Cap Vs. Economy

I've been watching and reading a bit from sports economists lately and they bring up some interesting points about the short term future of the NHL... and I've rasied a few questions myself to do with already set contracts...

With the rescent downturn in the economy sports are sure to be affected both on its fan spending be it tickets or merchandise, corperate support be it sponsorship or buying booths and government supports...

Talking to a few people that I know in economy world they wouldn't be surprised if the markets fall more and this lasts 2-5 years...

I bring this up only because the point is made that the slowdown will not affect the NHL this year all that much. As people close to the NHL point out, for the most part season seats are all ready bought and payed for, as are most yearly sponsorships, boxes and goverment influences... so for the most part the $$$ for the NHL is in... say 70% atleast... all thats left is playoffs and Retail...

It is expected NHL revenues will drop but not significatly, therefore the Escrow $$$ will probebly be used by the owners to claw the losses back from the players albeit a small amount...

All this means the Cap will fall... not significantly but 2-3 million next year...

Why I bring this up is the recent offseason trend of big long term contracts...

2-3 million fall means little next year... less fringe players will get increases in salery teams will cope... but it we look at the huge hit next year... the cap may fall 10-15 mill in the next 2 yrs... by comparison the NHL Cap this year is 50.3 mill, Ovechkin's contract is worth 9.538 mill till 2021... today thats 19% if the cap falls 5 mill its 21%, 10 mill 24% and 15 mill 27%... if it falls 15 mill the cap will be at 35.3... say thats 10/11... the Caps have Ovy at 9.538, Green at 5.25, Poti at 3.5, Nylander at 4.875, Clark at 2.633, Laich at 2.067 and Bradley at 1 all which = 28.863 mill already on the books... thats 7 players of 23 leaving you 6.437 mill to sign 16 players... (.402 per player)

now thats an extream example and there are a few things to consider... #1 do I think 15 mill will fall from the Cap? No but 10 is very real its rose that much in 3 years and the econmy has been just ok... #2 the CBA could get voted for a new contract by players after this year, if they decide to renegotiate then there will be new #s... if not then these #s are good till 10/11 as my number show... other factors jump in too...

Other teams to watch: Tampa (37.940/10 players), San Jose (29.900/7), Pittsburg (32.300/7), Phx (25.154/10), Philly (38.708/9), OTT (30.601/7), NYR (33.872/6), NJD (33.987/9), NSH (26.238/7), FLA (35.583/9), EDM (36.083/10), DET (28.967/9), DAL (23.075/5), CLB (25.281/9), CHI (25.498/6), CGY (35.845/9), CAR (28.046/9), BUF (32.018/7) & BOS (25.958/6)

Notice 19 of 30 teams I listed would have 60-96% of the salery eaten with less than 1/2 the team signed for the 10/11 season if they were were to fall to a 40.3 Mill Cap...

I only raise this as an interesting timbit for everyone to think about and if you have the interest to add on or adjust my understandings...

Food for thought.

We are already seeing signs of this.

Young players with rookie contracts have been sent to the minors b/c teams needed to clear cap space.

Moeller is on example I think.

You raise some great points. I too am very anxious to see how this recession affects the cap. IMO, given how GM's and Owners have been throwing 7+year contracts at players, they will not be able to lower the cap. Because of the problems you have brought up, I think the owners are collectively going to have to take the losses and maintain the cap as is, because the NHL would fall apart otherwise. if it were to drop, 1 contract would cripple a team. I like the good old days when the max was 7.8. To be honest, who really needs more then that?

I think the cap could fall $5 million next season and possibly more.

The reason? The Canadian dollar. A large portion of the revenue from the NHL comes from the 6 Canadian teams. The Canadian dollar was trading at par with the American dollar for most of last season. With the dollar now trading at only $0.85, the revenues from the 6 Canadians teams will look much smaller than they really are.

It will have a tremendous affect and its going to be funny watching teams try to weasel out of all those big contracts they've recently signed.

Another side affect of this is more middle level skill guys will go to Europe.

In the long run will this force teams to keep well below the salry cap and how will this affect arbitrations, what a mess all around.

Bring back the free market and let teams blow their brains out and the market will level things out, something like what baseball does where there is a limited revenue sharing scheme.

Please do not let baseball be an example of how you want the league to be run.

Is there really a better example of haves and have nots? Brutal.