SERAVALLI: NHL salary cap projected to rise to $82.5 million in 2022-23

The NHL is projecting a $1 million bump in the salary cap to $82.5 million next offseason ahead of the 2022-23 season, according to sources, which would mark the first rise in the league’s upper-limit since the COVID-19 significantly upended business operations, de-linked the cap from revenue and ballooned a billion-dollar debt load that players are working to pay back to owners.

Until then, the NHL will play a third straight season starting in October with a frozen $81.5 million salary cap, though teams and free agents gained flexibility this summer via the additional money pumped into the system by the Seattle Kraken joining as the league’s 32nd franchise.

A rise to $82.5 million in 2022-23 would likely trigger the start of a “lag formula,” as agreed upon in Collective Bargaining Agreement negotiations between the NHL and NHL Players’ Association in 2020, that could see the salary cap climb $1 million each offseason until the escrow balance owed to owners is paid off.

According to sources, the NHL is projecting hockey-related revenue in the $4.8 billion range for the upcoming 2021-22 season. Given that figure includes the increased revenue generated from the two new U.S. national television rights deals with the Walt Disney Company (ESPN) and Warner Media (Turner Sports), plus the juice from a new Kraken club that will almost surely be in the top quartile in revenue, that the NHL’s projection is still south of the pre-pandemic pace of $4.9 billion in 2019-20 would suggest that league bean counters believe some buildings will not be back to full capacity for at least a chunk of this upcoming season.

In addition, sources say that the escrow balance owed by players to owners is in the ballpark of $1 billion following last season, though the exact figure is still being computed following final 2020-21 accounting. A total of $1.1 billion owed is most likely.

But according to a calculation run by Daily Faceoff, NHL players are projected to increase the balance owed to owners in the 2021-22 season – not begin to pay it off – because at $4.8 billion in revenue their projected salaries paid ($2.9 billion) are likely to significantly exceed their allotted 50-50 share of $2.4 billion.

Provided that revenue bounces back strongly in 2022-23, starting at $5.4 billion and reasonably increases year-over-year from there, NHL players can hope to pay off their billion dollar debt some time during the 2025-26 season. Because of that, the Collective Bargaining Agreement is likely to automatically extend through 2026-27, which would also mark the first season that players and teams could reasonably expect to realize a significant increase in the salary cap, with the cap linked back to actual revenue projections again for the first time since 2019-20.

Put simply, short of a revenue bonanza, the salary cap crunch that has stared down teams and players is a grim financial reality that isn’t going anywhere any time soon – no matter the free-wheeling spending that occurred on July 28.

Daily Faceoff projections, for illustration purposes only, as a marked increase in revenue projections could pay off the escrow balance more quickly and provide a significant salary cap rise once the debt is paid: