Rising NHL revenue is good news for the cap-strapped savage
The Minnesota Wild are in a hellish salary cap situation for the next three seasons. By now, everyone understands that the Zach Parise and Ryan Suter buyouts were necessary to set the franchise on a promising new trajectory. It is also known and understood that regardless of buyouts, these contracts would eventually haunt the Wild. The unfortunate thing is that Minnesota has a few posts and tons of promise in this contention window. Still, they’re not going to compete with the same portfolio as every other team.
The pandemic’s disruption of the NHL couldn’t have come at a worse time for the Wild. I am not trying to be insensitive to the real implications and massive loss of life due to the virus. It’s just a reality when you look at the current situation in Minnesota. NHL revenue was relatively slow before the shutdown in March 2020. The pandemic has only exacerbated this problem. When the league returned, it forced a flat cap.
For the Wild, a fixed cap means that redemption penalties are not offset by an increasing cap.
The salary cap is tied to hockey-related income. To put it simply, all of the money raised through playing hockey, such as ticket sales, TV rights and sponsorship sales, goes into a big bucket. This bucket of money is then split 50-50 between owners and players. As income increases, so does the player’s share, in the form of salary cap increases.
A cap that doesn’t increase makes it harder to squeeze your best players into a single roster, especially since there seems to be another team that can pay them more if you’re not careful. Kevin Fiala is going to be a victim of the cap this summer. However, he could well be the first domino to fall if there is no relief soon.
Still, with the NHL posting record revenues this year, cap relief could come sooner than expected. Due in part to new television rights deals with ESPN and Turner Sports, an increase in sponsorships and gate receipts from a 32nd Seattle Kraken team, the money gets good and gets good fast.
Gary Bettman told the media in his annual state of the league press conference ahead of Game 1 of the Stanley Cup Finals, “Two, maybe three years is my projection [for paying off our debts].” Add to that the salary cap increasing by another million dollars for next season, and the NHL could soon find itself in a much more favorable state.
Even modest cap increases will help the Wild. They’ll be happy to take anything he can get. Does that mean Minnesota can fit Fiala and Matt Dumba into this team until the worst of these hellish years is over? No. Unfortunately, that will not be the case.
But for young players like Marco Rossi, Matt Boldy and Calen Addison, it’s huge. Entry-level contracts are loaded with performance bonuses. This money is added to the cap at the end of the season. If these bonuses cause the team to exceed the cap, the club is penalized with a lowered cap the following season.
It happened to the Washington Capitals last season. They lost almost $500,000 in purchasing power because Ilya Samsonov and Zdeno Chara hit their bonuses.
The Wild are already playing $12.75 million below the salary cap next season. This deficit reached nearly $15 million over the next two years. If the Wild can add some — any – room to help ease the pain of all bonuses, it can help them through it all.
Don’t get me wrong, the Wild need Boldy and Rossi to collect these bonuses. They need to rely on them to stay just as financially competitive during this tough time. If the Wild didn’t have a star in Kirill Kaprizov, maybe stepping back and handing the team over to young talent would be more acceptable. But no matter how much money has evaporated with Parise and Suter, Minnesota needs to stay competitive to keep Kaprizov here for the long haul.
This is the reality in which the Wild finds itself. Bill Guerin swears to “take care of it”. Positive news on the league’s revenue front, no matter how small, will be desperately needed for him to accomplish this mission.