Creative Capology – No Cap on Management

The post-lockout NHL has seen a rebirth of the league in many senses; among those, and taking centre stage this off-season more than any before it, is a near-obsessive focus on the Salary Cap and its constraints. While the Cap rose substantially in each successive year of its current existence (from its initial number of $39M in 2005-06 to $44.8M in 2006-07, to $50.3M in 2007-08, to $56.7M this past season), this season will see just a minute increase of $100,000 to $56.8M. The result, predictably, is increased attention to and anxiety concerning the Salary Cap and its potentially crippling effects, exacerbated by the belief that the Cap is set to actually decrease going into the 2010-11 season.

Greg Wyshynski, of Yahoo’s Puck Daddy, aptly describes this as "a symptom of cap culture," by which, he writes, “every conversation about the Game is anchored by its financial implications.” The summer’s biggest moves (including Marian Hossa’s 12-year contract with the Blackhawks, and the addition of Chris Pronger to the Flyers’ blueline) are therefore mired in debates over their long-term Cap implications rather than the impact these players may have on Stanley Cup contention. This is the sullen truth of today’s NHL, in which fans must debate not only the levels of talent involved, but also the financial ramifications of any and every move.

This fixation with the workings of the Salary Cap is evident on the executive and operational side of the NHL as well, except where fans and media generally focus on its constraints, NHL owners, GM’s and agents are caught in an obsessive search for creative loopholes by which to circumvent its obvious pressures. Like the ‘have-nots’ of the pre-lockout NHL, everybody must now make the most of a limited supply of spendable resources and so most (if not all) NHL teams now employ a full-time ‘Capologist’ to assist in understanding and managing the Cap as well as analyzing and identifying its many opportunities.

With the creative management of the Cap has come the proliferation of extremely long-term contracts with averaged down annual salaries (the pros and cons of which have been hotly contested), bonus-incentive structures and Cap-motivated player movement. One aspect of the Cap that has not received as much attention, however, and one which leaves significant opportunity for teams to improve their chances at success without negatively affecting their payroll structure against the Cap, is that there are no limitations whatsoever placed on the salaries of coaching, management and other operational personnel.

While teams in greater financial standing may no longer spend as much as they like in securing the top players available, they may still exploit their fiscal advantage by spending virtually limitless amounts of money in securing the finest scouts, GM’s, coaches, trainers and other organizational assets that money can buy. Similar scenarios can be found in other free market settings, where the pursuit of a given sector’s finest executives goes so far as to incite poaching among competing organizations. The realities of the NHL cannot be isolated from those of the business world as a whole, where competition is intense and companies will do anything and everything to manufacture whatever advantage possible within their respective marketplace.

For NHL teams, like other corporations, an advantageous structure begins at the top with the hiring and placement of the most capable and talented individuals available. With a strictly limited ability to pour resources directly into player personnel, the importance of drafting, development and decision-making become intensely magnified within a Salary Cap structure; ensuring success on the ice therefore requires an extremely competent structure at the executive and managerial level. Presenting thus a tremendous opportunity, teams would be well-served to recognize that there is no Salary Cap on management and executive-level personnel. Following one of the primary rules of business, it is the responsibility of each and every NHL organization to structure and surround itself with the most valuable assets available to it. Filtering down from the decisions of GM’s, scouts and coaches, strength at the top directly influences the bottom line—in this case, wins and losses. The first, simplest and, perhaps, most impactful place to seek solutions in creative capology is therefore to spare no expense in securing the best available people at all positions (mirroring the on-ice ideal). Anything less would be contradictory to the pursuit of success.