NHL Salary Cap: Shady Circumvention, Shrewd Management or Both ?

As the NHL's regular season begins its homecoming stretch, and players begin to either prepare for the playoffs, many general managers are doing anything they can to improve their rosters or prepare for future seasons.  For teams at the lower end of the standings, this process looks very dismal, where the competitive players are offloaded for future draft capital in the hopes of improving the team in future seasons. A looming question for many competitive teams revolves around their salary cap: How will they “make it work”, and fit as many good players in their lineup without exceeding the agreed-upon salary cap? Sometimes this is done by cutting and placing players on waivers, a process where players are posted for other teams to potentially pick up their contracts and add them to their roster. In the modern-day NHL (2015 to present), a new strategy has emerged. The Tampa Bay Lightning won the 2021 Stanley Cup championship while being almost 10 million dollars above the salary cap; How? Many teams have developed a new system of “circumventing” the salary cap by adding players to the long-term injury reserve (LTIR). By placing a player on the LTIR, their salary no longer is included under the salary cap. This allows the team to pursue and sign other meaningful players to their roster. With the current collective bargaining agreement (CBA), agreed upon by both the NHL and the NHL players association, there is no salary cap for the playoffs. Thus teams can add back any player to their playoff roster, in addition to the players they have signed, and thus can play “over the cap”. While this strategy may seem illegal and shady, according to NHL deputy commissioner Bill Daly, who discussed this topic at length with The Athletic staff writers, “the league looked into LTIR cases like the Lightning and Kucherov and ‘had no issues’” (Athletic Staff 2022). Thus, many teams who have used this strategy have had very tangible benefits. 

The NHL, like many other professional sports leagues in America, employs what is known as a Collective Bargaining Agreement. In its most basic form, according to the Cornell Law School Legal Information Institute, a CBA is an agreed-upon contract developed through a “​​negotiation process between an employer and a union comprised of workers to create an agreement that will govern the terms and conditions of the workers' employment” (Cornell Law). With regards to the NHL, the owners of the league and the players association agree upon numerous aspects of the game including the number of days off, length of season, injury pay, and of course, the salary cap. For the 2021 season, the agreed-upon salary cap was a flat 81.5 million. This number did not rise from the previous Covid shortened season, and NHL commissioner Gary Bettman has already stated he intends the salary cap to remain flat for the “immediate future” (Athletic Staff 2021). A subtle nuance to the cap, however, is that it only applies to teams for the regular season. This means that once teams enter the playoffs, they are legally allowed to go beyond the agreed-upon limit. However, there are certain safeguards in place, including a trade deadline, which limits to what point a team can make meaningful changes to their roster in the regular season; or so was thought.

For the 2021-2022 NHL season, the trade deadline was set for March 21st, 2022. Thus the only moves after the deadline that could be made would include waiver pickups and free-agent signings, both of which are relatively rare. However, the strategy of cap circumvention is present. Many teams have begun to use player injuries for good. This sounds incredibly contradictory, but it often works out in the team’s favor. As stated, players placed on the LTIR do not account for a team's annual cap hit. Thus their contract is virtually “hidden”. Teams will then activate these players as they enter the playoffs, when there is no salary cap, for a competitive advantage. For example, the 2020-2021 Tampa Bay Lightning entered the season 19.8 million dollars over the salary cap. This would not have been allowed. Initially, they placed Marion Gaborik, a 4.75 million dollar salaried player, and Anders Neelson, a 2.6 million dollar salaried player, on the LTIR. However, they were still 9.8 million over the cap. Nikita Kucherov, the star captain of the Lightning, did need hip surgery. General manager Julien BriseBois had him undergo the surgery prior to the Covid shortened season, in December. This allowed for the Lightning to place Kucherov on the LTIR, rightfully so, while also allowing time for him to recover for the playoffs. The Lightning were now under (barely) the cap. While the Lightning played the season without their best player, when the playoffs began, Kucherov was activated. His 9.5 million dollar cap hit was no longer a factor when they entered the playoffs, and he led the team to a second consecutive championship. Many players and fans were disgruntled by this. Dougie Hamilton, a player on the Carolina Hurricanes, who were knocked out by Kucherov and the Lightning, went as far as saying, “We had a great season. We lost to a team that's $18 million over the cap or whatever they are… I feel like we played them pretty close." He went and later stated how he did not feel as though they broke the rules but was more so frustrated with their loss and cap decisions, seemingly evoking mass hindsight bias. 

What will this mean for the future of the NHL? New rules have been discussed at previous owners' meetings, including a potential minimum for the number of games played to be eligible for playoffs (similar to the MLB) or even a gameday lineup cap, where all the players rostered for a specific game must be under the flat 81.5 million dollar cap. Yet, with no clear solution teams continue to meander around the salary cap in the hopes of gaining a competitive advantage. The Florida Panthers and Las Vegas Golden Knights are both primed for a deep playoff run this season, and yet both will undoubtedly enter the playoffs over the cap. Interestingly, both organizations added star power from other teams, with the addition of Claude Giroux (8.5 million dollar cap hit) and Jack Eichel (9.5 million dollar cap hit), respectively. Per the NHL rules, both teams have “hidden” star players on their LTIR lists (Mark Stone (Vegas) and Alexander Barkov (Florida), which will make for a very interesting Stanley Cup Playoffs.

Work Cited

Abbott, Tony. 2022 “Vegas Is Circumventing the Cap. so Why Are the Wild Being Punished for It?” Zone Coverage https://zonecoverage.com/2022/wild/vegas-is-circumventing-the-cap-so-why-are-the-wild-being-punished-for-it/ #:~:text=Is%20it%20cap%20circumvention %3F,salary%20cap%20is%20%2481.5%20million. 

Law Staff, Cornell. “Collective Bargaining.” Legal Information Institute - Wex. Cornell Law School, n.d. https://www.law.cornell.edu/wex/collective_bargaining. 

McGran, Kevin. 2022 “13 Musings: NHL Salary Cap Shenanigans Continue after Tampa's Success Last Season.” thestar.com. Toronto Star, https://www.thestar.com/sports/breakaway_blog/2022/02/15/13-musings-nhl-salary- cap-shenanigans-continue-after-tampas-success-last-season.html. 

Staff, The Athletic. 2021 “Hurricanes' Dougie Hamilton on Lightning: 'We Lost to a Team $18m over the Cap'.” The Athletic, https://theathletic.com/news/hurricanes-dougie-hamilton-on-lighting-we-lost-to-a-team-18m-over-the-cap/z0dG0hBqAh8n/FB PW=1&fbclid=lwAR2cp_y TIzelskLaiLG6IgCf-uMI9pHvZSxfpPuBtS mki-1HjunuzeA-BsQ

Staff, The Athletic. 2021 “Lightning GM on Salary Cap Decision: Everything 'Done According to the Rules'.” The Athletic. Whttps://theathletic.com/news/lightning-gm-on-salary-cap-decision-everything-done-according-to-the-rules/VyjvxfH2zsNs/.