Since the salary cap was instituted after the 2004-2005 lockout, the NHL has effectively leveled the playing field for all teams. Teams with more revenue can no longer outspend small-market teams in free agency, as they have to remain under a cap ceiling. Small-market teams can keep up by drafting well and developing young players who come at a cheap price before they hit unrestricted free agency.
The Arizona Coyotes exemplified this by making the playoffs three years in a row from 2010 through 2012, despite having one of the lowest payrolls in the league. Keith Yandle, Martin Hanzal, Mikkel Boedker and Oliver Ekman-Larsson all helped the Coyotes during this run at a very low price.
However, the salary cap system is not without flaws. Here are five ways that teams with more revenue enjoy some competitive advantages over teams that are cash-strapped.
1. Abuse the Salary Cap during the Playoffs
If Chicago seemed kind of loaded going into the playoffs this year, their circumvention of the salary cap explains why. Since their first-round series against Nashville, Chicago has had a playoff roster that exceeded the 2014-2015 NHL salary limit of $69 million by more than $5 million dollars. When Patrick Kane was injured and placed on Long-term injured reserve before the NHL trade deadline, his salary came off the books and Chicago was free to use the money on other players until he returned.
The Blackhawks went out and acquired Kimmo Timmonen, Antoine Vermette and Andrew Desjardins before the deadline. If Kane came back during the season, or if any of these players had contracts that extended into next season, the Hawks would have found themselves in a real crunch. But one very favorable fact about the playoffs helped them out.
During the NHL playoffs, the salary cap is null and void. When Kane returned from injury in time for Game 1 of the first round, the Hawks were fielding a team in excess of $74 million dollars.
Pittsburgh also famously circumvented the salary cap during the 2012-2013 season when they acquired Jussi Jokinen, Douglas Murray, Brendan Morrow and Jarome Iginla and added them to a team that already featured the huge contracts of Crosby, Malkin and expensive players like James Neal, Paul Martin, Chris Kunitz and Marc-Andre Fleury.
In addition, Vancouver, Philadelphia, Washington and San Jose were all over the cap during the 2011 playoffs. But since there is no salary cap in the playoffs, teams can rent players with impunity, so long as they have a big contract player on injured reserve who doesn't return until the postseason.
2. Sign College Free-Agents (especially ones that were drafted by other teams and opted not to sign with them)
Justin Schultz, Kevin Hayes and Blake Wheeler (and possibly Mike Reilly) all spurned the teams that drafted them and got a favorable deal elsewhere. A provision in the CBA allows college players to become free agents four years after they were drafted. The team that drafted them has the first opportunity to sign them but after an allotted period of time every team can offer them a contract.
Edmonton signed the Anaheim-drafted Schultz, the Rangers signed the Chicago-drafted Hayes, Boston signed the Arizona-drafted Wheeler and Mike Reilly opted to test free agency and not sign with Columbus. What is so appealing about these players is that they have to sign entry-level contracts, which are the cheapest kind.
Teams that snag these players get young and NHL-ready talent at a very low price. It shouldn't come as a surprise that two of the teams rumored in on Reilly - Chicago and Los Angeles - are also two teams with significant cap issues moving forward.
3. Have enough revenue to pay players you are playing against: using the amnesty buyout.
After the 2012-2013 NHL lockout, the league gave each team two amnesty buyouts as part of the new CBA. Big names that were bought out included Vincent Lecavlier, Brad Richards, Christian Erhoff, Scott Gomez, Danny Briere, Rick DiPietro and Ilya Bryzgalov.
While the buyouts provided cap relief, the teams were still on the hook for paying the players their salaries. Teams like the Rangers, Canadiens, Flyers, Sabres and the Lightning got a break from bad cap-hits because they could afford to pay the salaries, but teams like Ottawa and Arizona could not really entertain this option. The buyouts allowed big-spending teams to escape from the mistakes they made in free agency, something small-market teams could not afford to do.
4. Offer Sheets
In the NHL, two types of free agents exist: Unrestricted (UFA) and Restricted (RFA). Once a player plays seven years in the league or around the age of 27, he may field offers from all teams and his current team has no exclusive rights in trying to sign him. RFAs on the other hand encompass younger players (usually 20-26) whose teams have exclusive rights over retaining them.
Teams can submit qualifying offers to RFAs that guarantee they retain their rights. However, other teams can try to sign these young players by sending them 'offer sheets.' In terms of money, an offer sheet is just like a normal contract that is offered to UFAs. But offer sheets are different because they require draft-pick compensation based on how much money is offered.
Historically, a first-round pick and mid-round picks are usually what is required as compensation but compensation can run as high as four first-round draft picks, depending on how much money per year is offered to the player. The team who receives the offer sheet can either match it or take the compensation.
The Flyers, Oilers, Flames, Canucks, Sharks and Blues have utilized this frowned upon practice to try and poach young talent from other teams. While the Oilers are the only team to actually acquire a RFA (Dustin Penner in 2007), these teams have put their competitors at a financial disadvantage that has manifested itself elsewhere.
For example, although the San Jose Sharks were unable to poach Niklas Hjalmarsson when they sent him an offer sheet in 2010, they prevented the Blackhawks from re-signing Antti Niemi and were able to sign him.
Similarly, the Flyers created future financial problems for the Predators when they gave Shea Weber a 14-year $110 million offer sheet that Nashville matched. Needless to say, successfully poaching RFAs could give teams a big advantage over their competitors. And even unsuccessful attempts can hamstring clubs into otherwise bad or inflexible contracts.
5 Mega-deals signed prior to the implementation of the new CBA.
The contracts of Sidney Crosby, Marian Hossa, Duncan Keith, Zach Parise, Ryan Suter, Alex Ovechkin and Nicklas Backstrom all carry pretty reasonable cap hits. The reason is because they were signed before the new CBA, which limited contract length to seven years (eight years for re-signing a player).
Pittsburgh, Chicago, Minnesota and Washington were able to lower the price of their stars by adding more years. Compared to the eight-year deals signed recently by PK Subban, Patrick Kane, Jonathan Toews, Ryan Getzlaf and Corey Perry these mega-deals provide a little better value.
While the NHL does not face inequality problems like the MLB or European Soccer, teams with more revenue still enjoy advantages over small-market teams. Teams like Toronto, New York and Chicago can all exceed the cap and make mistakes during free-agency but Arizona and Ottawa, among others, can never dream having a playoff roster that exceeded the cap.
Furthermore, the ground salary floor teams can make up via smart drafting can be rendered useless by the college free agent problem. The NHL does not need to make any big changes when this CBA expires, but if they truly want to address salary cap circumvention, there is still much to do.