NHL Salary Cap System

Years in place, does the current salary cap system work or should it be adjusted for the times.  

History lesson, when the NHL salary cap was initiated in 2005 the starting team cap was $39 Million. This year the cap will be between $78 and $82 Million. In comparison the top salary in the 05-06 season was Jaromir Jagr coming in north of $8 Million. This year the #1 earners are John Tavares and Connor McDavid both coming in over $15 Million. 

Watching the Toronto Nylander situation play out it I started wondering how this started and does the current salary cap system play a part in this drama. 

Note, I am not a salary cap expert or lawyer by any means and my comments and observations may be generalized and not be a 100% accurate. 

I digress. 

The Toronto contract stalemate may be a result of the following reasons: 

One, Toronto signing Tavares while improving the team, wrecked the team improvement plan. 

Two, Toronto has drafted too well and simply can’t afford their draft success.  

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Let’s look at one, there is always a risk when signing players like Tavares. Over the years in too many instances these signings simply haven’t panned out. Rick Nash comes to mind, big dollars with no cup success. Columbus looked like they were trading away a key to their team when in fact it the trade made the team better. In the Tavares case, goals, assists and leadership for the young core will be a success. Will the Toronto win the cup, the real measuring stick, time will tell. 

Looking at two, obviously with the current salary cap and where salaries are, if you draft too well all the players can’t make top dollars and not all players will accept the ever popular “Home Town” discount as is the reported case with Nylander.  

I am amused at the under lying negative that Nylander is balking at accepting a home town discount. Toronto is not his home town, Sweden is.  

I digress, again.

Discount talk aside, does the current cap structure fail and is there an underlying problem exasperated by the Tavares signing. 

Taking a look at the major sports caps that I understand, in general, plus watch the sport. I wanted to look at those cap differences and see if a change would be of benefit to the NHL. 

Baseball, salary cap with luxury tax. Baseball suffers from the haves and the have nots. The “rich” teams will pay the luxury tax and remain competitive, period. The Luxury Tax is likely built into their annual budgets as such these teams remain a top contender most seasons. The rest, teams that don’t use the Luxury Tax or spend and are considered “poor” finish every year in September, out of contention from early summer on.  

In the NHL “rich” teams would excel same as MLB, not an NHL option in my estimate. 

NFL football, salary cap with Franchise player tags. Players seem to dislike the Franchise player tags but it is a system used by teams to stay competitive and financially sound for a period of time. Franchise tags are in play for one season, gives each team an extra period before offering a long contract with big dollars attached or of course moving on from that player.  

Work in the NHL, possibly, but the hitch here would be contract length or the one-year period. 

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For the NHL, what about a cap combination that satisfies players and owners alike.  

Spending time thinking, what if the NHL adopted a system with a Franchise tag that allowed each team to sign one player under the following conditions: 

  • A designated Franchise Player can be signed at a “soft” percentage of the annual NHL salary cap, flexible with each year increase or decrease fluctuations. The percentage would be negotiated between the league and the players.  
  • One Franchise Player per team. 
  • Franchise Player is exempt of performance bonuses. 
  • Franchise Player salary not counted against Team Salary Cap. 
  • Franchise Player contract term cannot exceed 5 years, minimum 3 years, and is a “hard” term contract. No trades or buy outs. 
  • Franchise Player must remain top salary on each team. 
  • Teams are not mandated or required to carry a franchise player but can be penalized if Franchise tag not used to encourage draft “tanking”. 
  • Franchise Player Penalty – League institutes a two-tier Salary Cap, teams with a Franchise Player (Higher) and Teams without a Franchise Player (Lower). 
  • Franchise Player cannot be on the “Rookie” or “Bridge” contracts. 
  • Franchise Player cannot sign back to back franchise contracts. 
  • Teams restricted from Offer Sheets stipulating Franchise Player tag assignment for the length of one-year contract term. 


This cap system would allow multiple good drafts being signed to high dollars, allow owners to spend lavishly if they so wish, control contract terms and lastly the players still benefit in financial gains. Larger cap-controlled salaries will remain fluid increasing with the NHL mandated salary cap increases. Franchise Player salaries will increase since it is a percentage-based system tied to the NHL mandated salary cap. Limiting the contract term of the Franchise Player allows teams to sign the player but as seen in the past, not be strapped with an underperforming player at the end of his career.  In lieu of the excessive term the Franchise Player cashes in with a large salary. 

This cap system would also allow teams to continue to build. What is being seen in places, Edmonton and to some extent Toronto, seem the inability to sign defense. Darnell Nurse sat out for a period, was this, among other things, a result of the McDavid and Draisaitl contracts. Toronto has made noise about signing a defense man for quite a while now, is the delay resulting from Nylander, Tavares, Matthews and the Marner quandary.  


How will San Jose sign Brent Burns with Erik Karlsson in the fold.  How does Los Angeles manage with Drew Doughty.  

Will these teams remain competitive.  

Clouds on the horizon. 


Whether you agree or disagree, it’s hard to believe that a system in place when salaries were $8 million still works when salaries double. I believe the Nylander situation is the start, problems are or will be seen in Edmonton, San Jose, Los Angeles any team that is pushing the individual salary ceiling.  


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