The Perils of an NHL Salary Cap

While many hockey fans support the NHL's demand for a salary cap - what better way to keep those fat cats in New York and Dallas from sucking up all the good players? – you don’t have to dig very far before flaws in the concept begin to emerge.

Over at Canuck's Corner, Tom Benjamin has been poking holes in this all-too-tidy solution to the NHL's economic woes. His recent article explains that there is nothing "fair" about the notions of fairness and equality that underline the salary cap idea. He points to the current state of the NFL, a league run with a hard salary cap and a high player turnover every year as teams struggle to meet the cap:

"The NFL is set up like a handicapped horse race, designed to produce a near random result and generate lots of betting action. The Bettman position that every hockey team should begin the year with the fans believing that their team has a legitimate chance to win is a terrifying idea. That is the National Football Lottery, not hockey. That's my real issue in this labour dispute. Artificial 'fairness' isn't very fair at all."

"The Carolina Hurricane deserve to lose money. If they cannot eventually put a product on the ice that sells, they deserve to go out of business. Giving the Hurricane an 'equal' chance to win in 2005-06 isn't fair to the competently run organizations. Dragging excellent teams back to the pack so mediocre teams can sell more tickets is good for the owners and bad for the sport."

"Make life equal! Break up the Avalanche! Shuffle around all the players every year! Everybody will get to win once every 30 years! It will be great! Any fool can win the Cup!"

"Bunk."

Full credit to Tom for producing the best articulation yet of the salary cap falacy.

A salary cap is a form of enforced mediocrity. It’s an artificial advantage for teams that do a lousy job of scouting, drafting, trading, developing and evaluating players. Such a team can rely on the salary restriction to take down the competent franchises and force them to start over.

Good teams are screwed by the cap, punished for compiling too many good players and getting the best out of them. As they become more successful, those players demand raises and the team has no choice but to release some of them so it can stay within the salary cap. That's the reward for doing what a team is supposed to do: excellence is undermined by a ludicrous financial scheme.

At the other extreme, the English experience shows the danger of an unregulated open market for players. A report in the Guardian newspaper suggests that England’s top soccer league is in trouble. The Premiership is “ridiculously uncompetitive and, for many fans, terminally over-priced.” A big part of the problem is that the richest teams buy up all the good players, which means that only three teams - Arsenal, Chelsea and Manchester United – have any chance of winning a championship. (Thanks to Off Wing Opinion for the link.)

What’s the solution for the NHL? Assuming the current system is no longer acceptable, and assuming no one will come up with a new, groundbreaking idea, the league should forget about a salary cap and agree to a payroll tax.

By taxing teams that exceed a set payroll ceiling, the league could reign in reckless over-spending and create a pool of money to help the bottom feeders. A minimum payroll would ensure that owners of lousy teams don’t simply pocket their revenue-sharing cheques.

The players’ proposal is at least a starting point for such a system. But the owners refuse to budge. For them, it’s a salary cap or nothing. The NHL's stance is hardly conducive to negotiation or compromise, but by tarring the players with the “greedy millionaire” brush, the NHL continues to win public sympathy for its foolish cause.