Revenues are exploding in the NHL and player salaries are poised to shoot drastically higher.
The soon-to-be-signed Dion Phaneuf contract, reportedly worth $49 million over seven years, hammers home the reality of the NHL’s new economics. Although Phaneuf is somewhere around the 15th-20th best defenceman in the league, his cap hit will be tied for the fourth highest among blueliners.
Big money deals are no longer reserved for the truly elite.
The major influx of money to team coffers means fans need to adjust their expectations of what exactly constitutes market value. While $7 million a season may have once locked up an elite No. 1 defenceman, teams will now have to spend the same amount for an average No. 1 defenceman. And teams are entering an era where $3 million or more per player may be required to fill out the bottom of a roster.
The cap ceiling is projected to rise to $71.1 million next season, up from the current limit of $64.3 million. Considering the NHL won’t start collecting revenue from the massive $5.2 billion TV deal struck with Rogers until next season, the cap will rise even higher in 2015-16.
Teams now have way more money to spend on players than ever before. The league has come a long way since the initial cap limit was a relatively paltry $39 million. Under that limit, Phaneuf’s $7 million cap hit, which will take up 9.84% of next year’s cap, would be equal to a $3.84 million deal.
WATCH: Maple Leafs sign Dion Phaneuf to seven-year contract extension
Going forward cap hits will also seem much larger than in previous years because teams can no longer circumvent the cap by adding on bogus years at the end of deals to drop the cap hit. Those cap-circumventing deals typically saved teams about $1.75 million in cap space a season. Cap hits now reflect the true value of players’ contracts.
We are soon approaching a day when the top free agent deals easily exceed the average annual value of those earned by Sidney Crosby, Evgeni Malkin, and Alex Ovechkin.
If, say, Jonathan Toews was to hit unrestricted free agency in 2015, he could negotiate a contract worth $10 million a season based on the deals free agent centres have received in years past. Or if reigning Norris Trophy winner PK Subban takes a bridge deal as his next contract to take him to unrestricted free agency in 2016, then he could probably receive close to $11 million a year if the cap exceeds $80 million, which isn’t an outlandish estimate.
What this means is that teams with young star talent should try to lock in their players to lengthy deals now before the price of doing business goes up. Because the price of players isn’t going anywhere but up, way up.
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