The NHL salary cap is the total amount of money that each National Hockey League (NHL) team is allowed to pay its players collectively. It is a "hard" salary cap, meaning there are no exemptions (and thus no luxury tax penalties are required). The current cap system was introduced in the 2005–06 season.
Like many professional sports leagues, the NHL has a salary cap to keep teams in larger markets (with more revenue) from signing all of the top players and extending their advantage over smaller-market franchises. A notable instance of this was when the Detroit Red Wings stockpiled expensive high-end performers for their Stanley Cup-winning 2001–02 season;[1] the New York Rangers often also used a similar approach, offering massive contracts to marquee, veteran players.
The NHL owners' efforts to include a salary cap had contributed to the 1994–95 NHL lockout, which ended with other issues, but not a salary cap, being worked out between the NHL and the National Hockey League Players' Association (NHLPA). The NHL reintroduced the desire for a salary cap as one of its conditions during the next round of contract negotiations, resulting in the 2004–05 NHL lockout, which was resolved with an agreement including the terms and conditions of a salary cap. The terms of the salary cap have been refined in subsequent NHL Collective Bargaining Agreements.
Overall, the salary cap varies on a year-to-year basis, calculated as a percentage of the NHL's revenue from the previous season. The salary cap was introduced for the 2005-06 season, set at US$39 million per team. Over the next two seasons, the salary cap surpassed the $40 million threshold, then the $50 million threshold. Following those three consecutive thresholds, the salary cap would first surpass $60 million in the 2011–12 season, $70 million in 2015–16, and $80 million in 2019–20. With the impact on sports revenue associated with the COVID-19 pandemic in North America, there has been a "flat cap" of $81.5 million from the 2019–20 through the 2022–23 seasons.[2][3]
A salary cap existed in the early days of the NHL. During the Great Depression, for example, the league was under financial pressure to lower its salary cap to $62,500 per team, and $7,000 per player, forcing some teams to trade away well paid star players in order to fit the cap.[4]