FanPost

Another comparative look at NHL salaries

Let me start by saying I love Giroux, both as a player and as a leader of the team. I agree he is one of the elite players in the league, and should definitely be compensated as such. I still cringe at the thought of anyone getting $70m+ to play hockey, but as you'll see that is simply thoughtless reaction. So - it seemed basically obscene to me (as one who has studied income disparity) that the league minimum should be $550,000, and the essential maximum is $12,000,000 (Capgeek - that wonderful place - has a superb FAQ about the new CBA). (For those challenged in math, that would mean the minimum is 4.6% of the maximum.) So, even if we accept the fact that 4th liners are a dime a dozen (actually, they'd be $6.6m for a dozen, but whatever) and that compensation increases exponentially as skill increases ... we are intimating that Evgeni Malkin is 155 times more valuable than Tim Jackman. For comparison, minimum wage in Philly is $7.25 an hour ($15k a year if you work 40 a week every week ... sick, isn't it?). The top-paid CEO in the Philly area (in 2012; Dolev Rafaeli) was paid roughly $28.28 million. That would be 1,880 times as much as the minimum wage recipient. That seems like a lot in comparison to the mere 155 times that Malkin gets compared to your average 4th liner, but we need to remember that 4th line players actually have a pretty unique skill set as well - anyone can dig a ditch, but not everyone can skate in the NHL. If we just use the populations of the US, Canada, and Europe as the available resource pool, we have slightly over a billion people. Of those, in any given year, the NHL sees 900 or so players (let's just use 1,000 for fun). That means 0.00009% of the available population can skate in the NHL (talk about the top 1%, sheesh), while our assumption is that anyone can make minimum wage (even the Eskimos). So, what's reasonable compensation for that tiny fraction of people who can manage to make it? If we invert our relationship between the populations (such that the tiny percentage of players becomes a the factor by which salary relates to the minimum wage) it appears that the league minimum salary should be approximately $740,000. So we may surmise that NHL 4th liners are actually slightly underpaid, although I think if we look a bit deeper, and average the salaries of players by games played and normalize annually, it would end up being higher - don't forget, Max Talbot and his $1.75m salary spends lots of time on the 4th line. Short story - it looks like the league minimum is both market value and fair compensation in income distribution study. Let's return to Mr. Ugly. Is he really 155 times more valuable than Tim Jackman? On a purely evocative level, of course he is - the best are always far better than the rest. And considering that he's one of the top half-dozen players in the league (of 1000 players) he's very much in the 1% club of the already-exclusive set of NHL players. The pure math says that his compensation could easily be many times what his salary actually is - the league has 'capped' salaries more severely than they have cut off the bottom with the minimum. But what's market value for him? Seemingly $9.5m a year, because that is what he got. In summary, while we may be appalled by the face value of these contracts (and I count myself among that group) the sheer exclusivity of the skill set would actually demand a HIGHER salary than the league maximum. The league has set a salary cap on teams as a whole - and by doing so has also capped maximum salaries to any given player on the team, far below what the market could justify for their skills. So whatever we do end up giving Giroux for his next contract will be mathematically less than he 'earned' anyway, and will solely be based on 'market value' for his services. That (as others have explained ad nauseum) looks to be somewhat north of $8m a season over an 8 year contract, if we agree he's in the top 1% of the NHL (about 10 players). So just get used to it - or write an article explaining how team balance wins more Cups than superstar power (and be prepared to be wrong - you need an element of both).

Postscript - G has gotten an 8 year contract worth $8.275m a season.

This item was written by a member of this community and is not necessarily endorsed by <em>Broad Street Hockey</em>.

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