Point/Counterpoint: The merits of a salary cap floor

Does the salary floor force teams to flush money down the toilet?

Welcome to another edition of Point/Counterpoint, where a pair of Flyers Faithful scribes square off, debating an issue with their own unique style and flair. This week, Kim Q and our own Fearless Leader Marcello D take on the issue of the salary cap floor.

Point: The cap floor has kept its promise of parity

by Kim Q

At first thought, the salary floor is the yin to the yang of the salary cap. The salary cap serves an important purpose in leveling the playing field for some of the lower revenue teams and keep the higher revenue teams spending in check. Just as important in leveling that playing field is the salary floor. A reasonable salary floor would force teams to spend enough to remain competitive and pay their players fair wages, however the tricky part is keeping these teams from spending more than they can afford.

The parity in the league has indeed increased as promised. All you need to prove this is the fact that an eighth seed in the Western Conference won the Stanley Cup this year. This is highlighted even more by the fact that the 3rd, 7th, and 8th seeds in the Western Conference were separated by a mere point each. A large part in this has been the incorporation of the salary cap and floor. The Phoenix Coyotes are one such low revenue team that has experienced success, partly because they would have most certainly not iced a competitive team had their payroll not been pushed to meet a salary floor.

In theory the salary floor is a good thing, however since the cap is based on league revenues I’m not so sure the floor should be an arbitrary number like it is at present. The salary floor is set at $16 million below the salary cap, which hardly cuts slack to the bottom feeding teams that just don’t see the revenue increases that the rest of the teams in the league do. One way to circumvent this is for these lower revenue teams to sign players to contracts that include bonuses that count against the cap whether or not the requirements for bonuses are met.

The salary floor also means that trading bigger contracts is possible and that aging players that are in their decline can still find work as role players on teams that just need to hit the floor. Unfortunately, with the salary floor rising each year, many mid range players end up with inflated contracts that they may not play up to. This is, of course, the fault of and a problem for the teams that deliberately overpay to hit the salary floor and not a prerequisite that is forced upon them.

One of the problems with the current cap system is the long term, large contracts that are handed out to players like Ilya Kovalchuck in order to decrease the cap hit and allow an elite player to eat less of a chunk out of the team’s cap. Limit these large contracts and we really will see more parity in the league, since a team wants to spend $10 million a year on Ilya Kovalchuk really will have a $10 million chunk of their available cap gone, rather than a more reasonable $6.7 million.

While I’m not sure that the NHL can keep up its current increases in the cap and floor each year, I do think the salary floor has lived up to its promise of parity. While the present system is far from perfect, with some simple tweaking, it can become a system that is fair to all.

Counterpoint: The cap floor must go

By Marcello D

In 2005, the salary cap floor was $21.5 million, or 55% of the cap ceiling. It served valuable purpose of spreading salary around the NHL and — to some extent — increasing parity.

Unfortunately, that purpose only worked in theory. Since its inception, the salary cap floor skyrocketed to $54.2 million, or over 77 percent of the salary cap ceiling and $15.2 million above the initial 2005-06 salary cap figure of $39 million. This puts low-revenue teams in a very tough spot.

As a result, nearly one-third of the teams in the NHL currently sit below the cap floor and numerous bad contracts have been handed out over the years just so that teams could be cap compliant.

While the cap floor seemed like a good idea at the time, it has turned the NHL’s poorest teams into both a dumping ground for bad contracts and a loophole for Collective Bargaining Agreement exploitation.

Owners have gone bankrupt, teams have been sold, and big-market teams have continuously manipulated the CBA by handing out front-loaded contracts structured to move players to teams who can benefit from having a player with a high cap hit and low salary.

Perhaps, in the next CBA, the league can find a way to make the cap floor work but, as it currently stands, it serves no real positive purpose for the NHL.