Tuesday, July 03, 2007

My New NHL 3

The rich millionaires started to save while the poor millionaires began spending. That’s what happened when the six-year collective bargaining agreement was signed in the summer of 2005. Rather than embolden the small market teams, the new CBA created huge reserves for the wealthy ones, huge reserves that would allow them to make serious splashes in the UFA pool when the cap would start rising again. It stood at 38 million dollars for Year 1 of the CBA. Now, at Year 3 it has climbed up to 52 million. It has gone up by 37%. Poof!

In an environment where the playing field is in the process of expansion, a gap starts to emerge, between the Haves and the Have-Nots. The field was flattened at a 38 million dollar cap, where everyone could allocate that amount in salaries. Today however, not all pockets around the NHL are 52 million dollars deep.

A New order is rising. It happens to be the Old order.

While the NHL was deflating spending to 38 million dollars a couple of years ago, the wealthy teams who were spending over 70 million were making significant savings. Today, with a cap that’s over 50M teams like the Red Wings and Rangers are still saving about 20M a season compared to their pre-cap splurges. That money could not really come in handy with everyone being obliged to run in a potato sack race. Now that the rules are changing and are allowing participants to run the race with the latest and most sophisticated engines money can buy, some teams will still have to resort to the best potato sack money can buy. This is when the savings of the last 2 years are going to pay huge dividends for the Rich of Yesterday. In fact, they are the ultra Rich of today and the uber Rich of tomorrow.

My New NHL 2 (from 2005-2007) was a flattened league. My New NHL 3 is a system of castes again.

Who’s in trouble? The small market American teams, that’s who. They are spending the same American dollars today as they did before the CBA. The Canadian teams, while relieved somewhat by the cap correction of 2005, have much more to thank in the surging Canadian dollar.

In 2001 the dollar was agonizing at 61 cents. Today it’s trading at 94.

The Canadiens’ payroll in 2001-2002 was 41.2M, meaning they were paying 66.3 M Canadian. Today that would mean a 43.7M payroll in Canadian funds. In today’s league figure the Habs will take up the entire cap room and spend the allowed 52M; in Canadian funds, with a 94 cent dollar, it will cost them 55.1M, 11 million dollars less than in 2001 despite a cap that is 11 million higher! God Save the Queen.

What has rescued Canadian hockey is the dollar, it actually has little to do with the cap. There was a time (that time was 2 years ago) when the cap did restrict the wiggle room and level the playing field. A 25M payroll did not have to compete with the 80M T-Rex roaring out of Manhattan. Today, the cap is rising and the tide is going to turn. At that turn, you will find Scott Gomez and Chris Drury in their new Ranger uniforms.

The Canadian teams can weather the storm and ride the momentum of a strong currency. The more tepid American teams however will have no luck in finding such solace. They are the Canadian teams of old. Which is why the Pittsburghs and Nashvilles are going to turn over their business AFTER the CBA was signed, because they know what’s coming. They’ve been there before.


Anonymous said...

Alan Johnston has been freed.

Miracles could still happen.

Even in Montreal.

I predict we will parade Stan again on St-Catherine when St-Catherine becomes a 2 way street.

Anonymous said...

Well said. Detroit, new York, Detroit New York. Yeesh. At least not the Leafs!