The NHL salary cap only went up marginally for 2016-17 because the NHL Players Association exercised their right to inflate it. For the first time since the cap was instituted in 2005, growth in the amount that teams can spend on players has flattened. Here are three reasons why I don’t see this changing anytime soon:

Canada

For the 1st time since it was instituted in 2005, the NHL’s salary cap limit has entered a period of flat growth and teams that have traditionally banked on continued expansion of the spending limit are now bumping their heads on the ceiling. The main culprit behind this NHL stagflation? Canada. No major professional league on Earth is more impacted by foreign currency movements than the NHL, as the League’s 7 Canadian-based teams pump a disproportionate amount of revenue into a pool that is then split 50/50 with the players. At the end of the last lockout in 2013, the Canadian loonie was trading about even with its American cousin, which meant that a dollar of revenue generated in Edmonton was about the same as a dollar generated in Chicago. Since that time,
the NHL has had a perfect storm on its hands from a currency perspective: bad on-ice product in Canadian markets (last season the best Canadian-based team finished 19th and out of the Stanley Cup tournament) plus bad TV ratings on its new Canadian TV deal (when Toronto and Vancouver stink, Hockey Night in Canada’s ratings stink) plus a dollar that has lost over 20% of its value. It all adds up to zero salary cap growth.

The Changing of the Guard

Since 2010, the Stanley Cup Finals has had significant major US market participation, with Chicago, LA and Boston winning 6 championships between them and with Philly and the Rangers appearing as Finalists. The NHL, more than any of its major competitors is a local market league, and when the big TV markets aren’t playing, fans aren’t watching. Case in point: the 2016 Finals averaged less than 4 million viewers despite having face-of-the-NHL Sidney Crosby winning his 2nd Stanley Cup and taking home the MVP. To put these numbers in perspective, the US Olympic Swimming Trials drew 4.39 million eyeballs one weekend later. That’s the bad news. The even worse news is that the NHL’s Big Boys are either all heading into or are already in a competitive down cycle, about to be replaced by the likes of Edmonton, Buffalo, Dallas, Tampa Bay and Florida. Since we are making swimming comparisons, the NHL will be at best treading water where TV ratings are concerned.

Brexit

It’s fashionable to blame everything going wrong in the world to the UK deciding to leave the European Union, so I’ll pile on and forecast that Brexit will not only have caused England to lose to Iceland in Euro 2016, but will add more downdraft to the NHL’s revenues. What does Brexit have to do with hockey revenues? Nothing directly. However, the Brits have created a stew of global volatility that will likely only get worse before it gets better. This world-wide economic uncertainty will have a negative effect on commodities like oil and will lead investors to flock to safe havens like the US Dollar. Translation: no relief in sight for a stronger Canadian dollar leads to continued leaks in the NHL revenue bucket.

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