NHL economics cost Canes plenty

Staff WriterJune 21, 2011 

Jussi Jokinen is apparently out of the Carolina Hurricanes' price range. Joni Pitkanen and Chad LaRose, too. Maybe Erik Cole as well.

Even if the Hurricanes wanted to keep all four players, it wouldn't be financially feasible. As it is, they seem to think they can get more money elsewhere, more than the Hurricanes are willing or able to offer.

The whole point of shutting down the entire NHL for a season was to get a labor agreement that would enable small-market franchises to retain their best players and compete with the giants in Detroit and New York and Montreal and Toronto on the open market.

(Oh, and to lower ticket prices - how has that worked out?)

From the summer of 2006 onward, the salary cap has shot up each season, driven by increased revenue across the league - in part from increased ticket prices, but no one around the NHL really wants to acknowledge that.

This year's cap, which should be finalized soon, is expected to have a ceiling of $64 million and a floor of $48 million. That floor is $9 million higher than the ceiling in 2005-06, when the Hurricanes played the new cap game better than anyone and walked away with the Stanley Cup.

Now, as they prepare to let their impending free agents walk away, the Hurricanes are back where they were before the lockout - watching good players leave, with no chance of replacing them with free agents.

Their bottom-line losses may not be as high as they used to be, thanks to revenue sharing from the NHL, but the competitive imbalance is almost as large. They're going to end up spending more than $10 million less than wealthier teams, a difference of two or three key players.

The cap system was supposed to fix all this, but a number of factors - including a stronger Canadian dollar and bigger television contracts - have grown leaguewide revenue much faster than teams like the Hurricanes have been able to grow within their markets.

The Hurricanes' opening-night payroll in 2005-06 was $28 million, before the trades for Doug Weight and Mark Recchi. To get to that same relative payroll position this season, it will cost them $25 million more.

To keep pace, that would have demanded a tremendous amount of growth over the past six years, a good chunk of that during the worst economy in a generation. Attendance, one barometer of financial health, is more or less stable around 20th in the NHL - from a low of 15,240 in 2009-10 to a high of 17,386 in 2006-07.

Combine that with only one injection of playoff revenue in the five years since the Hurricanes won the Cup, and even if owner Peter Karmanos hadn't tightened the budget in an attempt to sell part of the team, the Hurricanes would still be feeling the financial pinch.

Six of the NHL's final eight teams this season ranked in the top 11 in payroll. Three of the conference finalists were in the top seven - except for the Tampa Bay Lightning, which relied on an excitement-sapping trap in an unfortunate echo of how small-budget teams kept pace before the lockout, during what came to be known as the "Dead Puck Era."

The NFL and NBA are in the throes of labor disputes that could delay, if not wipe out, one or both of their upcoming seasons. The NHL's agreement with the NHL Players Association runs through the end of next season, and there's plenty of time to work out a new one.

It would be wise not to dally. The Hurricanes are becoming an example of how the current system may have helped avoid financial catastrophe but doesn't do enough to correct the imbalances between big and small markets., or 919-829-8947

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