Philly Front Office

The NHL and the Player’s Union announced today that they expect the salary cap to go up even more than originally anticipated and by a significant amount too. After remaining stagnant for a few years, the cap will go up by about 30% in the next 3 years:

• 2024-25: $88m
• 2025-26: $95.5m
• 2026-27: $104m
• 2027-28: $113.5m

After losing the entire 2004-5 season and then half the 2012-13 season to lockouts, the NHL seems to have scared itself straight, enjoying labor peace since then. The 04-05 season significantly reformed the leagues finances but at the cost of a stable TV contract. The NHL could only manage a revenue sharing plan with NBC that included no up-front money. This arrangement is basically unheard of today, but the NHL was desperate. A few relatively calm years later, the NHL and NBC re-upped their arrangement for around $250m per year over 10 years. In 2021, the NHL announced that they had signed new broadcast deals worth around $650m per year over 7 years from ESPN and TNT.

Wait, if they signed a new deal in 2021, how come the salary cap is going up now?

The labor agreements signed by the league and the players calls for 50/50 sharing of revenue. However, during the pandemic the players did not take a reduction in pay despite lower revenue from not selling any tickets. This created a debt to the owners. Instead of a huge cap spike in 2021, everyone agreed that the money owed would be paid out over time from the new revenue. After staying stagnant for years, the cap will now be able to breathe.

What happens next?

Between 2018-19 and 2023-24 the cap only went from $79.5m to $83.5m. Now it will go up $30m in 4 years. If the NBA can be used as a forecaster, that jump is going to have a two-fold effect.

First, teams that haven’t had cap room in a while (cough…the Flyers…cough) are finally going to be able to spend. The $7.5m jump in cap space is the most the NHL has ever had from season to season and that record is just going to keep getting broken. This jump is enough to add one significant player in itself. Remember when the NBA had its salary cap jump and, all of a sudden, the Steph Curry Warriors could sign Kevin Durant? That’s on the table here.

As for the Flyers, after the recent Joel Farabee trade, they should have roughly $25.5m to spend next season and significantly more than that in the future. Unfortunately, most teams are going to have extra cap space too, but it helps not to be up against the wall.

Second, NHL players are about to get seriously paid. Anyone who signed an extension early has to be kicking themselves for getting shut out of this impending cap explosion. Medium level guys are about to get paid more than their star teammates. Stars are about to go…well to the stars.

Austin Matthews is currently the highest paid player in the league at an AAV of $13.25m. He just signed his deal though. Nathan McKinnon is just below that after signing an 8-year contract for $100m 2 years ago. The real winner here is Connor McDavid. He signed his own 8 year, $100m contract 7 years ago. He gets to watch someone like Mikko Rantanen break the bank this off season before he gets to set a new record the year after. Realistically, he should be the first $20m man and probably more than that. The Flyers are going to have to sign Matvei Michkov by the end of this rise. That should be interesting.

Anything else you want to say?

Why yes, thank you for asking. Labor conversations in sports are not fun. Even someone like me who is interested in it HATES the idea of losing games and my favorite players fighting with my favorite teams. The Phillies took Bryce Harper off their website a few years ago. It was gross. Baseball is headed for ANOTHER labor fight in two years and seem destined to keep doing that every few years. The NBA is in trouble due to sky rocketing salary and tanking ratings. They are going to have a reckoning soon enough. The NFL players are terrified of the NFL owners to the point that they just keep saying yes to more games despite player safety supposedly being a concern for people. They make so much money that they don’t care right now, but the owners will overstep eventually and lock the players out. The NHL did something cool here. Despite their labor contract being up before the start of the 26-27 season, they announced this cap spike together. The sides are expected to basically renew their CBA for another term next year. This smooth renewal will take us to 15 years of labor stability in the NHL. That’s a nice relief.