In a move that seemed all but inevitable, the massive loss of revenue tied into the COVID-19 stoppage of play is going to create a financial migraine for a number of Stanley Cup contenders in the coming years.
A four-year extension of the current Collective Bargaining Agreement between the NHL and NHLPA is still awaiting official ratification, but a number of details regarding the document already leaked — whether it be Olympics participation in 2022/2026, financial concessions in regards to paychecks and escrow and no limits on signing bonuses.
But if we’re looking at a headliner in this extensive document, it’s tough to ignore the fiscal constraints looming on the horizon — namely, a flat salary cap for the 2020-21 season.
Now, if you’ve been following along since the COVID-19 stoppage began in mid-March, this news isn’t all that surprising — as we’ve braced for a scenario in which teams would need to move ahead with an upper limit that remains at this year’s maximum allotment of $81.5 million.
And while we’ve already forecasted the troubles that lie ahead for the Bruins (and especially a few other contenders across the NHL) given that an expected cap-ceiling stimulus up to $84-88.2 million is now off the table, such financial troubles won’t exactly be eradicated in the following seasons, either.
Yes, the salary cap’s upper limit will be frozen for 2020-21 at $81.5 million, but there is no guarantee that teams will be primed for another boost ahead of the 2021-22 campaign. According to a report from TSN's Frank Seravalli, the league's cap ceiling limit will remain frozen until hockey-related revenue (HRR) returns to $4.8 billion — which was the projected total for the 2019-20 NHL season before the COVID-19 pandemic hit.
Once that revenue pushes itself up to that $4.8 billion threshold, the upper limit will be determined using a new formula that relies on the actual hockey-related revenue from two seasons ago, along with the projected HRR from the previous season.
In a perfect world, one would hope that the HRR for the 2020-21 season would soar back to that $4.8 billion projection, but that's far from a guarantee. Rather, you could view it as a long shot.
While the NHL has been adamant about playing a full 82-game season in 2020-21 (even with a later start date in December/January), the odds of the league maxing out said revenue next year are slim — considering both the gloomy financial outlook across North America and the likelihood that we might not have packed arenas at sporting events until a vaccine is fully developed.
So what happens then if the Bruins are forced to contend with a $81.5 million cap limit for three straight seasons?