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Habs & The Salary Cap

With the annual golf tournament now in the rearview mirror, we can safely say that the preseason has officially begun. Players will submit to their physical and medical exams at the end of the week, hit the ice a few times and kick off the preseason slate of games starting on Tuesday vs the Dallas Stars. It won’t be long now before we spend our nights in front of the tube, firing 140-character darts at each other on twitter, and ranting away on our blogs.

It’s looking like there will be precious few surprises at this year’s training camp, with the roster all but carved in stone already. The only lingering questions are that of the health of Lars Eller’s shoulder, and Andrei Markov’s knee. Recent reports suggest that Markov has suffered a set back in his rehab and has had another procedure done to correct the problem. If this report is true, it can’t be seen as good news. That Markov was not at the golf tournament to answer questions about his knee only adds fuel to that fire. Let’s wait and see what the Canadiens have to say, but from the sounds of it, and according to General Manager Pierre Gauthier, Markov is a question mark to start the season. As for Eller, he believes there’s a strong possibility that he’ll be ready to start the year. That’s certainly welcome news.

When we take a look at the Habs salary cap situation, we see that they are sitting on a small mountain of unused space; 3.98 million dollars of unused space to be almost precise, out of an available 64.3 million. It’s smart practice to not spend 100% of your space just in case you need to replace a pricey injured player, as the Habs did with Markov last year with the acquisition of James Wizniewski, or if you want to make some upgrades at the trade deadline. Considering that by the time that the trade deadline rolls around, the vast majority of a star player’s salary is already paid, is there really a need to preserve 4 million dollars of cap space? A star player (with a 6 million dollar salary) would only require about 1.3 million in available cap space. So what gives? Aren’t the Habs one of the league’s high rollers? With ticket and concession prices as high as they are, you’d like to think so, right?

So what would Gauthier’s response be if posed the question of why hasn’t he spent more freely?

Would he tell you that the team is fortunate enough to have key roles filled by young players that remain relatively inexpensive, and therefore the savings can be put to better use later in the season? A reasonable explanation I guess. Perhaps he doesn’t want to risk locking himself in to long term deals with players that he doesn’t view as core members of the team, and would prefer to be as flexible as possible when it comes to resigning Subban, Price, Gorges, and other young members of the team.

Would he tell you that he has full confidence in his current squad’s ability to compete at a high level, and wants to give this group a chance to excel before making changes? Also reasonable. We as fans like this group, don’t we? We can see them doing big things this year, right? After all, there’s no shortage of people that will tell you that they were 1 goal away from knocking out the Cup champs – without Markov, Gorges, Pacioretty, and with even more players hobbled with injuries (Wizniewski’s, Eller, Desharnais). Doesn’t this group deserve its fair shake?

Would he tell you that the season hasn’t started yet, and that there’s still time to make tweaks? This would be nothing more than lip service, and a simple deflection of the question. Any signings now would be from the scrap heap and would have no ramifications to the team’s long term future.

Would he tell you that he’s not 100% confident in Markov’s recovery, and would like to have a large chunk of cash available if he had to wheel & deal to replace him again? Doubtful, although, again, he did reveal that Markov may or may not be ready to start the year. Could he be more worried than he’s letting on?

Would he go on to reveal the nightmare scenario for Habs fans: that the Canadiens have an internal budget, regardless of how high the cap goes, and that they currently sit within 1-2 million of that number? Hmmm. This one is likely to ruffle the feathers of most readers.

Regardless of what the real answer is, there are a lot of Habs fans out there that have one eyebrow raised at the fact that the Canadiens haven’t spent to the cap. In recent years the Habs bumped their heads against the cap when stood up straight. But it wasn’t always that way.

Blame the economics of the league, blame the weakness of the Canadian dollar, blame the price of oil, blame whatever you want. Here are some facts that many Habs fans have probably long since forgotten, or never realized to begin with. Below is a listing of where Habs ranked in team payroll since 1998-99, which of course includes the free-spending capless days, as well as the system we currently know. I used Wikipedia and NHLnumbers.com to compile this data. You may use other sources, and the one that I used are by no means official numbers, but I do believe that they paint an accurate enough picture that even if they’re off just by a bit, you’ll get the idea.

Year         Payroll ranking
1998-99: 8th
1999-00: 11th
2000-01: 22nd
2001-02: 13th
2002-03: 12th
2003-04: 17th
2004-05: LOCKOUT
2005-06: 17th
2006-07: 9th
2007-08: 18th
2008-09: 6th
2009-10: 8th
2010-11: 7th
2011-12: 11th (projected)

From the above, two things become clear: the Habs have not always been high rollers. In fact, it’s only since 2008-09 that they’ve been a consistent top-10 team in terms of team payroll, but they have yet to crack the top 5 in the cap era. Previous to the lockout, they may have been subject to market and economic conditions that were beyond their control, and they were no doubt operating with an internal budget that restricted spending. But it’s a cop-out to say that the Canadian dollar was the one thing that sunk them. Since we love to compare ourselves to Toronto (what inferiority complex?), let’s look at how the Leafs spent vs how the Habs spent in the pre-lockout years:

1998-99: Leafs – 34M vs Habs – 33.5
1999-00: Leafs – 34M vs Habs – 33.8
2000-01: Leafs – 41M vs Habs – 26.5
2001-02: Leafs – 51.6M vs Habs – 41.3
2002-03: Leafs – 65.1M vs Habs – 42.3
2003-04: Leafs – 62.5M vs Habs – 38.9

The Canadian dollar bottomed out in 2002; it cost over $1.60CDN to acquire one U.S. dollar. No doubt that hurts when salaries are paid out in American dollars. However, Toronto shares the same currency as we do in Montreal, so please go find another reason to explain why the Leafs payroll nearly doubled from 34 million in 1999-200 to over 65 million just 3 seasons later. They were spending over 50% more than the Canadiens were by that point. Why were the Habs – who have always been an expensive night out – unable to keep up with the Leafs? Were they unable? Or were they simply unwilling? The easy answer may be that the Canadiens are a tightly run organization that puts dollars and cents above wins and banners. Despite their glossy presentation, and the prestige of just being at one of their games, is it not possible that they are ruled by the shareholders desire for profits, the same as any corporation? If you think with your head, and not with your heart, the answer is a resounding yes. The heart says that the Canadiens belong to the fans, and as fans we want success at any cost, and that management OWES its fans. We pay for our tickets, our concessions, and our swag. We pay dearly for it. But we don’t sign the paychecks, and we don’t get to see the balance sheet….not that we all care to.

While the Canadiens are often referred to as the most prestigious team in hockey, they aren’t a bottomless pit of money. Well, maybe they are a bottomless pit of money, but perhaps ownership is more than reluctant to part with their riches. We should all brace ourselves for the day where the Habs are no longer a cap team, but rather a team that has to be mindful of what the shareholders want over what the fans want.

That day may already be here. Those days may have always been here. It’s a sobering thought, isn’t it? For some of you, I suppose you’ll think I’m nuts that the Habs are even close to the upper limits of their spending. Maybe I am, but you have to admit that given the evidence above, they have shown themselves to be a more frugal bunch over the years than we give credit for.

How do you explain the abnormally large chunk of cap space left over?

  • http://www.cowhideandrubber.com Kyle Roussel

    Hi Shawn,
    The point of the blog is not to suggest that it be spent now. I like the team as is (for now), but my point is that it’s unusual for the Habs to go in to a season with 4 million (not 3) left on the cap. Perhaps Gauthier is afraid that Markov/Gorges will not be at 100% and wants to have a security blanket. My larger point is to bring up the notion that the Canadiens do have an internal budget and I’m simply wondering where that number is. I’m willing to bet that we are close to that internal ceiling.
    Thanks for reading!

  • http://www.stubbornfool.com Shawn

    3 million isn’t a whole heck of a lot of money in the NHL. You suggest it be spent now? Wouldn’t it make more sense to at least get through training camp to see what the team may need? Injuries aside what if Gomez sucks again, Plekanec plays like a girl and Chara takes off Pacioretty’s head again? And what if Price isn’t the Price of Auld (get it?) Anyway, it’s too soon to start spending all the team’s money.

  • http://www.cowhideandrubber.com Kyle Roussel

    I know that the easiest answer is that Gauthier likes his team or didn’t like what he saw as UFA. I also agree with what you have to say about the potential holes he may have to plug. I can buy in to any of those reasons to explain the $4M in unused cap space. I don’t even necessarily believe that the Canadiens *are absolutely* at their internal cap now, but I think it’s possible (hence this blog post). If it’s not the case today, then I certainly think that day is coming soon. A lot sooner than most Habs fans would want to believe, never mind accept. If the cap hypothetically jumped to $64.3M to $75M next season, would the Habs spend up to that number? Unlikely. They’d probably hover somewhere around 67-69M, unless the recent 20% jump in ticket prices is a pre-emptive move so that the money is available for when the cap makes its next big leap (and with Atlanta out / Winnipeg in that leap may come as soon as next season).

    Thanks for reading, it’s nice to hear from you again!

  • http://habrachadabra.wordpress.com/ HABraCHadabra

    Interesting hypotheses, Kyle!

    I don’t think we’re quite at the minding-the-inner-budget-ceiling stage. PG’s reluctance to spend with abandon might have something to do with the dubious quality of merchandise available (especially FAs willing to sign a one-year contract – see Hamrlik, Roman).

    I believe that although Ghostie likes the team he has set up, he is aware that his ship’s buoyancy depends on certain risks (the health and performance of rehabbing players, as Arpon pointed out) and several experiments that need to pan out for the team to be successful. To wit:

    – the rise of a #3 defenseman: Gauthier has assembled a 10-deep corps to ward off any leaking roofs, but who will take Hamrlik’s place? Gorges is not a #3; Gill or Spacek aren’t either. It seems we are counting heavily on Yemelin to assume that mantle, with Weber and Diaz as a dark horse candidate. The Habs obviously want to give them a real chance… but what if they fall short? It may be necessary to shop for a solid blueliner then. And that might not come cheap (see Wisniewski, James).

    – the right-handed center: who will win the face-offs that Metropolit, Lapierre and Halpern were given in previous years? In-house candidates are Engqvist and White (but he should stay on wing). What if their skills are not up to speed? Is Gauthier counting on Trotter or Dumont? Not likely! He may decide that a more experienced pivot is required, especially if the Eller/Desharnais switch to wing proves unsustainable in the long-run.

    Having a large sum of money is a privilege that may allow Gauthier to accept a pure salary-dump. That can reduce the asset cost you need to get the over-paid player needed to fill in any blank(s)… and allow him to keep his 2nd round picks, dammit!…

  • Arpon Basu

    I think he’s equally wary of both Markov and Gorges, and this is a reaction to the tightrope walking he had to do last season. One thing Gauthier said yesterday is that he doesn’t anticipate any of the injured players to miss significant amounts of time, so there’s that, but that’s admittedly open to interpretation. But I think he likes this team if it stays healthy, and if a major injury hits, he has the room to make a move early in the season. I think he could use a bit of it to sign a veteran for the league minimum, but he doesn’t appear to share that opinion based on his answers yesterday.

  • http://www.cowhideandrubber.com Kyle Roussel

    Hi Arpon,
    I figured you’d know the answer for sure. I didn’t hear many of the sound bites from the golf tournament, but this has been sticking in my craw all summer. His answer is a rather verbose, but meaningless one (shock!) isn’t it? We don’t care that he just went to the bank, and we know that he doesn’t *have* to spend every penny, but we do like to know his reasons for not knowing. Based on your reply, it really does sound like he’ s not confident in Markov’s knee, which is bad, bad news. So much for those that are tearing Tony Marinaro a new one on twitter over his report, right?

  • Arpon Basu

    I actually asked Gauthier this very question. His answer? “I have a lot of money in my pocket right now because I just went to the bank. But that doesn’t mean I have to spend it.” He went on to say it gives him the latitude to “read and react” to situations as they come up, such as his No. 1 defenceman being lost for a big chunk of time for instance. However, $4 million in space is excessive for this, I agree.

  • http://www.cowhideandrubber.com Kyle Roussel

    Thanks for reading, Rob!

    One of the things I was driving at is that I personally don’t believe that fans buy in to a cap that is too high for the Canadiens. If I say that I believe that a 64 million dollar cap is too much for the Habs, there would be no shortage of fans telling me that I’m nuts.

    But I do think it’s a reasonable explanation that management is comfortable with the team in place, did not like this year’s free agent market and did not want to jeopardize negotiations with future core free agents of the team, like Subban, Price, Gorges and Pacioretty.

    Thanks for reading!

  • http://habstalkradio.com/category/blogs/rob-elbaz/ Rob Elbaz

    Free agents left to add (sorry for the split post). We are saving money on Subban and Price this year so expect the cap space to disappear next off season.

  • http://habstalkradio.com/category/blogs/rob-elbaz/ Rob Elbaz

    Great article Kyle, forgot juat how recently the Habs were a low spending “have-not” team. I think the reason we have so much cap space this year is due more to the fact that the cap was set way too high. With the team we have there is not much need to add players and not that many

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