The NHL Salary Cap

The 2017 – 18 season came to end recently, along with the joy and stress of watching and cheering our team, waiting to see who we would play next and hoping no one got hurt.  While we shared our days of pride and loss in the end, we knew at least we could relax and impatiently wait for next year.  

And then someone started talking about who would be back and who would be gone in the fall.  WHAT!  WAIT!  That wasn’t part of the deal!  We want ALL of our Golden Misfits back next year.  After all, they are our team, and they love it here as much as we love them.  And when you try to find out more, everyone is saying something different, and you can’t tell what is fact and what is opinion.  This is not good.  

It is safe to say the whole process is confusing, convoluted and impossible to predict.  So we need to sit back and wait and see.  But that doesn’t mean we can’t learn more about the process and understand what is happening to our team, as well as other teams.  Hopefully it takes away some of the stress!

So lets start with the Salary Cap.  This is key to a lot of the decisions that are made in the next few months.  

What is a Salary Cap:

The NHL salary cap is the total amount of money that National Hockey League (NHL) teams are allowed to pay their players, in total. It is a “hard” cap, meaning there are no exceptions.  Some sports such as baseball allow luxury taxes to go over the cap, hockey does not.  

The cap applies to players at the NHL level only.  For the most part, it does not include the players in the minor leagues.  There are some exceptions to that but they’re not critical to the general discussion. 

The actual amount of the cap varies each year, and is based on the league revenue from the previous season.  It is calculated as an actual percentage of the revenue.  There is the opportunity for the League and the NHLPA (National Hockey League Players Association), which is the governing union of the players, to request up to a 5% variance on the amount.  

The success of our Knights, increased interest in the playoffs, and general success of the NHL have helped raise the NHL revenues this year. This could cause the cap to go up more this year than it has in previous years.  Recently it has been going up approximately $3 million per year.

2018-2019 Cap:

The Salary Cap for the 2018 – 19 season will be established soon (last year it was set on June 18th).  It has been determined to be somewhere between $79.2 – $80 million; in general you will hear it will be set at $80 million.  This is up from $75 million for the 2017-18 year.  

Cap Floor:

Another interesting part of the NHL Salary Cap is that the teams are required to maintain a minimum amount in salaries, called the Cap Floor.  The minimum for the 2017-18 season was $55.4 million.  Even our Golden Knights had to get to the minimum amount, which is why George McPhee was willing to take some of those high salary players that were not playing due to injuries, or other reasons.  He definitely did, and by the end of the season we were at the cap max of $75 million.

Cap Space:

Although the Cap max was hit in 2017-18, it resets each season.  The Unrestricted Free Agents’ salaries come out, leaving our initial cap at this time is around $48.5 million.  Because of the players that we took in the draft who didn’t play, as well as our current Free Agents, we have one of the largest cap space amounts going in to the 2018-19 season of just over $31.5 million (based on the recommended $80 million).  

Why is this important to the Knights?:

Since the Knights have more money to work with, they’ll be able to sign great players from other teams without sacrificing the ones they already have. The majority of other teams have much less room in their 2018-19 caps.  Even with the projected increase, teams have players that need contracts negotiated based on Restricted Free Agents and Unrestricted Free Agents ( a LOT more to come on that in our next article!).  This means it is not easy for most teams to sign players that are requesting high dollar contracts.  They would need to trade away other highly paid players to make room for the new contracts.

Understanding the salary cap will leave you better equip to understand what happens next with the Restricted and Unrestricted Free Agents.  They all tie together and make the whole process a balancing act on how to make the team as strong as it can be.  

~By Ann Olson

This article is the first of a series that focuses on player trades in preparation for July.  On July 1st, teams will be able to start signing Free Agents. In our next article, Ann Olson will explain Restricted and Unrestricted Free Agents.  She will also talk about the current situation pertaining to the players on our team!

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