What a difference three years make.
Coming out of the 2004-05 NHL lockout, teams were saddled with a brand new collective bargaining agreement that featured a salary cap with a payroll range of $21.5 million to $39 million US.
A steady increase in league revenues and the rise of the Canadian dollar to a level of parity with its American counterpart means the NHL's 30 teams now have considerably more room to manoeuvre — the salary cap for this season is $56.7 million and the floor, the minimum each team must spend on player salaries, is set at $40.7 million.
Think about those numbers for a second. Within three years, the floor has nearly doubled and is now higher than the original salary cap.
Increase in the salary cap
So, has the shocking elevation of the salary floor forced teams to spend beyond their means? Calgary Flames general manager Darryl Sutter doesn't believe so.
Sutter points out the CBA is predicated on linkage between salaries and league revenue and that there's also a revenue-sharing scheme in place where the top money-making clubs contribute to a fund shared by the bottom teams.
"I think the floor affects teams that aren't doing very good at the gate, aren't doing very good on the ice, which results in them falling into a position where they are entitled to revenue-sharing funds from teams that are doing well," Sutter told CBCSports.ca.
"Our plans and decisions are based as a team on the number of season ticket-holders we have, so we know what percentage of that will go towards salary and our overall budget, and what percentage has to go towards revenue sharing."
The salary floor is a bit of a red herring when you consider all 30 teams in the NHL spent more than $34.3 million — last season's floor — on player payroll, including small-market teams such as the Flames, even though Sutter isn't a fan of that term.
"I think there's different plateaus of small-market teams, and we prefer not to call ourselves that because we've done well both on and off the ice," said Sutter, before adding that the Flames' payroll this season will fall right at the $56.7 million cap level.
"I think a small-market team is looked upon as a team that's not doing very well, and our team has done very well since the lockout. Obviously, we've been able to manage our budget properly."
Still, the salary cap system does provide many challenges for GMs, especially those employed by teams in Canada who have to deal with the unpredictable value of the Canadian dollar.
"We try to project what the dollar is going to be, so that's what we're basing our budget on in terms of managing our money. That's first and foremost for a Canadian GM," explained Sutter.
Long-term planning the key
Looking three or four seasons ahead is also essential in terms of managing the cap.
"When the new CBA came into effect, we tried to put together a long-term plan in terms of salaries and what kind of revenue the league would generate and what we would generate and what we had to do to remain a top team," Sutter said.
Developing a long-term strategy allowed Sutter to sign four pillars of the Flames franchise — captain Jarome Iginla, defencemen Robyn Regehr and Dion Phaneuf, and goaltender Miikka Kiprusoff — to lengthy contract extensions over the past 14 months.
"Coming out of the lockout we knew we would be in a position where at some point we would have to renegotiate and keep our star players from becoming unrestricted free agents," explained Sutter. "So we looked and planned ahead in terms of what it would take to keep those players based on what the market would be doing and what the salary cap was.
"Last year was the year we put ourselves in a position where we were able to lock up those players, and now we can move forward."