What's behind the big NHL free-agent salaries?

National Hockey League clubs doled out hundreds of millions of dollars in new contracts in the first days of free-agent signing.


That's the word New Jersey Devils general manager Lou Lamoriello used when asked for his reaction to the amount of money tossed around on July 1, the first day of the National Hockey League's free-agency period.

Over $300 million US in contracts were handed out on July 1 alone. Of course, Lamoriello was one of the men doling out the big contracts; he brought back forward Brian Rolston on a $20-million US, four-year deal.

Defenceman Brian Campbell went to the Chicago Blackhawks on a $57.12-million, eight-year contract. Last year, he made $1.75 million.

"It's craziness," Calgary Flames general manager Darryl Sutter said. "I'm no different from you.... It's a lot of money."

The figures are certainly eye-popping, and some of the biggest names remain unsigned, like Mats Sundin, who is reportedly considering a $20-million US, two-year offer from the Vancouver Canucks. The Swede, also said to be the target of Montreal, Toronto and the New York Rangers, announced he won't make a decision for several more days.

So what's behind the bags of money being thrown around? For one, a rise in the salary cap for the upcoming 2008-2009 season. The maximum amount that NHL clubs will be allowed to spend on players for next season will be $56.7 million US, up from $50.3 million US last year. The salary cap is up more than $17 million since the 2005-06 campaign, when the league returned from the 2004-05 year-long lockout.

With the rise in the salary cap, the maximum individual salary a team can pay is also up. The maximum a team can pay to one player can be no more than 20 per cent of its total annual compensation. For 2008-09, that figure climbs to $11.34 million US, up from $7.8 million US in 2005-06.

The league's cap is tied to its revenues, which have been on the rise. NHL revenue hit $2.56 billion US last season. NHL deputy commissioner Bill Daly has said revenue was up 12 per cent for the season.

A stronger Canadian dollar accounted for about a quarter of that revenue growth, Daly said.

Canadian teams are enjoying the rebound in the dollar from its low point under 62 cents US in 2002 to its current levels near parity with the U.S. greenback. With contracts paid in U.S. dollars, Canadian teams can spend more when the loonie strengthens.

Rising league revenue, in turn, means increased money going to player salaries as the salary cap rises correspondingly. Under the terms of the current collective bargaining agreement, the players' maximum share of revenues is 54 per cent in any year league revenues are below $2.2 billion. That climbs to 55 per cent when revenues are between $2.2 billion and $2.4 billion, 56 per cent when NHL revenues are between $2.4 billion and $2.7 billion, and a cap of 57 per cent of revenues in any year the league brings in more than $2.7 billion.