The NHL and NHL Players Association announced this weekend the salary cap’s upper limit would be rising from this past season’s $83.5 million to $88 million in 2024-25. That $4.5-million increase is about five percent of the cap opening up, but really, by the time teams are done handing out speculative contracts to 24-and-25-year-old RFAs and trying to keep a productive veteran or two to stick around, that $4.5 million raise will vanish very quickly for most organizations. It’s basically the cost of inflation, and at a time when franchise values are skyrocketing, it seems less-than-fair that from the time the cap was first implemented in 2005-06, the upper ceiling has only risen by $49 million in 18 years.
The NHL has announced an $88M salary cap for the 2024-2025 season pic.twitter.com/ycvHLdHWhL
— B/R Open Ice (@BR_OpenIce) June 8, 2024
That said, the rising cap ceiling does take off pressure on some of the league’s highest-spending teams – the Toronto Maple Leafs, the Vegas Golden Knights, the Minnesota Wild, the Tampa Bay Lightning, the New York Islanders and Rangers, and the two Cup finalists this year, the Edmonton Oilers and Florida Panthers – and every additional penny they get under a rising cap is a huge relief for their chances at staying competitive year-in and year-out.
The Leafs need the ceiling to go as high as possible to keep their “Core Four” together. The Golden Knights always use every penny to push the envelope. The Rangers and Islanders are under constant pressure to spend whatever they have. The Bolts, Oilers and Panthers are built to win now. The Wild are trying to get back into the playoffs There are different reasons for each team’s cap desperation, but that’s the reality for at least one-quarter of the league’s 32 teams.
This brings us to the need for notable changes in the collective bargaining agreement when it opens up for renegotiation in 2026. And here’s an idea we’ve discussed before, but it bears repeating: the time has come for a luxury tax system. Imagine what your favorite team could do next season with, say, a $92-93-million cap ceiling. Suddenly, there would be enough cap space for teams to retain the players they’ve drafted and developed, rather than watching them walk away for no asset in return.
More teams would have the ability to engage in bidding wars for free agents. The league would get even more competitive – and bear in mind, the luxury tax doesn’t require all teams to spend more money; it’s there for owners who get great financial support from their fans, and/or who are personally motivated to spend as much as possible to create a Cup-winning squad. Nobody is forcing any owner to spend to the limits of the cap, but those who do want to push the monetary line in the sand would get a fair opportunity to do so.
That would be a more just system than this current one, in which revenue-sharing props up struggling teams at the expense of the most successful teams. And that brings us to New York Post writer Larry Brooks’ bang-on column about the need to address the income tax discrepancy that ostensibly gives teams in no-or-low-tax states like Dallas and Florida a clear advantage in recruiting players.
We’ve said the same thing for years. If the cap is truly supposed to be about equity, it is no longer justifiable for the league to ignore this issue. There ought to be a higher cap for Canadian teams who labor under the weight of the Canadian dollar. There ought to be an evening-out process for the cap ceiling when it comes to players and their tax burden. A dollar spent in Calgary or Winnipeg should be equal to a dollar spent in Dallas or Tampa Bay. Of course, these changes wouldn’t mean anything if a team’s mismanagement of their talent base leads to disaster. There’s a long history of teams paying big dollars and falling flat on their face. There are no guarantees to any of this.
A $3 million NHL player pays nearly $500k more in income taxes in Toronto than they do in Florida.
Is it time to adjust the hard salary cap to either allow for a luxury tax or add an offset for higher-taxed markets?https://t.co/85Y70EA1bDhttps://t.co/85Y70EA1bD— David Alter (@dalter) June 2, 2024
But there’s no question the NHLPA should be lobbying for a luxury tax in the next labor deal. A relaxation of the brakes the cap puts on teams would make for more drama and intrigue than the current system provides. A chance to spend a few million dollars more – and what is that, these days? The cost of a low-offense utility player in Major League Baseball? The price of a nondescript veteran in the NBA? – would do wonders to increase interest and attention in the NHL’s entertainment product. And like most entertainment products, it should leave fans wanting more.
They should get more. A $4.5 million increase in the pool of money available to players is better than no increase at all, but considering how much the game has grown – mostly, to the benefit of the team owners – it feels like the days of crying poor are long over. A luxury tax and an income tax equalization process are not ridiculous asks for the NHLPA in the next labor negotiation. And owners are surely able to afford the benefit of spending a relatively small amount of money to make everyone’s boat rise with the tide. The hockey world will have to wait until 2026 to get that opportunity, but by then it will be all the more apparent that the current cap system needs significant tweaks. And $4.5 million more isn’t good enough.
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News Summary:
- Is a Luxury Tax System the Answer to the NHL's Cap Problems?
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