Sports

Connor McDavid's New Contract Could Change the NHL's Salary Structure

We might be seeing a shift in how teams allocate money, with the league's elite players rightfully getting a bigger chunk of the pie.
July 7, 2017, 5:58pm
Photo by Greg M. Cooper-USA TODAY Sports

When you look around at the other major sports in the world, you can't help but notice that hockey is weird. It's a very insular culture that's extra Canadian in many ways, whether it's the overly polite nature of most of the players in the league that leads to boring postgame interviews with an entertaining quote appearing once per month, or the lack of superstar status for the best of the best.

What I mean by lack of superstar status isn't that there's a lack of respect, it's that unlike other major sports, hockey has trouble marketing its best stars, and also doesn't pay them a whole lot, relatively speaking.

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In fact, since the summer of 2006, the share of the salary that the average top five and top-30 earners in the NHL make has gone down. Part of the reason for that is the previous existence of long-term, back-diving deals given out to players like Marian Hossa, Shea Weber, and Zach Parise, skewing the cap hits and obscuring the actual rise in salaries. But in terms of cap hits overall, superstar and star players have come nowhere close to the NHL's league maximum salary.

Graph by Andrew Berkshire. Photo by Perry Nelson-USA TODAY Sports

When you look at the trends, the average superstar player has gone from making about 16.72 percent of their team's salary cap in 2007-08 to just 13.34 percent for the 2017-18 season, which amounts to a hair over $2.5M in lost salary for each of those top-five superstars today.

In fact, when you look at the graph closely, you'll notice that the last point on the orange line is lower than the first point on the blue line, meaning the top-30 players in 2007-08 on average earned a higher percent of their teams' salary cap than today's superstars do. The top-30 players today also earn less as a percentage than their peers 11 seasons ago. To put into context how little sense this makes, the top five players in the NHL today only make 3.18 times more than league average. Is Sidney Crosby only worth three Matt Stajans? Put this way, the NHL's salary structure is tough to defend.

When insiders began reporting that Connor McDavid could see a cap hit on his extension as high as $13.25 million, one thing I wondered was if this signaled a change in the way money is allocated in the NHL, because if stars and superstars are both getting less money, that means mid-tier and lower-end players are likely getting a pay bump that doesn't make much sense.

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The simple reality of sports is that the best players are not replaceable, and most other players are. That's why the Chicago Blackhawks have been able to remain competitive while cycling through legions of depth players around their locked-in superstars. That's efficient spending, but the NHL has a fairly consistent problem with overvaluing depth players—even an intelligent organization like the Maple Leafs gave Matt Martin a contract worth $2.5M per year, just under the NHL average for a fourth liner at the best of times.



Martin's off-ice contributions are famously excellent, but is he worth 25 percent of Anze Kopitar or Evgeni Malkin? Of course he isn't.

McDavid ended up signing for $12.5M per season in the end, which is the richest contract in the NHL right now, and yet, a steal for the Edmonton Oilers, who will pay McDavid about 16.2 percent of their salary cap if it increases by about the same amount next season to $77M, which will be less than the average top-five player in 2006-07.

What's going to be interesting is whether McDavid's new contract extension, combined with Carey Price's similarly rich extension and the upcoming new contract for John Tavares, begins to push the NHL's salary structure back toward a model that makes sense. When we look at the actual salaries of the best players in the world over time, there are a few idiosyncrasies that stand out.

Graph by Andrew Berkshire. Photo by Kelvin Kuo-USA TODAY Sports

Comparing the growth in elite player salaries to the growth of the actual salary cap, we see an aggressive drop off shortly after the implementation of the cap, largely due to pre-cap contracts timing out. We also see, however, that during the cap's biggest growth periods—from 2006 to 2012—cap hits for the NHL's top players consistently dropped as teams got more and more money to pass around.

Some part of this would be due to large, long-term contracts aging nicely, but what this really shows more than anything is a trend toward overspending on the middle and bottom of a team's lineup.

In recent years, without the ability to add term to deals to cut down the cap hits, the actual market values of elite players has started to show, rising faster than the salary cap since the extensions of the Blackhawks' duo of Jonathan Toews and Patrick Kane kicked in.

Even without Tavares accounted for, 2018-19 should represent the largest bump in superstar salaries since 2015-16, and the third biggest in the salary cap era. It's about time this happens if it actually is a trend, as star (top-30) players have seen their salaries rise by just 41.3 percent since 2006-07, while the average salary of players in the NHL has risen by 70.5 percent in that same period.

General managers who figure out that spending big money on stars and cutting costs everywhere else is the smart thing to do will be the ones winning multiple championships over the next decade. Those who pay middle-six forwards $5 million per season are going to be left in the dust.