Bettman signals NHL is willing to negotiate on larger 2023-24 salary cap increase
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NHL commissioner Gary Bettman fired up the Bat Signal at the conclusion of the General Managers meetings on Wednesday, letting incoming NHL Players’ Association executive director Marty Walsh know publicly that he is willing to negotiate on the league’s hottest button issue: the salary cap increase for next season.
In other words, Game On. Walsh is set to officially succeed Donald Fehr as the players’ union head on Monday, his first day on the job after transitioning from his government post as the U.S. Secretary of Labor. And how next season’s salary cap is bargained will be the first significant window into how the relationship might unfold between Bettman and the fifth union counterpart of his tenure. As first forays go, this one will be interesting.
By the letter of the NHL-NHLPA Collective Bargaining Agreement extension negotiated in 2020, Bettman doesn’t have to do anything. He told reporters in Florida on Wednesday that the remaining debt owed from players to owners as a result of pandemic damages is projected to be “approaching $100 million, in that range” at the end of this season.
If even $1 dollar is owed on the debt, the CBA calls for a scant $1 million increase in next season’s salary cap, which is why all 32 GMs left the meeting with $83.5 million set as their expectation. However, Bettman left open the door for a larger increase, saying for the first time that the NHL is open to “discussion.”
“I suppose there’s always a possibility of negotiation once the new Executive Director of the Players’ Association [starts], but subject to that, it appears the cap will go up $1 million,” Bettman told reporters.
Anyone who has spent any period of time around Bettman is smart enough to know that a negotiation is just that. Even if the majority of your owners and all players want it, and it’s best for the game as a whole, why hand out a salary cap increase for free when you could get something for it? Few people on the planet are better at understanding leverage than Bettman.
So, the question leaving Florida is: What is Bettman looking for in return?
The belief is Bettman has his eye on something in particular. League sources say Bettman would consider raising the salary cap beyond the $1 million mandated by the CBA if there is also a resolution to existing and unresolved Hockey Related Revenue claims by the NHLPA that remain open from the last several seasons. Claims are relatively common in the auditing process to ensure an exact 50-50 split is divided as the CBA calls for it to be; league sources were unclear on exactly how much is in dispute or the validity of the claims.
But to boil it down for simplicity, the gist of the conversation from Bettman to Walsh might go something like this: If the NHLPA is willing to remove those claims, we can talk about a salary cap increase. It’s impossible to know Walsh’s stance, not even on the job yet.
In the meantime, it appears that Bettman threw out a red herring on Wednesday, dangling buzzwords that he knew would capture the attention of all NHL players. His warning was that increasing the salary cap next season might also increase the amount of escrow withheld from player paychecks.
“We’re hearing around the bend from players and others that there may be interest in having that [negotiation],” Bettman said. “But one thing to keep in mind: If we’re going to raise the cap and [the debt] hasn’t been paid off, then we’re going to have to look at raising escrow rates.”
As part of the 2020 CBA extension, players negotiated a cap on escrow withholding at six percent for the next three seasons. That was an important point for players, who had previous uncapped quarters of withholding ranging anywhere from 12 to 18 percent of their paychecks. But that six percent cap was also predicated on a few things, including projections that the debt would still be lingering into those seasons as a result of pandemic-related losses in revenue.
With league-wide revenue rebounding stronger than expected, that $1.2 billion debt has been repaid quicker than anyone might have originally envisioned. Once that debt is fully repaid, the CBA calls for each season’s salary cap to be re-linked to revenue projections, as it was in the prior cap-era CBAs.
So that means that until the debt is retired, which most reasonable projections indicate it will not be by the end of this season, next season will still be played under an artificially low salary cap figure. Picking up the breadcrumbs left by Bettman on Wednesday, who said that if it were retired the cap would go up by approximately $4.5 million next season, it would stand to reason that the salary cap could increase by $3 to $3.5 million without the need to raise next season’s six percent escrow cap. That’s why his comments, which would surely bother NHL players, were a bit of a red herring.
Bettman knows now that many owners want to see the salary cap moving in a meaningful upward trajectory now that somewhere between 85 to 95 percent of the debt has been repaid. He’s set it up for a win for them, a win for GMs, and a public win for Walsh and the players to not increase the escrow cap – so long as they don’t ask too many questions.
There are many ways to accomplish the end goal. Place your bets where you may, but if you’re a fan of a team currently living and dying with each nickel on the salary cap, Wednesday marked a day to be confident that a fourth straight season of a flat cap won’t come to pass.