blank'/> THE PUCK REPORT: Rethinking NHL Player Salary Structure

Friday, July 3, 2009

Rethinking NHL Player Salary Structure

As the NHL braces for a future of economic uncertainty punctuated by failing franchises, GMs and player agents continue to bind their clients to onerous long-term fixed-dollar arrangements. Now partnered through the CBA's tying of team payrolls to league revenues, the NHL and NHLPA need a more imaginative mechanism to reward players and insulate owners as revenues expand and contract accordingly.

The solution lies in revising the standard player contract to state salaries beyond the present year as a percentage of the team cap limit rather than sums certain. For example, if a player signs a 5 year deal for $25m when the team cap limit is $50m the contract would be expressed as a '50% of current cap' contract spread over 5 years. The parties could then structure the percentage payout as they see fit (e.g. 15%-12%-10%-8%-5%, 10%-10%-10%-10%-10%, 6%-8%-10%-12%-14%) provided the total does not exceed the bargained for 50% over 5 years and the terms fall within the prescribed league minimum and maximum salary guidelines. Although the player's pay would likely vary from the contemplated $25m (unless, of course, the cap remained fixed for the 5 year term), their percentage of the signing-year salary cap would be constant.

The proposed 'percentage of current cap' contract serves to strengthen the existing owner/player partnership by building equity and elasticity into player contracts. Undoubtedly players will pine for fixed dollars in downturns and owners will miss pocketing profits when revenues rise. But the arrangement offers a sustainable financial future for all concerned, protecting against economic fluctuations and from reckless team representatives committing more than 100% of the salary cap pie.

Reluctant as they may be, further embracing and bolstering their inevitable association is the best course for fiscal health moving forward.

Comprehensive current and forward-looking team and individual player salary information may be found here. Present year only data is available from the NHLPA here. Historical team and player salary information is available at the USA Today salaries databases here.

* See also NHL Highest Paid Players By Year.
* See also NHL Minimum Wage & Maximum Wage By Year.
* See also NHL Highest Player Salary & Cap Hit By Position.