Hope for significant increase to 2023 salary cap tempered at NHL BoG meeting

PALM BEACH, Fla.— Optimism that the salary cap could jump by over $4 million next season has cooled since NHL commissioner Gary Bettman first raised the possibility at the league’s board of governor meetings in New York back in October.

Following two days of meetings in Florida, which Bettman characterized as “very productive” on Tuesday, he walked back his statement from the Manhattan meetings that there was a “good probability” the players would be able to pay the remnants of their $1 billion-plus debt to the owners by season’s end in order to trigger a considerable increase in the cap.

“Based on the projections, there will still be an escrow at the end of the season,” Bettman said after Tuesday’s three-hour meeting at the Breakers Hotel. “And if that’s the case, we will move the cap up by a million dollars. If in fact we perform even better—and the budgeting projections that we have now are pretty robust, we’re anticipating having a very good season—but if we do even better by ballpark an additional $140 or $150 million, it’s conceivable the escrow will go away and then the cap will go up to $86 million, in the midrange of $86 million-plus. We’ll have to see.”

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The NHL and NHL Players’ Association signed a new collective bargaining agreement in 2020 and agreed—while league revenues were being severely impacted by the pandemic—to keep the cap at $81.5 million until hockey-related revenue spiked to over $3.3 billion the previous season.

This season is the first one that’s seen the cap go up by $1 million since that decision was made.

But any hope of the cap going up by much more next season is dependent on currency valuations and which teams make the playoffs, according to NHL deputy commissioner Bill Daly.

With a significant portion of the league’s revenue generated by the seven Canadian teams, the Canadian dollar decreasing by seven per cent since the start of 2022 has had its effect on hitting the HRR target that would see escrow eliminated by end of season. And barring long playoff runs for some of the NHL’s most lucrative franchises, it’s unrealistic the estimated $70-million gap that will remain can be closed to trigger the type of increase to the cap Bettman suggested was “probable” back in October.

“We’re just going to watch it,” he said on Tuesday, “and clearly it appears that if we don’t end up paying off the escrow this year, after next year it should be all gone and there shouldn’t be any issue about that.”

Daly said financial projections have barely changed from October to now but suggested Bettman’s statements from the first BOG meetings of the season were misunderstood.

“He wanted to make sure that people were aware that it was possible,” he said. “Because I think it was out there that it wasn’t getting paid off this year, and he wanted to make sure people knew that we’re relatively close.

“It could get paid off this year…Those projections continue to suggest we’re going to be close. But who knows?”

It would be reasonable to assume the appetite from the governors to see escrow retired and the cap increased by more than a million dollars would naturally be very strong after such little movement over the past two years has weakened their ability to improve their respective teams.

Still, that the debt (which Bettman said was in the neighborhood of $1.5 billion) is as close to being paid off as it appears to be at this point could be considered miraculous considering the damage done by fans being barred from so many games since March of 2020.

“We collectively have done quite well—meaning us and the players—by having things come back as strong as they have and having us back where it’s crystal clear where certainly this going to be paid off in the not-so-distant future,” Bettman said.

But he poured cold water on the idea the governors want the league to approach the NHLPA to renegotiate the terms of their agreement to clear whatever remains in the escrow balance and either trigger a big jump in the cap or a more balanced one-year-over-year instead of one big leap.

“That’s not something we’re discussing right now,” Bettman said before questioning why a reporter in attendance would even raise the possibility.

“Are you negotiating right now,” Bettman asked.

He followed with: “Has the union suggested that?”

“It is what it is,” Bettman concluded.

Where it leaves the league is on the precipice of one more season where cap flexibility for the majority of its members remains elusive.

There are 15 of 32 teams currently over the cap (exceeding it legally through long-term injury reserve spending), and there are another seven who have less than $1 million of room.

Any excitement they had following the October meetings was tempered considerably in sunny Florida this week.

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NHL turning away from a potentially lucrative revenue stream by not considering expanding playoffs

When it was suggested to Bettman by a reporter that some governors have interest in creating a play-in round of the Stanley Cup Playoffs to increase the number of teams participating in the annual tournament, he denied they do.

“If you’re saying to them, ‘Would you be open to a play-in?’ some of them might say, ‘Well, we could talk about it.’ We don’t get that feedback,” Bettman said. “People think the system we have in place right now is working extraordinarily well and, frankly, there’s nothing better in sports playoffs than our first round. So, I’m not sensing much of an appetite for change.”

He’s said every time it’s come up in recent years that he’s against it and reaffirmed his position on Tuesday by saying, “You’re looking to fix a problem that doesn’t exist.”

When we asked him about seizing the revenue opportunity an expanded playoff format might present the NHL, Bettman said, “I’m not sure it enhances revenues.”

“Diluting the regular season and diluting the playoffs doesn’t make much sense to me,” Bettman continued. “I think having a system where half the teams make the playoffs and half don’t, I think that’s perfect.”

When Bettman first joined the NHL in 1992—his 30^th anniversary was cheered by the governors on Monday—it was a 24-team league with 16 teams making the playoffs and having two-thirds of them in and one-third out didn’t appear to “dilute” the product then.

Thinking it would now doesn’t really hold water.

Neither does the insinuation that the league’s revenue wouldn’t grow from following some of the other major North American sports leagues in expanding the playoffs to include more teams. Logically, having more of the most profitable games of the year being played would increase revenue, as would having fans of teams suddenly included in the race to the playoffs engaged over a longer period than they otherwise would be under the current format.

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Interest in purchasing the Ottawa Senators “significant”

While Bettman clarified that the bidding for the Ottawa Senators isn’t open yet and won’t open before the beginning of 2023, he still backed Daly’s comments from Monday about what should be “a healthy process” by saying more than 12 parties have signed non-disclosure agreements and expressed interest in purchasing the franchise.

The commissioner also said the NHL recently met with actor (and part-owner of the Wrexham football team in the fifth-tier English football league) Ryan Reynolds, who has publicly expressed his interest in the Senators. Bettman said he and Daly came away impressed.

When asked if the league wants Reynolds as part of whichever group lands the bid, Bettman said, “If we can figure out a way to have him included, I think that would be great for the Ottawa Senators and I think that would be great for the league.”

When asked what impressed Daly and him about Reynolds, Bettman said, “He’s very smart, he has a number of businesses besides the acting business, and he understands sports, and he understands promotion.”

“I think he told us his followers on all of his platforms combined are well over 100 million, so he’s somebody who’s very popular and very engaged. And he’s doing a great job with Wrexham,” Bettman added.

One party reportedly very interested in purchasing the Senators is Montreal Canadiens minority shareholder and Hamilton Bulldogs (OHL) owner Michael Andlauer, who was in attendance at the meetings but wouldn’t comment because he said he couldn’t and that he was there representing the Canadiens as an alternate governor.

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Board ads are a “non-issue”

Ignore the Twitter complaints over dynamic advertising on the boards during NHL game broadcasts.

Bettman says that not only have they been a more lucrative revenue stream than expected, but also that NHL fans don’t have any gripes about them.

“They’re working great, and the polling we do with our fans gives us the feedback that it’s a non-issue,” he said. “In fact, many think it looks better having the numerous logos and ads on the dasherboards. It’s working extraordinarily well, particularly for the complexity that’s involved in doing it.”

Bettman also said that ads on jerseys, which have been placed on those of several teams in the league for the first time ever this season, are being well-received by the public.

“Fans, in that regard, based on the polling, have shown no pushback,” he stated. “They get it.”

However, the league isn’t making money hand over fist from that stream yet.

“It’s a work in progress,” Bettman said. “Not all of our clubs have sold yet. Some are looking for the right partners and the right value, but it’s been a very robust marketplace.”

News and notes:

-The NHL is still aiming to hold a 2025 World Cup of Hockey after postponing the 2024 event because of the optics of allowing Russian participation while Russia’s invasion of Ukraine is ongoing. Daly confirmed this, but also said the league will monitor how the International Olympic Committee handles the question of Russian participation for the upcoming 2024 Paris Games before deciding how to proceed.

-An amended fan code of conduct at NHL arenas was discussed at the BOG—following projectiles launched on the ice during a recent New Jersey Devils and Toronto Maple Leafs game and a wild brawl at a recent Arizona Coyotes-Boston Bruins game—and is expected to be implemented at the start of next season.

Bettman said the league is consulting with every team to create the new code.

“We want everybody who comes to our games to feel welcome, to feel safe, to feel that this is an environment that they can be comfortable in,” he said.

-Respect in the workplace training, overseen by Sheldon Kennedy and the Respect Group and mandated by the NHL, is to be completed by all teams before Dec. 31, 2022, according to NHL executive vice president Kim Davis, who added all Canadian teams have gone through it and that 32 per cent of the American teams still need to go through it.

-The NHL’s independent investigation of the Hockey Canada scandal is ongoing and “in the home stretch,” said Bettman.

Both he and Daly added the league would defer to police authorities on when to release their findings, saying that they wouldn’t publicize them if the police asked them not to out of fear of interfering with their own ongoing investigation.

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