Falling Cap Solution

Saturday, March 21, 2009

...NHL GMs in a jam of falling cap...

he NHL works under a cap system--all teams are limited in the total amount they can pay their players. The cap number is based on league revenues which come from three sources: gate receipts, media rights and licensing. With the downturn in the economy, the revenues for the 2009-10 season will surely fall and with it the cap number. It may even fall in the year after that.

Current player contracts were signed with the notion of an ever increasing cap number. It would be possible therefore for a team to have a roster in place that is at or under the cap for this year, but be over next year.

Then there is the issue of signing free agents in the summer. Teams usually spend big dollars on free agents. Teams could be a position where they sign a player or two and are left with no cap room.

The solution? Sign the free agents to a contract where the player gets a percentage of the cap instead of a flat amount. If the cap goes down, the salary goes down and the team is protected. In fact, all player contracts would be a percentage of the cap.

Why is no one talking about this approach? It makes sense to me.

Posted 2009/03/21 at 08h05ET in Hockey.

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