NHL Created New Cap Problems By Fixing Old Ones

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

During the course of this off-season, there has been a dramatic redistribution of talent in the National Hockey League. The Collective Bargaining Agreement signed last summer implemented a salary cap first and foremost, and with few exceptions, we’re seeing the competitive balance shift so that all but a handful of teams will be competitive in 2006–07.

Prior to the lockout that canceled the 2004–05 season, a few dominant teams consistently scooped up all the best available talent during the offseason and at the trade deadline. But now, each team can afford to hold on to at least a couple of All-Star caliber players, so the parity the league was striving for when negotiating the CBA now appears to be a reality.

However, there are some signs that all is not well with the new economic order, and the problems with the current system are almost identical to those that sent the league into the fiscal tailspin that precipitated the lockout.

Under the old CBA, NHL teams held unprecedented control over the rights of the players they drafted, locking them up from age 18 until age 31. And although many critics claimed that the Rangers’ annual free-agent shopping spree was to blame for the league’s financial ills, the truth was far different.

Yes, the Rangers overspent on pasttheir-prime free agents. But their spending never had any impact on the salaries of under-31 players.Instead, it was smallmarket teams like the Calgary Flames and Tampa Bay Lightning that would alter the pay scales for rising stars.

In the summer of 2002, the Flames rewarded 25-year-old Jarome Iginla with a two-year contract worth $13 million, significantly raising the bar for comparable forwards. The next summer, when the Lightning broke the bank for Brad Richards while the player held no leverage, it raised the cost of doing business for the Ottawa Senators (Martin Havlat) and the Minnesota Wild (Marion Gaborik).

Today, we’re seeing the same problems resurfacing, but with far different consequences.With the collective player payroll capped at 54% of league revenues, there is a fixed amount of capital for the NHLPA to share. And when one player is overcompensated, it consequently means that another player won’t be paid his due.

On Tuesday, the Buffalo Sabres made the decision to walk away from J.P. Dumont’s arbitrationawarded salary of $2.9 million, making the talented forward an unrestricted free agent. The Sabres’ maneuver is indicative of a growing trend in the NHL, where teams are suddenly a lot more willing to let young talent leave in order to maintain their budget. Committing nearly $3 million to Dumont would likely cause the Sabres to be unable to grant a long-term deal to a player more deserving.

Last season, Dumont scored only 40 points in 54 games, hardly setting the league ablaze. And although he was certainly an important component on the Eastern Conference finalists’ roster, he was by no means essential.

Yet all Dumont’s agent needed to do was to point out other players who averaged approximately .75 points/game (as Dumont did last year) and earned $3 million, and suddenly a justifiable case would exist for why he deserved a similar paycheck, regardless of how unjustifiable that other player’s compensation might be.

The problem is simply the method by which “comparables” are determined for the purpose of framing arbitration arguments. A few weeks ago, The New York Sun broke down the possible comparables for Scott Gomez when his arbitration hearing was approaching. We pointed out that Gomez could use Brad Richards’ $7.8 million/year deal as justification for why he deserved a dramatic increase in pay.

And though there probably isn’t a GM in the NHL who would trade Richards for Gomez straight-up, the two players’ statistical similarities were probably enough to convince the arbitrator that Gomez was worth $5 million for the coming season — this despite the fact that two other similarly comparable players (Patrick Marleau and Pavel Datsyuk) will earn substantially less.In the end, the $5 million Gomez was awarded wasn’t completely unreasonable, and so the Devils decided to accept the ruling.

By holding their ground with regard to Dumont, the Sabres actually did both the NHL and the NHLPA a great service. For if there are too many overpaid players amongst the union’s membership, dissension amongst the ranks would likely increase. But by walking away and making Dumont an unrestricted free agent, it means that the market — and not a flawed arbitration system — will ultimately determine the level of his compensation. In the end, Dumont will probably end up accepting less from another team than the Sabres would have given him in a pre-arbitration settlement.

Now, there is little reason to feel sympathy for Dumont here. He could have settled prior to arbitration. As a UFA at this late point in the off-season, he won’t be able to maximize his compensation for 2006–07. But he’ll be able to choose where he plays (virtually every team has at least the league minimum to offer), and a strong season in a good situation will put him in a great position to earn a big payday next summer.

For the Sabres, losing Dumont will hurt — from a hockey perspective — but it’s far from their biggest worry. In a summer during which no fewer than 12 players filed for salary arbitration, they went from being the model of fiscal restraint to having a payroll dangerously close to the salary cap. With over $37 million committed to 18 players, and with starting goaltender Ryan Miller and key defenseman Dmitri Kalinin still unsigned, the Sabres’ payroll in 2006-07 will be nearly $40 million, nearly 40% higher than it was last season. Considering this is a franchise that was saved from bankruptcy less than five years ago, it’s safe to say that this turn of events can hardly be considered good news, regardless of how competitive the team might be on the ice in the coming season.

Mr. Greenstein is the editor in chief of InsideHockey.com.

The New York Sun

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