Yesterday, I read a Twitter discussion between Lyle Richardson (Spector), Dirk Hoag (The Forechecker), James Mirtle, and Greg Wyshynski (Puck Daddy) regarding the current CBA and potential changes for the new CBA. Lyle opined that the salary cap has not helped the Nashville Predators. He expressed the opinion that they are the same today as they were in 2004, 2006 and 2007 due to the inability of the salary cap to help. Regardless of his opinion of the Predator’s financial situation, basing that opinion solely on the salary cap is a flawed premise.
Putting all the PR statements made by Gary Bettman aside, the salary cap (including aspects like the cap floor) was meant to ensure cost certainty (combined with escrow). That cost certainty was the single most important aspect of the CBA for the League and the owners. Beyond cost certainty in and of itself however, there’s nothing about the salary cap that’s designed to help small market franchises from a financial standpoint. Where it does help the small market franchise is on the ice. The aspect of both a cap floor and cap ceiling means every team in the league will have a roster that’s roughly within $16 million of every other team. Prior to the lockout, there were several teams that had a payroll more than $50 million higher than the Predators. It’s now easier for the Predators to both ice a competitive team and to keep most of the players that they want to keep.
Before continuing down the CBA path, I feel compelled to spend a few sentences explaining that last statement. In trying to prove their point that the cap/CBA doesn’t work, many try to point to the Nashville talent purge after the 2006 season that saw Hartnell, Timmonen, and Vokoun traded as well as little effort to re-sign Kariya and Forsberg. To point to that event in one’s list of “CBA failures” is being ignorant or forgetful of the situation in Nashville at best and intellectually dishonest at worst (on which I’m definitely not accusing Lyle to be very clear). In that offseason, Craig Leipold had decided to sell the team due to his inability to make money. As such, he ordered David Poile to cut salary to make the sale more palatable for a potential buyer. What most didn’t realize at the time was that much of Leipold’s troubles stemmed from his alienating the local corporate sector. After the sale to local ownership, that situation has been publicized. The local ownership group has done a great job of turning things around which has allowed Nashville to keep their core players (David Legwand, Martin Erat, Shea Weber, Ryan Suter, Pekka Rinne, etc.). Of course Nashville still has to have an internal budget, which leads us back to the aspect of the CBA that provides the most financial benefit to Nashville beyond cost certainty- revenue sharing.
While the salary cap, along with escrow, provided the cost certainty, it did nothing to help account for the revenue advantages one market has over another due to size, history, etc. Enter revenue sharing. Revenue sharing was essentially designed to increase the revenues of those disadvantaged clubs in order to allow a payroll near the midpoint of the salary cap. Why not the cap ceiling? The cost certainty percentage the CBA targets each season is actually represented by the midpoint of the salary cap. In other words, the goal of the CBA is for every team to spend exactly to the midpoint. If that were to happen, the players would receive all of their escrowed money back. On the other hand, if every team were to spend to the cap ceiling, the players would lose all of their escrowed money back to the league in order to bring overall payroll costs back into line. (Please note that this is very much a simplification of the CBA and ignores certain nuances like the 5% kicker voted on by the players in the past offseasons, among others.) I feel that this is especially important so I’ll reiterate that it is not a goal of the CBA that every team spends to the cap ceiling, otherwise revenue sharing would target the cap ceiling. As such, there’s nothing wrong with some teams having a budget somewhere south of the cap ceiling.
So what we have is a CBA that is designed to provide cost certainty in terms of overall payroll and provide revenue sharing to allow all teams to have a payroll between the cap floor and the midpoint. Those two factors combined produce the desired side effect of increasing the likelihood of parity in narrowing the range between the “haves” and “have nots”. It’s still up to the individual GM’s, coaches, and players to take advantage of that increased financial parity on the ice.
With that understanding in place, we can now answer Lyle’s question. Are the Nashville Predators better under this CBA than the prior CBA? The answer is an unequivocal yes. Not only was Nashville able to endure a hostile takeover attempt, they’ve been able to re-up their core players at market rate. Their budget has been within a couple of million of the midpoint (leaving necessary contingency room in the event of injuries or trade deadline activity) each season. While Nashville continues to rely on revenue sharing, which means they can’t cross the cap midpoint, that reliance is within the rules of the current CBA (which expects roughly ten teams to receive revenue sharing each season). Sure they haven’t advanced in the playoffs, but their odds to do so have increased (not to mention that they should have beaten Chicago last year, in my opinion). What hasn’t happened was Nashville losing most of their talent. It didn’t prevent Nashville from paying over $5 million to David Legwand and Martin Erat, $4 million or more to Jason Arnott, J.P. Dumont, and Shea Weber. Nor will it prevent them from paying $6 million to Erat in the 2011-12 season and about that amount to Weber or about that amount the following season to Ryan Suter (all numbers courtesy of CapGeek). Even so, spending to the max only brings you so far (as the Rangers have proved).
Is the CBA perfect? No. Can the CBA be improved? I believe so. With the expiration of this CBA coming soon, discussion of potential changes among fans has already started. What won’t happen, in my opinion, is any type of soft cap with a luxury tax. The problem with those options is that it destroys the cost certainty that was achieved in the last CBA. It makes no sense to give back the most important item for all the owners achieved in the last CBA.
Next time, I’ll look at some things I’d like to see to provide additional stability to the smaller markets and to the League.
I really enjoyed reading the discussion you guys had Lyle, Dirk, James and Greg. Thanks.
About the Author: Nashville Predators Blogger, Software Engineer (C#.NET), Novice Woodworker, Southern Cook, Husband, Father of Two. You may contact me at David.R.Singleton AT gmail.com.