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FISCAL RESTRAINT IN THE NHL
Originally posted October 24, 1999: Volume 2, Number 5

In spite of the signing of Dmitri Khristich this past week, it appears that reality is sinking in for the NHL's many restricted and unrestricted free agents (RFAs and UFAs) alike. That is the reality of the modern NHL, a distant fourth among the major North American team sports in terms of revenue. It is nevertheless possessed of athletes who demand to be paid on par with stars in football, basketball and baseball.

The owners, who have been paying these disproportionate salaries, have now chosen to reign in the horses. It is not collusion, as might some suggest, but a mutual recognition of the obvious as salaries climb out of control. The average NHL salary has risen five fold since 1990-91. Revenues -- albeit a tightly kept secret by NHL owners -- almost certainly have not risen at a similar pace. Unlike football and basketball, and to a lesser extent baseball, hockey is reliant primarily upon ticket revenues and local television to survive. The NHL's U.S. national television contract with ABC/ESPN amounts to five years for $600 million, a pittance compared to the billions doled out to football, basketball and baseball.

They played for pride...
and little else
As a result, RFAs and UFAs are sitting on the sidelines watching hockey games like the rest of us. At writing, unsigned restricted free agents included such notables as Byron Dafoe, Keith Primeau, Boris Mironov, Bill Guerin, Patrick Elias, Brendan Morrison and Nikolai Khabibulin. Available UFAs include Joe Murphy, Pat Verbeek, Ray Sheppard and Kirk Muller. Even Khristich -- who was signed by Toronto -- was forced to become a free agent when the Bruins walked away from an arbitrator's award. Teams appear to be playing hardball, and this is all without even mentioning Alexei Yashin. The less than satisfactory results produced by aging or underachieving free agents -- Gilmour, Francis, Messier, Krupp, to name a few -- have owners reconsidering their approach.

Cujo's six million has Dafoe and Khabibulin dreaming
History tells us, however, that the owners' resolve to be fiscally prudent will not last. In 1998-99, the disparity between rich and poor teams was considerable. The Detroit Red Wings payroll amounted to $48.3 million, while the Nashville Predators spent a meagre $13.6 million on salaries. This season, the payroll of the New York Rangers is more than $55 million. The wealthier teams are not compelled to adhere to a fiscally prudent approach. The immediate beneficiaries are mediocre talents like Stephane Quintal and Lance Pitlick. The true beneficiaries are all the players, because such signings drive up the market value of all players. As we approach a 30 team league, it becomes more and more difficult to stock rosters. Players of dubious talent become more valuable.

The present collective bargaining agreement does not expire until 2004, but it is apparent that it is not succeeding in creating equity between revenues and salaries. Five of six Canadian teams are in financial trouble, with Ottawa threatening to move at season's end. The Islanders and the Penguins are not yet out of the woods.

The solution is a salary cap. The salary cap enables smaller market teams to compete with large market teams. It assists in spreading talent more equitably across the league. It makes expenses predictable and therefore easier to budget. It is no coincidence that the two most successful leagues in North America -- the NFL and the NBA -- each employ a form of salary cap. Unfortunately, Bob Goodenow and the NHLPA are saving their pennies in preparation for war in 2004. They anticipate that the owners will be pursuing this remedy for what ails them. Forcing players to wear a salary cap is not like forcing them to wear a helmet.

[Photos courtesy of Pictures Now! and Hockey.Ontheweb.]