New York Rangers: The future of the NHL will be determined off the ice

In comparison to the other three major sports leagues in North America, the NHL lags far behind in player salary and tv engagement. The opportunity for the New York Rangers’ salary cap to the balloon is on the horizon.

The past decade was one of player empowerment in the NBA. Moreso than any other league, the players are in charge of their future and are able to dictate where they want to play. Since the owners fought for shorter contracts in the last collective bargaining agreement, the players have forced their team’s hands to move before the team can move them.

Part of the NBA’s empowerment was a massive increase in the salary cap during the summer of 2016 that came along with the new television rights deal. The NBA agreed to a nine-year, $24 billion dollar tv deal with ESPN and Turner Sports which went into effect that summer. This, in turn, led to a $24 million increase in the salary cap  in one summer.

Compare that to the paltry increase the NHL had this past offseason from $79.5 million to $81.5 million. Now, this brings us to how the NHL could mirror the successes of the NBA. It’s unlikely the NHL cap will reach $100 million anytime soon because of the class of owners in the sport, but there are other steps for Gary Bettman and the owners to mimic.

Currently, Comcast, which owns NBC, is the sole rights holder for NHL games. However, this TV contract, which was signed back in 2011, which paid the league $200 million per season expires following the end of the 2021-2022 season.

In comparison

The TV deal may not expire for another two NHL seasons, but the league and Comcast can begin negotiating an extension as soon as this year. Under the old deal, 109 regular season games were broadcast and even if, on an affiliate like Golf Channel or CNBC, every single playoff game would be available.

Compare this with the NBA deal in which there is a nationally broadcast basketball game on every single night of the week across any of TNT, ESPN/ABC or NBATV and there is a clear disparity. It’s hard for the NHL to gain ground on the other leagues in terms of TV viewers when its relegated to NBCSN, which is not a part of every cable package.

Even compared to the stagnating Major League Baseball, the NHL has room for improvement when it comes to TV rights. As part of an early extension, Fox agreed to pay MLB $5.1 billion over seven years, which averages out to $728 million per season, more than triple what the NHL currently gets.

Even though the NHL struggles in terms of viewers compared to the other leagues, live sports rights are a steady cash cow for networks. Sports accounted for 89 of the 100 most watched broadcasts in 2018 according to Forbes.

The Jump

NBC has already expressed interest in an extension to remain the sole rights holder, which would be at a cost of exposure to the NHL. The potential for a bigger payday exists if the league is willing to split its rights across multiple networks for different days of the week like both football and basketball already do.

If the league is going to lock itself into a long term deal with one network again is another factor that needs to be considered. The other three leagues all had extensions negotiated this decade and it allowed their sports to gain exposure and have significant jumps in the salary cap while the NHL trailed behind.

At a minimum, the NHL needs to be shooting for around $500 million per season. This would be behind the other three leagues and what NBC pays the English Premier League for games two days a week, yet would still more than double the current tv deal.

The effect

As this summer proved, the NHL owners are always hesitant to increase the salary cap, even when times are good. The league took in $4.86 billion in revenue back in 2017-2018, the last year which statistics are available according to Forbes. A big jump in the TV deal would have a variety of effects in both the on-ice product as well as the health of the overall league.

The elephant in the room is coming this September when either the owners or player’s association could opt out of the current collective bargaining agreement. There have been four lockouts since 1992, including the 2004-2005 one which canceled the entire season.

While a new TV deal would represent a significant increase in the pot that NHL owners get to take home, the rising player salaries are still an issue across the league. It’s in part why the salary cap was adopted back in 2005-2006 following the lockout.

Throw in the Seattle expansion fee of $650 million which is to be distributed amongst 30 teams (The Vegas Golden Knights as part of their expansion agreement don’t get expansion money from Seattle) and suddenly things seem a little rosier between the owners and players.

Yet, at the same exact time, NHL player salaries linger far behind the three other sports in North America. The best player in the sport, Connor McDavid, makes $12.5 million to drag the Edmonton Oilers on his back. Mike Trout of the Los Angeles Angels makes $33.25, Stephen Curry of the Golden State Warriors makes $37.4 million and Russel Wilson of the Seattle Seahawks makes $35 million.

What it means for the Rangers

As a team that almost always spends to the salary cap ceiling, a dramatic increase would help the New York Rangers. If the new TV deal goes into effect in the 2021-2022 season that’d be after the contracts of Marc Staal, Brendan Smith, Kevin Shattenkirk and Henrik Lundqvist would all off of the team’s books.

However, by then, the group of Filip Chytil, Lias Andersson, Brett Howden as well as restricted free agents from the current summer, like Pavel Buchnevich and Tony DeAngelo could be coming off of bridge deals.

So, doing some back of the envelope math, we can roughly figure out what said hypothetical salary cap ceiling could be. Going off of this years $81.5 million, which was a $2 million increase from last year, we’ll say a $2.5 million increase each of the next two years as long as there isn’t a lockout.

This brings us to $86.5 million before the new tv money and Seattle expansion money is accounted for. Assuming that the NHL TV deal comes in at around $500 million, which would be a little more than half of what the NBA got when the cap jumped, we can peg the increase somewhere around $11 million on the conservative side.

At $97.5 million, the contracts handed out in the past calendar year are significantly more palatable. Instead of worrying about the cap hit, the organizations would be more inclined to value players in terms of cap percentage like in the NFL and NBA.

For example, Artemi Panarin‘s $11.64 million per year is 14.3 percent of the current salary cap of $81.5 million, a significant commitment to one player. But, if the cap were $97.5 million, it’d be 12 percent, which may not seem like a lot but in a salary cap sport, every last bit of cap space helps.

At a time when the Rangers’ young core would be coming into restricted free agent status, the jump in the cap would significantly help retain talent. One of the core ideas around the salary cap is that it makes retaining homegrown talent more difficult in hopes that it could reach the open market.

Of the Rangers’ core, the potential is there for at least one if not two superstars to emerge. If Kappo Kakko is as advertised, Vitali Kravtsov acclimates well to North America, K’Andre Miller jumps into the NHL come the spring and Chytil keeps making steps there’ll be at least two significant contracts to be doled out.

While the natural inclination may be more cap space means more free agents, it may mean the contrary for a young Rangers’ team. The jump in the cap may mean long-term deals for Kakko, Kravtsov, Miller and Chytil early on to develop a true core for a Stanley Cup contender.

The serious contenders all feature two quality centers, at least two quality wingers and one shut down defenseman. The Rangers have pieces that could eventually blossom into the said core, and a ballooned cap may enhance the team’s window of contention for a multi-year period.

It may be pie in the sky thinking, but a quality TV deal could have a long-lasting positive impact on the health of the NHL. The league must at all cost avoid another lockout and setting back any gains made since 2013.