The NHL's salary structure
Part 4: Distributing the wealth
I appreciate all of the feedback the salary structure series has gotten. Parts one, two and three can be found here, here and here.
On the weekend, blogger Tom Benjamin sent me a good suggestion related to wealth distribution, the topic that makes up the fourth (and final) instalment and measures how the players' share of revenues is divided.
Not surprisingly, the highest paid players take the biggest chunk.
There's a statistic out there that's often recited when it comes to wealth distribution in the United States, and it basically states that the wealthiest 1 per cent of the population has more wealth than the bottom 95 per cent. The NHL is a bit more equitable than that, however, as the wealthiest 25 per cent of the league takes about a 60-per-cent share of player revenues.
(In the CBA, the players' share is roughly 56 per cent of total NHL revenues on an annual basis, which means, based on recent history, the richest 185 or so players take home about one-third of all hockey-related revenue.)
Benjamin's idea was to split the entire league into quarters, separating the richest 25 per cent, the poorest 25 per cent and two other blocks inbetween.
For 2008-09, this would be the breakdown:
1st quarter: $3.5-million and up
2nd quarter: $1.4-million to $3.49-million
3rd quarter: $725,000 to $1.4-million
4th quarter: $475,000 to $725,000
How much of the players' revenue share does each group get? Here's a look, graphically (mmmm pie):
Benjamin mused that breaking the information down in this manner may show that players in the middle were, in fact, getting squeezed — unlike what I wrote in this post last week — but that's simply not the case. The wealth distribution pie charts look remarkably similar in all four postlockout seasons, with the largest segment of growth coming among the second quarter players.
Since 2005-06, the players' share of revenues has risen from about $1.1-billion to a projected $1.5-billion next season (before escrow), and the league's highest paid players have received the lion's share of those increases in terms of a total dollar figure.
On the flipside, if a player has stayed in the bottom quarter in terms of salary, it's unlikely he's received much of a raise since 2005-06.
Here are the rough numbers on where that $400-million increase has gone:
1st quarter: $200-million
2nd quarter: $160-million
3rd quarter: $35-million
4th quarter: $10-million
First quarter players have seen their salaries rise by more than $1-million on average since 2005-06, while second quarter players aren't far behind at $865,000 per player.
Third and fourth quarter players' salaries, meanwhile, have risen an average of about $200,000 and $50,000.
In terms of on a percentage basis, salaries have risen:
1st quarter: 30 per cent
2nd quarter: 70 per cent
3rd quarter: 30 per cent
4th quarter: 10 per cent
Whew, a lot of numbers, I know.
Perhaps the easiest way to think of the breakdowns is in terms of an average team, where the top six players are in quarter one of the salary scale, the next six in quarter two, and so on. The six players on this hypothetical team making $3.5-million or more certainly eat up the majority of the team's salary, but it's been the second tier, percentage wise, that has nabbed a lot of the NHL's new revenue.
I think that comes down to two things:
- The realization that teams need to pay for quality depth and the resultant competition for those mid-level players
- The push to pay young players more and more
- Randy Jones, for instance, makes $2.75-million;
- Bryce Salvador was given a $2.9-million per year deal;
- Dustin Byfuglien and Valtteri Filppula both signed $3-million deals after 36-point seasons;
- Rostislav Olesz makes $3.125-million;
And that doesn't even include some surprising players who are now in the top 25 per cent of NHL salaries: Jeff Finger, Brett Clark, Kevin Bieksa, Mike Commodore, R.J. Umberger, Derek Morris, etc.
The one constant in all of this, barring a raise of the league minimum salary, is that the bottom six or so players on teams' rosters are unlikely to ever get a bigger slice of the pie.
It'll be interesting to see where the money goes in the future — especially if the cap's rise slows.