A funny thing happened on my way to the bank to cash my pay cheque
As we all know, the CBA established a fixed relationship between player salaries and league-wide hockey related revenues, or HRR. Right now that relationship is 54%.
Ensuring that salaries collectively come in right at 54% requires reconciliation. The lower and upper limits on team salary caps (currently $28 and $44 million) are set based on pre-season estimates of HRR, and an escrow account withholds part of the players' salaries to aid in the reconciliation. At season's end, two things need to be brought into alignment: the league's actual HRR is calculated and multiplied by 54% to determine what player compensation should have been, and then the player salaries for the preceding season need to be raised or lowered across the board so that they match 54%.
Under this system, it's entirely possible for owners to sign players to contracts that collectively exceed 54% of HRR, in which case, the salaries are rolled-back at the end of year. And guess what: if the estimates of revenue for the current season are accurate, that's exactly what's happened.
Using Irish Blue's projected final cap numbers for each team, it's estimated that the cap hit for player contracts will total $1.258 billion, or an average of $41.9 million per team.
But if the pre-season estimates of HRR are accurate, teams will only be allowed to spend $1.08 billion on player salaries, or $36 million per team.
How to reconcile the two? Simple: player salaries would be rolled-back by 14.1%. For Ryan Smyth junkies, that means a contract with a paper salary of $5.5 million would result in a pay cheque for $4.725 million.
Oilers payroll below average
The reconciliation also helps put the Oilers player spending in perspective. Right now they're projected to finish the year at $41.9 million in cap salaries. That figure creates the illusion that they're spending close to the cap. In fact, their player compensation is below league average.
Factor in the adjustment, and what they'd actually pay would be $35 million, or roughly $1 million below the league-average team budget of $36 million. Raise or lower league revenues to change the reconciliation, and this relationship doesn't change -- the Oilers' share of player costs remains less than 1/30th of the pot. As Tyler always reminds us, it's a fixed pot, and raising one player's salary simply moves money between players, it doesn't change the total amount the owners' pay.
I always need to qualify these commentaries by restating my view that I don't think higher compensation necessarily equals higher performance. But when the team is in the top 25% for revenues, below league-average for player compensation, and out of the playoffs, you have to think that the fans who provided this spending power deserve more. I'd like to see both better investments by management, and a team that uses its higher than average revenues to deliver above-average player compensation.