Business of the NHL: Bucks beget blame

It was a cold day in November in Calgary, and the Wild had just finished a morning skate at the Saddledome.

On the wall outside the Flames locker room is a huge picture of the 1989 Stanley Cup champions, poised on the ice after defeating Montreal in the sixth game. Al MacInnis, Gary Suter and Joel Otto are there, among others. Lanny McDonald with his enormous moustache and playoff beard. And there, smiling, an assistant coach named Doug Risebrough.

Risebrough, now the president and general manager of the Wild, stopped and looked at the picture.

"Great team," he said. "And you know what? Guess what the payroll was for that team. It was $8 million . . . Canadian."

Oh, times have changed.

Today more than 20 players make more than that . . . American. Nashville has the lowest payroll in the NHL at $23.2 million. At the top is Detroit, at $77.8 million, with Nicklas Lidstrom ($10 million), Curtis Joseph ($8 million) and Brendan Shanahan ($6.5 million) pulling in the biggest paychecks.

The league and its owners say labor costs are out of control, that a salary cap is needed. The players, represented by the NHL Players Association, contend the free market sets salary levels and that there is a closer connection between rising revenues and rising salaries than the league is willing to admit. If the two sides fail to find a middle ground, the 2004-05 season could be threatened.

Talk about inflation.

"There is nobody to blame for it but the 30 of us who sit in the general managers' seats," said Phoenix GM Michael Barnett, who should have a well-rounded view of the situation. Barnett was a successful agent before taking the job. And in his former life he negotiated some breakthrough contracts, including the first for Joe Thornton when he was the No. 1 overall pick by Boston in 1997. The deal changed how a rookie could earn bonus money, and according to Bill Daly, executive vice president of the NHL, it rendered the bargaining agreement unworkable.

"I'll say it again. From the years I was on the other side, it was never a smoking-gun scenario," Barnett said.

So what has caused salaries to shoot so high?

Talk to folks on the business side of some of the NHL's teams, and you get the combination of competition, the rising-all-boats effect of a few major deals, that so-called "model" contract that has swelled in average value since Barnett first struck for Thornton that year with Boston President Harry Sinden.

"In any marketplace, there is a very strong relationship between the increase in revenues and a corresponding increase in salaries," NHLPA senior director Ted Saskin said. "Salaries are set by owners. They determine how much a player is worth, and they act accordingly."

Of course, the two sides find much to disagree on with this point. The NHL contends its clubs spend 76 percent of their revenues on player costs, the most among the four major sports. Ask NHLPA officials, and they will offer their own numbers that show both revenues and costs increasing at much the same rate while scoffing at the NHL's numbers. Indeed, according to NHLPA figures, revenues have risen by 157 percent from the 1995-96 season through last season while player salaries have risen by 170 percent.

But the bottom line is that salaries have skyrocketed in recent years. And here are some reasons:

Competition

Pure and simple. Owners want to win, and they are often willing to spend the money to do so.

"It's competition. Teams wanted to be good, to get better, so they made changes. Some of the changes, as it turned out, didn't work."

All it takes is a few out-of-the-norm contracts to start the upward pressure. And there have been more than a few deals in recent seasons that qualify. Joe Sakic -- then a group II, or restricted, free agent -- was given a $21 million offer sheet by the New York Rangers, including a $17 million signing bonus. Colorado matched the offer.

"It's the rising-tide theory," said one NHL GM, who asked not to be identified because the league has clamped down hard on league personnel, threatening fines for those who talk about issues now being negotiated with the NHLPA. "Guys who were $2 million guys became $4.5 or $5 million guys. The brakes could have been put on those group II's earlier, to where it could have been a gradual jump," he said.

Then there have been some deals that seemed out of line with the norm for unrestricted free agents that may have exerted upward pressure on salaries.

Take the Rangers. They wanted center Bobby Holik because he had won Stanley Cup titles in New Jersey and was perhaps the league's best defensive center. He received a five-year deal for $45 million. Other examples: the seven-year, $77 million contract Washington gave Jaromir Jagr, or the 10-year, $89.9 million deal the New York Islanders gave Alexei Yashin.

"It's hard to believe it's gotten this high," said Lou Nanne, who played, coached and was general manager of the North Stars. He remembers the Stars as having a $6.6 million payroll as late as 1991. "You have arbitration, which you didn't have before. You have an awareness of salaries around the league that you didn't have before. That didn't come in until about 1990, 1991.

"And you've got people who are trying to get good real fast, to try to make the playoffs. People aren't using the same business principles to run their hockey clubs that they use to run their [other] businesses."

Again, there are two ways to look at the results. You can take a quick glance and say that to the monied go the spoils. Since the last bargaining agreement went into effect, many of the Stanley Cups have been hoisted by teams spending big dollars. The Red Wings, three times since 1997. Colorado, twice. Dallas in 1999.

The model

In 1997, Sinden's Boston club was coming off a losing season in the Bruins' second season in the new FleetCenter. In an effort to avoid a holdout, he and Barnett agreed to a deal in which Thornton would earn bonus money by achieving two of the six components -- tied to goals, assists, points, plus/minus, ice time and voting for Rookie of the Year award. In the second year, three of the six needed to be reached; in the third year, four of the six.

"At one time you could go in and put a premium down of, say, $200,000 and you could get coverage on the bonuses by an insurance company," Risebrough said. "So the guys were saying: 'In some ways, it's not that costly. If a guy makes it, I'm not paying it.' The problem became, the contracts are three-year contracts, but you couldn't get the insurance by the end of the second year."

Fiscal sanity?

Well not yet. But at least some teams might be looking at another way.

Last season the Wild, then with the NHL's lowest payroll, made it to the Western Conference finals. Ottawa, similarly frugal, did the same. New Jersey, long a model of a successful team keeping a curb on salaries, has won three Stanley Cups and has been to four Cup Finals in the past nine seasons. And only last season did the Devils' payroll rise above the NHL average.

Teams have taken note.

Said Risebrough: "Every team is looking at its own situation. They're still bound by a collective agreement. But, at the end of the day, more teams are making individual decisions that relate to their plans than they ever did before."

Look at the NHL standings just past the midseason point, and you can see a handful of teams low on the salary list vying for playoff spots. Five of the teams in the bottom half of the salary list are now in playoff position, including San Jose (20th) and Tampa Bay (21st), each doing very well.

A trend or just a blip on the screen? Depends on who you talk to. The NHL continues to call for a hard salary cap. The NHLPA is willing to admit adjustments need to be made but insists on the need for a free market for free agents. Chances are we won't know how this one comes out until next fall, or maybe much longer. The current bargaining agreement expires in September, and this time a work stoppage could be a long one.