Previewing the NHL salary cap

In a regular NHL year, there are two seasons: the first is the regular season which helps dictate who gets into the playoffs. But once the playoffs start, everything that you have done up until that point is now done and all focus is on the playoff season. Much like that there are two key parts to the off months of the NHL season, the first part is the NHL draft and the later concerns free agency and managing around the salary cap.

The NHL draft is now behind us and we enter into phase two of the summer months – free agency and managing around the cap. In the last two weeks we saw a few big free agents get locked in early by their existing teams to avoid them hitting the open market.

Erik Karlsson signed an 8 year contract for $92MM, Kevin Hayes signed a 7 year contract for $49.9MM and Jeff Skinner signed a 8 year contract for $72MM. We will assuredly see a number of large contracts signed over the next few weeks, especially to Artemi Panarin, Sergei Bobrovsky, Matt Duchene and Joe Pavelski. Depending on the longevity of these players a 6+ year contract can seem like a steal as the total allocated cap levels increase or it could be a shackle and chains weighing down a team for years to come.

The chart below shows the top 100 FA in annual value per team and how long the contracts are extending. According to Spotrac, the Avalanche currently stand with $35MM in free cap space but they have only signed 13/23 of their players. Ottawa, Columbus and New Jersey all have $25MM+ in cap space but all have fewer than 19 players signed. Meanwhile, the Golden Knights are right up against the cap limit with 20 players signed. Behind Vegas are Pittsburgh and Arizona who are within $7MM of the cap and while Arizona has 22 players signed, Pittsburgh has 18 players signed and appears to be shopping some of the bigger contracts not named Sidney Crosby and Evgeni Malkin.

While the salary cap saw a hefty increase 2006-2019 (double digit growth each year), it has been considerably lower since the economic collapse. Only once (2011-2012) did it see growth of over 7%. Furthermore, four of the last five years, it has seem growth of under 4% including this year which saw a small 2.5% growth from last year. One interesting note on this – in the 2005-2006 season, if you had a roster of 23 players, you would be offering an average contract of $1.7MM, now 15 years later, your average salary would run $3.5MM. I highlight this because the league can be somewhat top heavy. 11 Players (1.6% of current contracts) have an average contract value over $10MM, 184 players (28% of current contracts) have an average contract that is between $5MM and $10MM, 113 players (17% of current contracts) are between $3.5MM and $5MM, 275 players (41% of current contracts) have an average contract between $1MM and $3.5MM. There are approximately 75 players (11% of current contracts) under $1MM right now (and a lot will probably sign this summer).

Total players signed as of now is about 655.

A few notes as we enter the next month:

By Position:

Forwards: Vegas is spending the most ($54.5MM or 65.59% of total cap spend with 13 players signed); Colorado is spending the least ($22.3MM or 48.58% with 6 players signed)

Defenseman: Arizona is spending the most ($31.6MM or 42% of total cap spend with 9 players signed); Ottawa is spending the least ($4.4MM or 9% with 5 players signed)

Goalies: Montreal is spending the most ($11.25MM or 15.78% with 2 signed); Calgary is spending the least ($750k or 1.09% with just 1 signed)

Among countries with at least 25 players signed:

United States players earning the most: 460 players at an average salary of $1.51MM per year

Canada is 2^nd 790 players at an average salary of $1.43MM per year

Russia is 3^rd 90 players at an average salary of $1.41MM per year

Czech Republic is 4^th 68 players at $1.36MM per year.