Why the NHL owners won’t want a hard cap with “exceptions”

On Tuesday, the NHLPA announced their initial collective bargaining proposal to the NHL, which included a reduction of the player’s portion of hockey related revenue, no free agency or contract changes, and a hard salary cap with “exceptions.”

It’s a good start the players are willing to concede some of their HRR to the owners as this will be one of the major sticking points in CBA negotiations. What that number turns out to be will be another story. The owners proposed some sweeping changes to free agency and contract lengths about a month ago so it may take a while before the NHLPA and NHL find their way to the middle on that one.

However, probably the most interesting and controversial part of Donald Fehr and the players’ proposal was the salary cap with “a few exceptions.” Those exceptions would be a luxury tax that would allow teams to go over the cap and the option for teams to operate below the floor. The owners bargained hard for their strict salary cap that lowered player salaries and shifted the competitive balance in the league to promote parity. It’s hard to imagine they’d want to make changes to it.

It’s obvious why the players would want the luxury tax: they would have opportunities to make more money playing for big market teams willing to spend over the cap. But that would certainly be a huge blow to the competitive balance in the league. The owners would surely be split on this.

Obviously the small market teams would be at a disadvantage with the Philadelphia Flyers and New York Rangers of the world being able to spend at will. No one has quite figured out “money puck” just yet and it’s pretty much a given that winning makes a franchise money. Teams that can’t sign key free agents are often left in the cold depths of the standings. I don’t think many of the small market owners would be content with being able to operate below the cap, because they know they would alienate their fans and lose revenue.

Let’s not forget about the big market clubs either, what’s to say they would be all for spending above the cap. While many owners have been willing to spend extra money by buying out bad contracts or stashing them away via Europe or the AHL, more cap flexibility would add pressure to spend even more. It’s a convenient excuse for an owner to say “we couldn’t sign ‘player X’ because we just didn’t have the cap space,” or better yet “we’re doing everything we can to win, but that darn cap is holding us back.” When successful teams with large fan bases like the Chicago Blackhawks still claim to be losing money, do you think the owners would jump at the opportunity to pay a luxury tax?

The main reason there is a threat of no hockey in 2012-13 is money. Essentially uncapping the league would drive player salaries up and would put more scrutiny directly on owners. Every team’s chairman wants to be viewed as a guy who “cares about the team” and “wants to win.” However, if he’s not willing to open his wallet and pay the luxury tax, all of a sudden he’s a bad owner.

The idea of a hard cap with “a few exceptions” is as close to an oxymoron as you can get. It would be very hard to envision an NHL CBA with a luxury tax in place.

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