NHL Free Agency 2012: Lame Duck Salary Cap Increase Provides Stars With Big Challenge

The Dallas Stars have operated at a self imposed internal budget the last three off-seasons. These numbers have been well below the league's cap ceiling, and they've stunted the growth of the franchise to the tune of four-straight playoff-less seasons. Those lean times are set to become a thing of the past this July when new Stars' owner Tom Gaglardi gets his first real chance to make a big splash - Except no one knows how much he's willing, or more importantly, how much he'll be able to safely spend under the new CBA.

Last week the league told its teams, reportedly, that the salary cap will be temporarily set at $70.3 million dollars for next season based on revenues and the current calculation dictated by the expiring CBA. The Stars, under that number, could, in theory, spend very close to $30 million dollars in free agency this season and be under that number.

It is, of course, a lot more complicated than all of that.

When the NFL and NBA experienced labor strife during CBA negotiations last summer, both had to wait for the settlement to begin free agency under a new set of rules and financial guidelines. NHL general managers, instead, have to operate under rules they know will not apply when play resumes this year or next.

It's a bit like being forced to sign a contract to buy a house one is not sure they'll be able to afford or get properly financed. It's a guess, and it's this challenge Joe Nieuwendyk and 29 others face when the phone lines open on July 1.

Today we'll take a little look at how the current calculations arrive at $70.3~ million, what future calculations might look like if the players lose, as is expected, a portion of their revenues, and what the Stars might do while not knowing the rules - Including needing to sign as many as 10 free agents this summer. How far back will the cap roll and how far can the Stars stick their necks out this off-season in a situation that is sure to change?

Continued after the jump...

This is from the Globe and Mail and is a sample calculation on how to get the $70.3 million proposed cap for next year under the current deal:

So, for example, to get the cap figure, this is a sample calculation:

Midpoint: ($3.3-billion x .57) - $90-million in benefits / 30 teams = $59.7-million

Inflator: 59.7-million x 1.05 = $62.7-million

Cap: $62.7-million + $8-million = estimated $70- to $71-million


Several things could change here when the new deal is complete. The most significant is expected to be what the players get as a slice of the whole revenue pie. They currently take 57% of league revenues, giving rise to the generous calculation above. That is expected to be rolled back a little, as was the with the NFL and NBA last summer.

Also in play could be the 1.05 multiplier used, and the $8-million added to make the previously calculated sum the "cap mid point". The league has a well documented problem where the mid-point is concerned, but it exists on the other end. The floor calculation could change in order to accommodate as much as a third of the leagues owners that reportedly have suffered significant losses in recent years.

Supposing the players have to roll back their piece of the pie to help maintain 30 teams in their 30 current locations, the calculation could possibly change like this. Let's take 52% as an example...

Midpoint: ($3.3-billion x .52) - $90-million in benefits / 30 teams = $54.2-million

Inflator: 54.2-million x 1.05 = $56.9-million

Cap: $56.9-million + $8-million = estimated $64.9 million.


The Globe article goes on to suggest that the league's opening offer will be BELOW 50% for the players, and it would be countered from there. There are obviously 100 other moving parts on this, ranging from this calculation to revenue sharing and T.V. money, etc. There's no way to know, but gives the state of so many teams, it's reasonable to think that the cap will be much closer to $60 million this coming season than $70 million.

Under current rules, a team can actually go 10 percent above the projected cap in the off-season, provided they shave their number down by opening day. Some teams could actually go all the way to $77 million this July and then adjust their rosters to fit the new CBA later, picking and choosing the talent they keep. It's conceivable. Not likely. An amnesty clause allowing teams to buy-out one contract that wouldn't hit their cap could help alleviate pressure on teams sitting too far over the line when training camp starts, but that's a long shot and not a wholly reliable strategy, though it has reportedly been brought up by general managers already.

Cautious general managers will remain flexible in the face of the unknown. The Stars cap room, even with the assumption that next year's number will be lower than this past year's, still allows them enough wiggle room to make a splash if they have the chance, while filling out the remainder of the roster with competent NHL-ready talent.

Capgeek shows the Stars as having $26.33 million in cap room under the $70.3 million number, but they're including Scott Glennie, Reilly Smith and Brenden Dillon in their calculations and stating that Dallas has about $44 million signed up for next year. The reality is that the Stars have $40.55 million dedicated to 13 players that we can safely assume will be on the NHL roster next season.

A conservative approach, using about $60 million as a guideline leaves them with 10 players to sign and about $20 million to do it. Any young players that make the team (Brenden Dillon, for instance) bring relief to that number as they tend to make under a million dollars on their entry-level deals. Otherwise the Stars must fill all their needs at an average of $2 million per body.

Their stated goal of signing a big name on defense and bringing in two top-six forwards would eat a significant chunk of that money and could leave them in a bit of a quandary in filling out the bottom of the roster, keeping an eye on the likely cap rollback the new CBA would bring. The reality is, however, that with at least one of Suter or Parise (and possibly both) looking very likely to stay put, an already bare market, looking thinner by the day, will prevent the Stars from spending on too many, if any, "big ticket items."

30 owners and 30 general managers bringing 30 different outlooks on the complicated landscape before them this off-season should make for interesting drama at the draft, and 9 days later at the start of free agency. The thing Stars fans need to keep in mind is that though Jim Lites said the Stars have basically no budget restrictions this summer, they will be limited by sensible caution where the future cap number is concerned, a thin free agent market, and most of all - A lot of patience, which we expect Gaglardi and Nieuwendyk to exercise with regularity in a summer that could be as damaging as it is exciting under the right circumstances.

Talks are expected to begin informally in the coming weeks between the NHLPA and the league, and they'll likely be kept quiet in the early going as the two sides set an agenda and enumerate the issues to be discussed.

For now you can rest easy knowing you're not a fan of the San Jose Sharks, who need to fill nine roster spots and already have $55.5 million dedicated to next season. A significant rollback in the players portion of league revenues could see the dismantling of the perrenial underachievers by the Bay begin.

The most interesting thing about July 1 for Stars fans, however, might not be who Dallas signs, but rather how they leave room for the four, five or six million that Jamie Benn commands when the CBA is finally sorted out. The final rules and number will affect those talks, perhaps, more than anything else.

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