How Will Bedard And Other Budding NHL Stars Navigate The Rocketing Salary Caps?

The NHL's projected salary cap jumps could change how Connor Bedard and other young NHL stars look at their second contracts. Who will take the lead?

NHL salaries lag behind those in other major North American sports leagues.

The jokes that bench players in the NBA or a mediocre bullpen pitcher in the MLB make as much as Connor McDavid, Auston Matthews and the NHL’s other mega stars are funny until you realize they are painfully true.

The average NHL player makes just under $3.5 million, whereas the average MLB player makes nearly $4.7 million. The average NBA player, albeit with smaller rosters, makes about $11.9 million.

The NHL recently announced salary cap projections for the next couple of years. The jump of $7.5 million next year to $95.5 million is set in stone. Subsequent jumps of $8.5 million and $9.5 million in the following two years are subject to change, but it could result in a salary cap of $113.5 million for the 2027-28 season. 

Those drastic increases will ripple through the NHL regarding contracts and salary structures.

For example, the largest cap hit in the NHL this season is Auston Matthews’ $13.25 million. That equates to 15.05 percent of the current cap. When his deal is in its final year, which is when the upper limit for teams reaches $113.5 million, his cap percentage will be down to 11.67 percent. Looking at it differently, Matthews’ 15.05 percent of the cap would equate to about $17.1 million in 2027-28. (Leon Draisaitl's $14-million cap hit kicks in next season, which would have been 15.9 percent of the cap's current upper limit but will now be 14.7 percent after the latest announcement.)

“The issue with the Matthews deal was that he went five years, which was probably a year too long, and then to top it off, the pandemic flattened the cap,” explained one agent. “Had COVID-19 not slowed it all down, he’s probably well over $15 million easily.”

It’s safe to say that NHL players will be eclipsing the $15-million mark quite soon, and it’s not unreasonable to assume that the $20-million mark is right around the corner. The NHL’s stars are sure to make much more money over the next decade, but what does all of this mean for the NHL’s young stars?

Players such as Connor Bedard, Lane Hutson and Wyatt Johnston are among the fantastic talents coming off their entry-level contracts this summer or next. Their second contract could mark a massive change in the contractual landscape of the game’s young talent – if they want to take that step.

With the drastic rises in the salary cap, star-level young talent can maximize their earnings by taking a shorter-term deal immediately out of their entry-level deal before taking advantage of the projected $113.5-million salary cap in three years.

Let’s use Connor Bedard as an example. He is in the second year of his entry-level contract, so he can sign an extension as early as July 1. 

Rather than locking into an eight-year contract worth $10 million annually, likely a team-friendly deal, Bedard could opt for a shorter term for slightly less money.

If he were to sign a contract for two years at roughly $8 million annually, he would lose $4 million over the next two years.

But assuming Bedard signs a deal for the same cap percentage as that original $10-million cap hit, which would be around 11.3 percent, the new deal would be for roughly $12.8 million per season. That means that within a year-and-a-half, he would recoup the money he lost, and the rest of his contract would be added value.

There is also the NBA route of taking multiple short-term deals to maximize his earnings. After the initial two-year contract, Bedard could take a three-year deal, which would walk him out of restricted free agency and buy the team one UFA year before capitalizing on an even bigger agreement that keeps him signed through his early thirties.

Signing a deal equivalent to Matthews’ cap percentage of 15.1 percent is a bit lofty for Bedard, but assuming his development goes as expected, his could come in at 13.5 percent when signing at roughly the same age. Assuming that the cap would continue to rise by an average of 4.5 percent as it did between 2012-13 (lockout season) and 2019-20 (pre-COVID-19), Bedard’s average annual value could end up at around $18.25 million when he's 26.

Although this is the most risky and least likely option, it would take a player at Bedard's level to lead the way on this kind of contractual progression. The three contracts and earnings over the next eight years are laid out below.

Although this hasn’t been the norm for NHL contracts, the drastic jump in salary cap is similar to what happened in the NBA between the 2015-16 and 2016-17 seasons, when it increased to over $94 million from $70 million. This caused massive shifts in how the NBA’s stars viewed contracts and approached maximizing value.

When the cap's upper limit increases $1 million or $2 million, locking in long-term makes sense because there's stability if the cap increases slow down as they did in the NHL for about five years since COVID-19. You have some assurances that you will get paid your money and set yourself up for long-term financial health.

With the new U.S. television deal taking effect in 2021-22 and a new Canadian rights deal coming in the next couple of years, the salary cap should rise a healthy amount. Revenues continue to reach record heights. These are all fantastic signs of where the game is going, and they mean that players will be compensated handsomely for their role in growing it to new heights.

Now that the NHL is getting its NBA moment (for lack of a better term), NHLers should begin studying their NBA counterparts and using their strategies to maximize earnings.

In the example above, Bedard could take the traditional long-term deal right after an entry-level contract and potentially earn $80 million. He could also take the extreme route, taking short-term deals a couple of times, which could see him earn about $106.75 million, a $26.75-million difference over the same eight-year period.

But not every player can take the risks a player like Bedard could take. NHL GMs may look at younger players, such as Toronto's Matthew Knies, Minnesota's Marco Rossi or Montreal's Lane Hutson, and find themselves more comfortable giving them a big, long-term deal out of their entry-level contract. Betting on a player at $7 million to $9 million annually for eight years isn't nearly as big a risk when considering that the percentage of the cap hit could fall to between 6.2 percent and 7.9 percent by the end of the term. That equates to a cap hit of $5.45 million to $6.95 million in today’s NHL.

“I think it has to be someone like Connor (Bedard) that does it,” another agent said. “Someone at the top end has to set the tone before other guys can really follow suit.”

Just because Matthews, Connor McDavid, Draisaitl and Nathan MacKinnon have huge contracts doesn't mean their cap hits will be considered the maximum for the league's next stars, either. As we've already seen, the slow rise of the league's top contract could continue with the next franchise talent taking just a bit more than the previous one in negotiations.

NHL GMs will be excited to have the additional cap space, but finding a way to allocate their money properly will continue to be key to long-term team success. Teams can't just overpay players just because they have the space. They must keep percentages of the cap hit in mind and make sure they aren't signing a player for an amount they're unlikely to live up to.

For now, we will have to see exactly how the massive salary cap elevations alter the way players, agents and teams view contracts moving forward. It should be a very fun time. 

Get the latest news and trending stories by following The Hockey News on Google News and by subscribing to The Hockey News newsletter here. And share your thoughts by commenting below the article on THN.com or by visiting our forum.