2023-24 NHL salary cap UPD Set at $83.5m, floor $61.7m

[ThreeOfAPerfectPair]

What's the cap supposed to be at when HRR is $6 billion?

 

[Golden_Jet]

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What's the cap supposed to be at when HRR is $6 billion?

Hard to say in the first year, as we don’t know how much escrow debt is left.

The high end of the cap is 115%,
Cap is calculated at the midpoint
Low end is 85%

Since so many teams go to the 115% number, easy to see why there is escrow.

With escrow locked in at 6% for next 3 years, I feel like players will end up owing again down the road.

 

[mouser]

The NHL’s estimate earlier this season was $5.7B in HRR. Perhaps I’m missing something, but the articles all seem to describe Bettman saying HRR “pushing $6B” this season.

$5.7B is ”pushing $6B“ in lawyer speak.

Looking forward to the reported HRR numbers.

 

[mouser]

if HRR does hypothetically end up at $6B for 2022-23, I’d estimate a cap of $97-$99m in 2024-25.

The 2020 MOU introduced a lag formula where the new season’s cap is based on the revenue from two seasons prior. The 2023-24 cap would have been based on 2021-22 HRR for example (absent Covid). HRR in 2022-23 will dictate the 2024-25 cap.

The most important variable we don’t know is exactly how much the Players receive in non-salary Benefits. This includes items like health insurance, life insurance, pension (401k, etc) contributions and more. All of these non-salary benefits count against the 50/50 split of HRR, reducing the salary cap ceiling.

My current estimate is $160m to $260m in non-salary benefits.

 

[StreetHawk]

The NHL’s estimate earlier this season was $5.7B in HRR. Perhaps I’m missing something, but the articles all seem to describe Bettman saying HRR “pushing $6B” this season.

$5.7B is ”pushing $6B“ in lawyer speak.

Looking forward to the reported HRR numbers.

Lawyer speak, so each word is important.

Such as Revenues is not HRR as there are some revenues that are excluded from HRR as I understand.

Pushing $6 bill, well $5.7 billion is technically pushing $6 bill if you round to the nearly billion.

If the jump in the salary cap is $10 million as your range suggest it may land, I think any 2024 RFA/UFA would be wise to not do a deal this off-season. Half way through the season, then you'd get an idea of what the cap will look like in 24/25. Whether that is below or above $90 million.

 

[rsteen]

Absent Covid and paying back the Escrow Balance, my rough estimate is the 2023-24 salary cap would be $88m-$90m.

I tried to include multiple changes in the modeling:
- Elimination of the cap escalator
- Change to using the Lag Formula cap calculation in the 2020 MOU
- Increase from 31 to 32 teams
- Likely increase in non-salary benefits in the 2020 MOU plus non salary benefit inflation.

I looked at the MOU today to check the rules for the lag formula and saw this

(1) Use HRR from the League Year two years prior (instead of Preliminary HRR from the immediately preceding League Year) (i.e., using HRR for Year 1 to set the Payroll Range for Year 3).

(2) Remove the Growth Factor (i.e., do not adjust the resulting Midpoint (based on Final HRR per (1) above) upward to yield the Adjusted Midpoint as provided for in Section 50.5(b)(i)).

Maximum year-over-year increase in the Upper Limit will be the lesser of 5% and the trailing two year average HRR growth percentage (measured using Final HRR from the League Year four years prior, Final HRR from the League Year three years prior, and Preliminary HRR from two years prior and after taking into account any FX impact adjustments)

Except for the 2026-27 League Year, minimum year-over-year increase in the Upper Limit is the lesser of 2.5% and the trailing two-year average HRR growth percentage. (measured using Final HRR from the League Year four years prior, Final HRR from the League Year three years prior, and Preliminary HRR from two years prior and after taking into account any FX impact adjustments)

So, does this mean that the maximum increase is 5% (around 4B), even in the year of the transition into the lag formula? If that's the case, we would see 5% every year until the cap 'caught up' with revenues.

 

[mouser]

I looked at the MOU today to check the rules for the lag formula and saw this

(1) Use HRR from the League Year two years prior (instead of Preliminary HRR from the immediately preceding League Year) (i.e., using HRR for Year 1 to set the Payroll Range for Year 3).

(2) Remove the Growth Factor (i.e., do not adjust the resulting Midpoint (based on Final HRR per (1) above) upward to yield the Adjusted Midpoint as provided for in Section 50.5(b)(i)).

Maximum year-over-year increase in the Upper Limit will be the lesser of 5% and the trailing two year average HRR growth percentage (measured using Final HRR from the League Year four years prior, Final HRR from the League Year three years prior, and Preliminary HRR from two years prior and after taking into account any FX impact adjustments)

Except for the 2026-27 League Year, minimum year-over-year increase in the Upper Limit is the lesser of 2.5% and the trailing two-year average HRR growth percentage. (measured using Final HRR from the League Year four years prior, Final HRR from the League Year three years prior, and Preliminary HRR from two years prior and after taking into account any FX impact adjustments)

So, does this mean that the maximum increase is 5% (around 4B), even in the year of the transition into the lag formula? If that's the case, we would see 5% every year until the cap 'caught up' with revenues.

There's also a clause saying they can increase by up to 10% if a Shortfall is projected, which should be the case after the Escrow Balance is paid back.

For any immediately upcoming League Year for which the NHL and NHLPA anticipate a Shortfall (as defined in Section 50.11(a)(i)) based on Preliminary or projected HRR, the parties may (but are not required to) increase the Upper Limit for that upcoming League Year by up to an additional 5% (over and above the increases dictated by the provisions above) so long as both the NHL and NHLPA agree to do so by the June 15th prior to that start of that League Year.

 

[Hockey Outsider]

The tax issue is way more complicated than the level of state income tax since players are also taxed where they play on the road. It's an advantage but how to quantify it is just about impossible to do I'd say.

Even in Toronto your numbers are not the same for every player. For example take Tavare's contract: His salary is almost all signing bonuses. Since he was a US resident for tax purposes whne he signed he had the opportunity to maintain that status and as such his signing bonus would only be taxed at 15%. So he would pay taxes at a much lower rate than say Marner might. Alternatively, he could take advantage of a Retirement Compensation Agreement if he did not want to maintain his residence in the US and forego owning property in Canada. How do you account for this?

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Agreed. As an example, Matthews and Marner have nearly the same compensation in F2024. But, based on an analysis of publicly-available information, Matthews is paying close to $1M USD less in income taxes. So they have virtually the same gross income, but very different after-tax income.

Lots of people on HFBoards (and elsewhere) are under the impression that everybody playing on the same team have the same tax situation, and that's simply false.

 

[Golden_Jet]

Agreed. As an example, Matthews and Marner have nearly the same compensation in F2024. But, based on an analysis of publicly-available information, Matthews is paying close to $1M USD less in income taxes. So they have virtually the same gross income, but very different after-tax income.

Lots of people on HFBoards (and elsewhere) are under the impression that everybody playing on the same team have the same tax situation, and that's simply false.

I’d almost think it would be more than a million, with Matthew’s getting the 15% tax rate on a lot of his signing bonus.

 

[Hockey Outsider]

I’d almost think it would be more than a million, with Matthew’s getting the 15% tax rate on a lot of his signing bonus.

The way the Canada-US tax treaty works is Matthews (as a US resident) only has to pay 15% in Canada on his signing bonus (which makes up around 90% of his income). He still needs to pay tax in the US on the signing bonus, minus whatever's been paid in Canada.

The top marginal tax rate in the province of Ontario is 53.5% and the top marginal rate in Arizona is somewhere in the low 40's. The difference (call it 12%) on the $7M signing bonus is over $800K.

This is a simplification, and there are other differences to consider (ie certain costs are deductible for tax purposes in the US but not Canada - and vice versa). But I think, as a ballpark estimate, Matthews is paying close to $1M USD less in income tax per year than Marner - despite them playing for the same team and having essentially the same income.

 

[Fourier]

if HRR does hypothetically end up at $6B for 2022-23, I’d estimate a cap of $97-$99m in 2024-25.

The 2020 MOU introduced a lag formula where the new season’s cap is based on the revenue from two seasons prior. The 2023-24 cap would have been based on 2021-22 HRR for example (absent Covid). HRR in 2022-23 will dictate the 2024-25 cap.

The most important variable we don’t know is exactly how much the Players receive in non-salary Benefits. This includes items like health insurance, life insurance, pension (401k, etc) contributions and more. All of these non-salary benefits count against the 50/50 split of HRR, reducing the salary cap ceiling.

My current estimate is $160m to $260m in non-salary benefits.

To go from $83.5M to even say $92M in one year would be chaos. It makes no sense for either the league or the players to hold the line on a $1M increase given that any escrow that may still be owed will be gone almost immediately at the start of the season.

 

[StreetHawk]

To go from $83.5M to even say $92M in one year would be chaos. It makes no sense for either the league or the players to hold the line on a $1M increase given that any escrow that may still be owed will be gone almost immediately at the start of the season.

Barring anything happening in the next 10 days or so, the $83.5 Mill cap is what we will get next season. Buyouts can begin 48 hours after the cup is awarded, so that's the first deadline of decisions an increase in the cap next year would impact. If you were to gain $1.5 - $2.5 mill of cap room to $85 or $86 mill next season, then a jump to $89 mill vs. $92 mill the following season, that probably would impact a decision to execute a buyout or not.

NBA several seasons ago when they got a new major TV deal had a massive spike in the cap and guys like Canadian Kelly Olyniak got like $50 mill over 4 years. NBA was handing out insane contracts.

Does seem that it would make more sense to even out the increase rather than have a massive bump in 1 season. Going from $82.5 to like $86 to $89 to $94 makes more sense than going from $82.5 to $83.5 to $92 to $94,

 

[Golden_Jet]

Barring anything happening in the next 10 days or so, the $83.5 Mill cap is what we will get next season. Buyouts can begin 48 hours after the cup is awarded, so that's the first deadline of decisions an increase in the cap next year would impact. If you were to gain $1.5 - $2.5 mill of cap room to $85 or $86 mill next season, then a jump to $89 mill vs. $92 mill the following season, that probably would impact a decision to execute a buyout or not.

NBA several seasons ago when they got a new major TV deal had a massive spike in the cap and guys like Canadian Kelly Olyniak got like $50 mill over 4 years. NBA was handing out insane contracts.

Does seem that it would make more sense to even out the increase rather than have a massive bump in 1 season. Going from $82.5 to like $86 to $89 to $94 makes more sense than going from $82.5 to $83.5 to $92 to $94,

Didn’t Gary shoot that down during his state of the union address. There will be no smoothing of the cap, assuming they couldn’t come to an agreement.

 

[LadyStanley]

 

[LadyStanley]

Boom

 

[Fourier]

Keeping the cap at $83.5M was a mistake. If it is followed by a large rise next year that mistake will be compounded.

 

[Tawnos]

Keeping the cap at $83.5M was a mistake. If it is followed by a large rise next year that mistake will be compounded.

The cap can only go up 5% per year unless certain conditions (which I’m blanking on) exist and then they can negotiate it between 5% and 10%. So we’re talking about an increase between $4.175m and $8.35m. It’ll be a nice rise, but not the crazy one some people seem to expect.

A big chunk of that money for a lot of teams is going to go to RFAs they haven’t been able to give appropriate raises to.

 

[Squiffy]

So, based on a bit of quick math, but mostly depending on posts here already, it seems a reasonable assumption that the conditions are/will be met for allowing a bump beyond the normally mandated 5%, yes?

Escrow is likely just this side of paid off, close enough that there was at least a discussion about tacking on the extra million in cap for this coming year. HRR is stated to be “pushing $6B”, which even if it is “only” $5.7B, puts player compensation in a shortfall for 24/25 at the standard max 5% cap rise to 87.5/team by roughly $50m, yes?

By simple math that’s a cap of $89m/team. At $6B HRR, without any artificial drags on the cap it’s nearly $94m/team, beyond even the scope of a full 10% cap increase.

There’s some posters in this thread whose opinions I’ve come to greatly respect over the years who seem to suggest a 24/25 cap could, again without mandated drags on it, be even higher then that, I’m curious about the quick math version of that, if it interests you.

Beyond that, is it safe to say we are a mutual agreement between the NHL and the PA from $92m~ ish per team 24/25 cap? And what do you think the likelihood of that is?

 

[andora]

What formula is used to determine minimum salary?

 

[tornadowarning33]

What formula is used to determine minimum salary?

"(Preliminary HRR for the prior League Year multiplied by fifty (50) percent (the Applicable Percentage), minus [-] Projected Benefits), divided [/] by the number of Clubs then playing in the NHL (e.g., 30), shall equal [=] the Midpoint of the Payroll Range (which figure shall be considered the Midpoint only for purposes of calculating the Adjusted Midpoint; all references to the "Midpoint" thereafter shall mean the "Adjusted Midpoint"), which shall be adjusted upward by a factor of five (5) percent in each League Year (yielding the Adjusted Midpoint, which shall then become the Midpoint of the Payroll Range)..."

"After adjustment for the revenue growth factor, the Payroll Range shall be constructed by adding to the Adjusted Midpoint an amount equal to fifteen (15) percent of the Adjusted Midpoint (i.e., multiplying the Adjusted Midpoint by one-hundred fifteen (115) percent) to establish the Upper Limit, and subtracting from the Adjusted Midpoint an amount equal to fifteen (15) percent of the Adjusted Midpoint (i.e., multiplying the Adjusted Midpoint by eighty five (85) percent) to establish the Lower Limit."

Lifted directly from the CBA, page 258.

NHL CBA 2013

 

[andora]

"(Preliminary HRR for the prior League Year multiplied by fifty (50) percent (the Applicable Percentage), minus [-] Projected Benefits), divided [/] by the number of Clubs then playing in the NHL (e.g., 30), shall equal [=] the Midpoint of the Payroll Range (which figure shall be considered the Midpoint only for purposes of calculating the Adjusted Midpoint; all references to the "Midpoint" thereafter shall mean the "Adjusted Midpoint"), which shall be adjusted upward by a factor of five (5) percent in each League Year (yielding the Adjusted Midpoint, which shall then become the Midpoint of the Payroll Range)..."

"After adjustment for the revenue growth factor, the Payroll Range shall be constructed by adding to the Adjusted Midpoint an amount equal to fifteen (15) percent of the Adjusted Midpoint (i.e., multiplying the Adjusted Midpoint by one-hundred fifteen (115) percent) to establish the Upper Limit, and subtracting from the Adjusted Midpoint an amount equal to fifteen (15) percent of the Adjusted Midpoint (i.e., multiplying the Adjusted Midpoint by eighty five (85) percent) to establish the Lower Limit."

Lifted directly from the CBA, page 258.

NHL CBA 2013

Appreciate it i meant individual player salary league min

 

[Golden_Jet]

Appreciate it i meant individual player salary league min

Not sure, but NHL is second highest, behind the NBA.

 

[LadyStanley]

What formula is used to determine minimum salary?

There is no "formula". It's set in the CBA.

For 22-23, the minimum NHL salary was $750k.

For 23-24 and 24-25, the minimum NHL salary will be $775k.

 

[andora]

Thanks for the replies.. i wonder what created the arbitrary numbers

 

[Squiffy]

Thanks for the replies.. i wonder what created the arbitrary numbers

It's just been gradually increasing as part of CBA negotiations for 2 decades. All straight from 2005 and 2012 CBA's:

2005-06 - U.S. $450,000
2006-07 - U.S. $450,000
2007-08 - U.S. $475,000
2008-09 - U.S. $475,000
2009-10 - U.S. $500,000
2010-11 - U.S. $500,000
2011-12 - U.S. $525,000
2012-13 – U.S. $525,000
2013-14 – U.S. $550,000
2014-15 – U.S. $550,000
2015-16 – U.S. $575,000
2016-17 – U.S. $575,000
2017-18 – U.S. $650,000
2018-19 – U.S. $650,000
2019-20 – U.S. $700,000
2020-21 – U.S. $700,000
2021-22 – U.S. $750,000