After the COVID-19 pandemic, many fans of US sports wondered if a financial reckoning was coming. The sheer pain of the year without finance had left many sports teams wondering how they would fare. It also left leagues, like the NHL, with salary cap headaches to try and work out. Could revenues stretch to keep players on the deals they were on? Or would the cut in caps cause problems all across the US sporting system?
Thankfully, as it stands, it looks like things might work out OK after all. The NHL is expected to see a rise in the salary cap for the 2022-23 season. A bump of around $1m is expected to be brought, taking the cap to around $82.5m. This would see the first rise in the upper-limit of the salary cap since the pandemic began. Indeed, with a billion-dollar debt load picked up during the pandemic, it was expected that, at best, caps would freeze. However, with the Seattle Kraken joining as the 32nd NHL member, the cash injection this provided has already improved the long-term forecast for the league.
Interestingly, the new cap addition might be part of the “lag formula” that was agreed as part of the 2020 Collective Bargaining Agreement (CBA). This formula would see a $1m rise in the cap each season until the escrow balance to the ownership is paid off. This balance ballooned during the pandemic.
Indeed, current reports suggest NHL revenue to be around $4.8bn for the 2021-22 season. This would also include the new revenue coming from the ESPN and Warner Media sports coverage deals, as well as the aforementioned funds brought in by the addition of the Kraken to the NHL.
Is this good news for the NHL?
While these all seem like positive factors, the cold facts are that the NHL is still below its pre-pandemic income of $4.9bn. Indeed, there are some worries that some of the stadia will still not be accepting full capacity crowds for much, if not all, of the 2022-23 season – that would further impact the revenues that can be drummed up.
At the moment, the escrow balance is expected to exceed the $1bn mark, creating another challenge for league ownership to deal with. The financial future of US sports looks quite confusing, but the good news in some rises shows that, at the very least, the worst case scenarios have not quite come to pass.
It will be intriguing, then, to see how things develop in the years to come. With revenue expected to rise to as much as $5.4bn by the 2022-23 season, though, it is hoped that the league can start to cut down on that massive escrow balance to keep things in check.
Indeed, NHL cap experts over at Daily Faceoff have created some interesting projections for the revenue to come in across the next years. The end note is quite simple – no matter how much money was spent on the 28th July, the future is going to be one of financial reality and teams having to cut their cloth accordingly.