyler Arnason? 6.2 for Smyth? Good luck not sucking for the next few years.

I think having Hall, Stastny and Duchene down the middle would help them get over it.

Player-wise, yes it will help. But they still have to eat the costs of those other salaries if they can't dump them.

Which brings up a question - is it possible that a team could be in a position where they can't sign, or at least, can't play their highly touted draft pick because it would put them over the cap? (because I thought that someone wrote that bonuses, etc still count - so early picks are expensive propositions).

Acrobat wrote:Player-wise, yes it will help. But they still have to eat the costs of those other salaries if they can't dump them.

Which brings up a question - is it possible that a team could be in a position where they can't sign, or at least, can't play their highly touted draft pick because it would put them over the cap? (because I thought that someone wrote that bonuses, etc still count - so early picks are expensive propositions).

As far as I know the bonus issue arose last season because we didn't know if the CBA would continue as is until the NHLPA approved it, meaning that they had to count bonuses on the assumption that we would need a new CBA.

I'm pretty sure now that the CBA will continue for a couple more years (?) that teams have the option to defer bonus money from one season to the next so, bonuses don't have to factor in.

Cap'n Clutch wrote:

Acrobat wrote:Player-wise, yes it will help. But they still have to eat the costs of those other salaries if they can't dump them.

Which brings up a question - is it possible that a team could be in a position where they can't sign, or at least, can't play their highly touted draft pick because it would put them over the cap? (because I thought that someone wrote that bonuses, etc still count - so early picks are expensive propositions).

As far as I know the bonus issue arose last season because we didn't know if the CBA would continue as is until the NHLPA approved it, meaning that they had to count bonuses on the assumption that we would need a new CBA.

I'm pretty sure now that the CBA will continue for a couple more years (?) that teams have the option to defer bonus money from one season to the next so, bonuses don't have to factor in.

Oh.

In that case, I stand corrected. (Well, sit actually, as I'm at the computer, but you get the idea...)

But even then, with the cap dropping, and teams already tight up against the current cap, doesn't the possibility exist?

Cap'n Clutch wrote:

Acrobat wrote:Player-wise, yes it will help. But they still have to eat the costs of those other salaries if they can't dump them.

Which brings up a question - is it possible that a team could be in a position where they can't sign, or at least, can't play their highly touted draft pick because it would put them over the cap? (because I thought that someone wrote that bonuses, etc still count - so early picks are expensive propositions).

As far as I know the bonus issue arose last season because we didn't know if the CBA would continue as is until the NHLPA approved it, meaning that they had to count bonuses on the assumption that we would need a new CBA.

I'm pretty sure now that the CBA will continue for a couple more years (?) that teams have the option to defer bonus money from one season to the next so, bonuses don't have to factor in.

I'm pretty sure that all non-performance-based bonuses (signing, etc.) factor into the cap, this year, last year, whatever.

All entry-level deals cap out at $850,000 in salary. The reason guys like Toews, Kane, and Stamkos are getting $3+ mil / yr on entry-level deals are those tricky signing bonuses. Those absolutely count against the cap, and their cap hit is calculated precisely in the same way you would do it for any player (i.e., the total salary amount of the contract divided by the years in the contract). There are no loopholes here.

I'm not sure about performance bonuses, however, which are a different beast. I'm pretty sure that this was the "x" factor this last year, before the extension of the current CBA. These usually apply to the Gary Roberts and Dominik Haseks of the world (i.e., older, injury-prone players).

Bottom line, great young players are not going to be cheap, even on their entry-level deals. I'm guessing Karlsson got a nice signing bonus -- unless he's smart, that is, and wants to get into the NHL now. I'd love to know his cap hit on his new deal so we can get a sense of whether or not he might actually be able to play for us this year.