Montreal Canadiens: NHL Needs to Fix Embarrassing Salary Cap Loopholes

The Montreal Canadiens finally spent up to the salary cap this season.

Over the past three years, the team elected to sit well below the maximum allowed to spend on its players. This baffled many fans as the Canadiens are one of the most profitable organizations in the sport, but they left some money on the table for three years.

Then, just when every other team was tightening up the finances because of the pandemic, the Canadiens went out and spent a boatload of money last offseason.

They re-signed Brendan Gallagher and Jeff Petry to lengthy and expensive contracts. They locked up Josh Anderson for seven year at $5.5 million per season after acquiring him from the Columbus Blue Jackets. They also traded for and quickly signed Jake Allen and Joel Edmundson. They signed Tyler Toffoli in free agency as well, committing over $100 million to players in an offseason where many teams didn’t want to spend any money.

Of course, the Canadiens had to stay below the salary cap limit of $81.5 million and were forced to expose players like Corey Perry and Paul Byron to waivers early in the year to take some of the cap hit off the books. They even lost Victor Mete to waivers when they tried to send him to the taxi squad where his cap hit wouldn’t count since he wouldn’t be on the official roster.

This was all legal and well within the rules that the NHL has collective bargained with its players.

What the Tampa Bay Lightning did this season is also technically legal, but there is no way it should be.

When the puck dropped for Game 1 of the Stanley Cup Final, the Habs lineup had a total combined cap hit of $64.435 million. This is well below the upper cap limit.

The Lightning? Well, their 20 man roster to begin the Stanley Cup Final combined for a cap hit of $88.12 million this season. That’s $6.62 million over the cap.

Why are they allowed to do this? Well, the salary cap that must be abided by to the penny throughout the regular season doesn’t mean a thing in the playoffs. When a player is injured, he can be placed on long term injured reserve and then his money doesn’t count against the salary cap anymore.

The Lightning had star winger Nikita Kucherov on LTIR all season long and they simply replaced his $9.5 million cap hit with other players. Then, magically of course, he was 100% healthy for Game 1 of the postseason but not a minute sooner.

It’s ludicrous that a league has rules that restrict what a team can do in the regular season more so than the postseason. They do need to allow some flexibility for teams that are dealing with injuries, but why let the team double dip in the playoffs, the most important time of the year for the sport?

Now, they have star players partying with the Stanley Cup, wearing shirts that say “$18 million over the cap.” It’s a bad look for the league that Nikita Kucherov is flaunting the fact his team bent the rules as far as they possibly could to win the Stanley Cup.

All they have to do is institute a rule where the 20 man roster submitted for any given postseason game has to be salary cap compliant. Most teams carry 23 players all season and have to keep that squad below the upper limit, so submitting a 20 player roster for a playoff game that is within the salary cap rules shouldn’t be difficult.

Unless of course, you have bent the rules to the limit in the regular season, which is exactly what the Lightning did this year.

For the Lightning to ice a cap compliant roster in the playoffs, Tyler Johnson would have to sit for sure and another player making about $3 million would have to sit as well. That would have to be Eric Cernak or maybe Yanni Gourde. Take two of those players out of the lineup and the Lightning aren’t nearly as deep.

The Lightning already benefit the most from an income tax perspective. The Canadiens on the other hand, benefit the least from local tax laws. A player playing in Tampa Bay will lose about 39% of its income to taxes. Players in Montreal pay just over 53% of their income to taxes.

This already shifts the playing field and allows Tampa Bay to retain players at a lower cap hit than they would get elsewhere.

The difference in taxes between Montreal and Tampa Bay just gives the Lightning an even bigger advantage. Their $88.12 million lineup for Game 1 would take home $53.75 million, while the Habs lineup for Game 1 would be keeping just $30.25 million.

So, the Lightning lineup to start the Stanley Cup Final brought home 1.77 times more money than the Canadiens lineup.

If the league really wanted to balance out the earnings of its players around the league they easily could. Players that play somewhere that pays less tax, like Tampa Bay, could pay more escrow into the league. Players that play somewhere that taxes more than half their incomes, like Montreal, could see less of their earnings paid into escrow.

Escrow, for those that aren’t aware, is basically a kickback the players have to give to the owners. The NHL revenue has to be split evenly between players and owners and the players salaries are too high for that to work itself out. So, they have to give some of their earnings back to the owners so they also get half of the league revenue.

That is fine, they should just be taking more from the players who earn more. Everyone has money coming off their pay check, but they all pay the same percentage into escrow, while some pay nearly twice as much tax as others. The league needs to fix that.

Simply have players in a higher tax environment pay less escrow and don’t allow a team to ice a roster that is well above your own salary cap. It’s embarrassing that the league allows this now, and they need to fix it immediately.