Friday, July 06, 2007
Hate the High Salary Cap? Blame Canada!
by Jes
With the NHL Salary Cap hitting an amazing $50mil+ for the next season, people are wondering how the figure got so high, especially considering the much-more-popular NBA has a cap of just $56mil.
Well, the answer lies in the stronger Canadian dollar (and weaker American dollar).
From Stephen Brunt of the Globe and Mail:
In layman's terms, Canadian ticket sales become worth more to the league, and then the total league revenues went up, simply because of a currency exchange issue.
So, the players benefit with increased salaries, all thanks to Canada.
The owners? Well, they asked for this 'cost certainty', and didn't predict/expect that the Canadian Dollar would get as strong as it did. It's their fault that they didn't have a plan in place for such an event, and now we see the rich teams able to spend just as foolishly as they did pre-lockout.
It's a double-edged sword, of course. The strong Canadian economy allows fans and business to buy pricey tickets, which in turns increases revenue, which increases the cap, etc etc...
Or, we can see Kevin Lowe be even more foolish than he ever was by signing Tommy Vanek to a $7mil+/season offer sheet. WTF?
With the NHL Salary Cap hitting an amazing $50mil+ for the next season, people are wondering how the figure got so high, especially considering the much-more-popular NBA has a cap of just $56mil.
Well, the answer lies in the stronger Canadian dollar (and weaker American dollar).
From Stephen Brunt of the Globe and Mail:
That first year postlockout, with the Canadian dollar up to about 84 cents (U.S.), the cap was set at $39-million (U.S.). Then two things happened: the Canadian teams rode a wave of pent-up demand for their product, filling their buildings, maxing out their revenues, and the Canadian dollar began to climb toward parity.
That swing was enough to push overall league revenues up, even as American television money dipped, and many U.S.-based franchises were struggling to reclaim even the modest fan bases they had maintained before the lockout.
This year, with the Canadian dollar closing in on 95 cents — up more than 27 per cent over the spring of 2004 — the new cap number is $50.3-million.
In layman's terms, Canadian ticket sales become worth more to the league, and then the total league revenues went up, simply because of a currency exchange issue.
So, the players benefit with increased salaries, all thanks to Canada.
The owners? Well, they asked for this 'cost certainty', and didn't predict/expect that the Canadian Dollar would get as strong as it did. It's their fault that they didn't have a plan in place for such an event, and now we see the rich teams able to spend just as foolishly as they did pre-lockout.
It's a double-edged sword, of course. The strong Canadian economy allows fans and business to buy pricey tickets, which in turns increases revenue, which increases the cap, etc etc...
Or, we can see Kevin Lowe be even more foolish than he ever was by signing Tommy Vanek to a $7mil+/season offer sheet. WTF?
Labels: Kevin Lowe, NHL Front Office, Salary Cap, Vanek
