NHL salary cap

The NHL salary cap is the total amount of money that National Hockey League teams are allowed to pay their players. It is a "hard" cap, meaning there are no exemptions (and so no luxury tax penalties are required).

The actual amount of the cap varies on a year-to-year basis, and is calculated as a percentage of the League's revenue from the previous season; for instance, in 2007–08, the NHL's salary cap was approximately US$50.3 million per team; for the 2008–09 season it was $56.7 million; for the 2009-10 season it was $56.8 million; for the 2010-11 season it was $59.4 million; and for the 2011-12 season it was $64.3 million. Following the 2012–13 lockout, the 2012–13 salary cap has been set at $60 million, but teams can still spend up to $70.2 million, pro-rated for the shortened season length. Like many professional sports leagues, the NHL has a salary cap to keep teams in larger markets (with more revenue) from signing all of the top players and extending their advantage over smaller-market franchises. This was particularly prevelant during the 90s and first half of the 00s, where the Detroit Red Wings stockpiled expensive high-end performers and subsequently won four Stanley Cups.

A salary cap existed in the early days of the National Hockey League (NHL). During the Great Depression, for example, the league was under financial pressure to lower its salary cap to $62,500 per team, and $7,000 per player, forcing some teams to trade away well paid star players in order to fit the cap.

Prior to the resolution of the 2004–05 lockout, the NHL was the only major North American professional sports league that had no luxury tax, very limited revenue sharing and no salary cap.

During the Original Six era through to the early years of the expansion era, the NHL's strict reserve clause negated the need for a salary cap. Player salaries first became an issue in the 1970s, after Alan Eagleson founded the NHL Players' Association (NHLPA) and the upstart World Hockey Association began competing with the NHL for players. Not all NHL owners were willing to engage in a bidding war, in particular, Harold Ballard of the Toronto Maple Leafs spent as close league minimum on rosters as he could, making his team the most profitable. There was little financial incentive for Ballard to spend money on star players to improve the quality of the on-ice product and attract fans, as all Maple Leafs games were sold out regardless of how poorly the team played. The Leafs, which had only ten losing seasons in its history before Ballard took control of the team in 1972, had twelve losing seasons up until his death in 1990.

...
Wikipedia