Bernstein: Two Leagues, Two Cap Realities
By Dan Bernstein--
CBSChicago.com senior columnist
(CBS) At first glance, it looks surprising that the NHL has a higher salary cap number than the NBA for the upcoming season.
It's true. Before we get into the details of what's commencing for the two leagues Wednesday – NBA free agency just tipping off at the stroke of midnight and the puck dropping for the NHL open market – note that hockey teams are preparing to slice up $71.4 million per team while the ballers have $67.1, though reports indicate the possibility of the latter number rising by another $2 million before all is said and done.
It's deceptive, however, the difference between a hard cap and a soft one. Look no further than Chicago for a stark rendering of how the two systems play out.
The Blackhawks were just forced to trade a well-liked rising star in Brandon Saad, while the Bulls' own All-Star guard, Jimmy Butler, is incentivized to not want all the money the team can give him. It's all because of the number of American televisions tuned to the respective sports and the advertising muscle each audience can deliver.
NBC pays the NHL $2 billion over 10 years for U.S. broadcast rights. Franchises on this side of the border struggle to turn a profit mostly due to the lack of revenue from that stream, while Canadian teams benefit from the league's 12-year, $5.23 billion (Canadian) deal with Rogers Communications. The struggles of the Canadian dollar have also adversely affected the amount available for players.
The NBA's new contract with ESPN and Turner Sports is worth $24 billion over nine years, jolting the salary level up to a projected $89 million per team in 2016-'17 and $108 million in 2017-'18, and that's before factoring in the byzantine system of exceptions that allows teams to splurge far beyond even those levels.
Luxury tax is paid next year at around $82 million, and the new TV money figures to push that to a whopping $127 million level as soon as 2017-'18. That means teams blowing past the soft cap to re-sign their own free agents under what's known as the Larry Bird rule can pay out whatever they want as long as they pay a penalty to the league that's then redistributed to smooth out financial imbalances. That the lowest tax threshold will soon be almost double the current cap number speaks to the power of eyes on TVs.
That's why basketball is seeing a game of chicken going on between agents and teams. Somebody like Butler – a 25-year-old with his arrow pointed up – is smarter to turn down the maximum guaranteed offer of five years and $90 million he received from the Bulls, angling instead for a shorter deal to get him an earlier maximum slice of the much richer pie available soon. Players can bet on themselves maintaining health and performance to reap tens of millions in return.
But there are no such windfalls and no such relief afforded NHL teams, where the number is the number. Though Butler and Saad played in the same building, the ice under the hardwood means a colder reality.
Saad wanted the bigger salary, to which he's completely entitled, and his team simply couldn't afford him. There's no Larry Bird exception that would let the Blackhawks exceed the cap, so he was sent to Columbus for a handful of viable players.
Names will be flying around the news in the coming hours and days, as both wintertime pro sports begin to remodel their rosters. They held their respective amateur drafts last week on consecutive days and open their free agency periods together, but they exist in entirely different economic worlds.
Dan Bernstein is a co-host of 670 The Score's "Boers and Bernstein Show" in afternoon drive. Follow him on Twitter @dan_bernstein and read more of his columns here.
