Sources close to both sides say NHL, NHLPA agree on Salary Cap structure

June 9, 2005

The Globe and Mail (Toronto, ON), citing sources close to both sides in the dispute, reported Wednesday that the National Hockey League and the NHLPA have agreed to a salary cap structure, arguably the most contentious issue in the continuing lockout that led to the cancellation of the 2004-05 NHL season on 16 February, 2005.

The Globe and Mail is reporting that the deal, providing the "cost certainty" that the NHL has been seeking, will consist of a floating, team-by-team salary cap and floor based on a percentage of each team's revenue projections. What is being reported as a six-year deal has a salary cap range of $34-36 million and a salary floor of $22-24 million, both hard caps. The new deal will also reportedly include the across-the-board 24% decrease in salary offered by the NHLPA in February. A dollar-for-dollar Luxury tax will also take effect at the halfway point between the lowest salary floor and the highest salary cap (slated to be $29 million for the first year of the deal). Details about what will be done with this money have not been completely worked out, but it is thought that this money will be distributed to teams below the halfway point in such a way as to make sure they remain above the salary hard minimum.

While this is one of the most contentious issues in the labor dispute, there are several other issues that may delay the signing of a new Collective Bargaining Agreement. These include deciding how high-payroll teams will drop to the new maximum, working on new systems for salary arbitration, free agency, Olympic participation, and drug testing, and to design a complete revenue-sharing system.