The NHL salary cap was assumed to rise when the NHL and ESPN struck their TV deal, and it is doing just that. While the cap news broke at the beginning of August, the next move in the financial books for the NHL came just a few days ago, when a statement announced that the league would put a 3″ x 3.5″ rectangular advertisement on the front of teams jerseys. As of the 2022-23 season, not only will the salary cap raise $1 million per club, the advertisements on jerseys will appear as well.
Looking deeper into the advertisements, the NBA currently runs a similar program with the placement on their jerseys. While the NBA has a leg up in popularity, the case for how profitable the new move would be for the NHL is vividly apparent.
On average, since its inception in 2016-17, NBA teams have made an additional $9.3 million per year since putting advertising patches on their jerseys. The Golden State Warriors receive an estimated $20 million per year from Rakuten. The NHL jersey situation is good business.
— Danny Bennett (@RealDannyB) August 18, 2021
The NBA has had advertising on their jerseys, in the form of a 3″ x 3″ square, since the 2016-17 season, netting an additional $9.3 million in revenue, per team, on average. The NHL, meanwhile, had started their helmet ad campaign for the 2020-21 season and raised a reported $15 million as the league tries to recoup from having no fans in attendance during the pandemic. Surely, ad placement on jerseys would come with a higher premium for placement, especially with more valuable franchises. Adding the advertising to the jerseys is a truly high-risk, high-reward game for the league as it will hurt the prestige and nostalgia of some team sweaters in the eyes of fans.
The last thing you want to hear about is more advertising talk. I get it. But it’s relevant to the salary cap. When ESPN and NHL struck their seven-year deal worth over $2.8 billion, the broadcasting company became the primary rights holder for NHL games. The league also inked a seven-year deal with Turner broadcasting, which will allow Turner Sports to present up to 72 regular-season games, and half of the first three rounds of the Stanley Cup Playoffs each season. The Turner deal adds a sum of $225 million annually to the NHL’s revenue.
For those calculating, from their new television deals, the NHL is slated to earn an estimated $625 million per year over the next seven seasons. Their previous 10-year deal with NBC brought in $200 million per season. Add the new string of television revenues to the advertising profits, and the NHL is on pace to not only recoup the finances they lost from hosting empty arena games but exceed their fiscal profits like never before.
This is important as the salary cap gets a $1 million raised to $82.5 million in 2022-23. Early projections are a $1 million increase per year until 2026-27 when it will leap from an assumed $85.5 million to $91.4 million; however, it may be too early to tell. The pandemic is still a factor in many cities, and some stadiums may not operate at full capacity. The league also needs to add $1 million in escrow to pay off the team owners for lost earnings, which is expected to be completed by 2026-27, although it could come sooner if the league hits a home run with the jersey ads.
How does this factor into play with the Tampa Bay Lightning?
As it stands right now, the Tampa Bay Lightning come in right underneath the $81.5 million salary cap, thanks to Brent Seabrook being on LTIR after he retired. Trading Tyler Johnson to the Chicago Blackhawks was a tough but necessary move if Julien BriseBois wanted to continue extending the franchise’s success.
In the future, as the cap raises, the Bolts will find more breathing room. However, it won’t come easy as there will certainly be another move in the offseason, similar to Johnson’s. The Lightning’s farm system and scouting have been top-notch for quite some time. So, even with a step or two backward with cap casualties, those are only temporary measures.
When it comes to the Lightning, the team is no stranger to working within and around the salary cap. Just ask any fan of another team; they will be more than happy to detail their thoughts on the subject. But, BriseBois plays within the rules. If the Lightning’s general manager can continue to work his salary cap magic, the Bolts could find themselves on the right side of the history books.