Edmonton Oilers are now the biggest revenue-generating team in the entire NHL, reports Forbes

This in from prominent NHL player agent Allan Walsh, who for 13 years has been on The Hockey News’ list of Top 100 people of power and influence in the sport. Walsh, posting soon after William Nylander signed his new eight-year deal at $11.5 million per for the Leafs, said, “Back in 2004, Bob Goodenow said a hard salary cap would dominate fan and media discussions, become detrimental to growing the game we love. He was right. Nowadays, the fan bases around the NHL are all wringing their hands over a players AAV. The debate becomes ‘he’s a really good player, but is he worth $6M AAV? We only have so much cap space to go around.’ This could have been avoided with a luxury tax. Instead, the system makes players the villains for taking up X% of a teams cap space. Horrible business model.”

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And, in related news, Michael Ozanian of Forbes magazine reports that the Edmonton Oilers are now the biggest revenue generating team in the entire NHL (tied with Toronto) at $281 million in 2022-23. Any talk of how a freer market for NHL players will impact the Oilers is contingent on the revenue of the team, which has now soared to new, unimagined heights.

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My take

1. Truth bomb alert! Who can deny the veracity of what Walsh says here? All you have to do is talk Oilers hockey on social media for an hour or two and you are certain to hear someone complain about Darnell Nurse’s salary, not to mention Jack Campbell’s deal. This comes even as Nurse is playing the best hockey of his NHL career right. But in a league where the competitiveness of a team is directly linked to how well a GM allocates his cap dollars, the pay of each player is critical to winning and losing. Fans want their team to win, so of course there going to focus critical comments on any player perceived to being giving poor or even below average bang-for-the-buck.

2. That said, just because Walsh speaks the truth here it doesn’t mean that any major reform of the NHL’s hard cap is needed. Of course, he’s not going to like the current hard cap system. He’s a player agent. He’d rather have it like the big-spending days, 1991-2005, when teams could and would spend whatever they wanted on top talent. If this were to happen again, there would be massive inflation in NHL salaries, with top players especially taking in two or three times as much money. That would be good for the players and good for their agents. It would be bad for the owners, which is why they were willing to throw out an entire season, 2004-05, in order to break the will of the players’ union and win a hard cap through hard=ball negotiating and aggressive lock-out tactics. But what of the fans? Would axing the salary cap, perhaps in favour of a more open-ended cap system as seen in baseball, work for the us?

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3. Obviously in the big money markets, such as Toronto, New York and Montreal, a cap system that allowed those teams to outbid other NHL teams for star players would work for fans there. The fans might have to pay more money for tickets, but I doubt that NHL owners are charging much less than the maximum allowed by their particular market right now. Instead the increased share for bigger player salaries would come right from the owners. The big market players would get more. The big market owners would get less.

4. How would Edmonton do in such a scenario? Remember, I write this blog not as a cold-blooded analyst of hockey finances or a non-partisan observer of the games, but as an Oilers fan. Essentially, I don’t give a flying frak about how much the owners or the players make. What I care about is how a given change to the Collective Bargaining Agreement will impact the Oilers and their chances of winning the Stanley Cup. For that reason, in 2004-05 when the owners locked out the players, I was all for it. At that time Edmonton was a small market team that had lost countless star and superstar players, from Wayne Gretzky to Mark Messier, from Esa Tikkanen to Adam Graves, from Dough Weight to Curtis Joseph, because the Oilers could not pay enough to keep them. But that’s now changed. In fact, it’s changed dramatically. The Oilers finances have gone supernova.

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5. When Edmonton was losing its star players, it was one of the least valuable teams in the NHL, with some of the lowest revenues and operating incomes. In 2001-02, for example, it was the lowest valued franchise of any NHL team, 30th out of 30 teams. But that all started to change after the 2004-05 lock and the new CBA. That year Edmonton shot up to 18th overall for franchise value from $104 million to $146 million. It’s climbed steadily since then, with two new factors adding to the value, the new downtown arena and district and the arrival of Connor McDavid. With the Oilers and McDavid now a regular Stanley Cup contender, the Oilers were valued at $1.85 billion in 2022-23 by Forbes, making the team the seventh most valuable franchise. Wrote Forbes of changes in the Oilers financial situation: “The Oilers debuted PlayAlberta as the club’s new home helmet sponsor in a 2023-24 preseason game against the Jets. PlayAlberta is the only regulated gambling site in Alberta, offering slots, table games, and a full sportsbook for the four major leagues, and various other professional sports. The club’s away helmets will still feature Skip The Dishes, as they have since the 2020-21 season, the inaugural helmet ad season.”

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6. When it came to revenues, the Oilers were tied for first overall with the Toronto Maple Leafs at $281 million last season. First overall! In other words, in an open market right now, based on team revenue, the Oilers should have the financial clout to battle with anyone for top players. If Connor McDavid were free and out on a truly open market, Edmonton would be in the game. Of course, the last time the Oilers were riding so high in the late 1980s, owner Peter Pocklington’s outside business interests were dragging him down and sucking out money from the Oilers organization. So far as I know there’s never been a hint that Katz is draining money out of the Oilers like Pocklington did. Instead Katz appears to be the kind of owner who would do whatever it takes to bid for top players to come here.

7. Edmonton, in the short term at least, would be good with a more open market for players in the NHL. New hockey boss Jeff Jackson could likely add all kinds of talent around McDavid and Leon Draisaitl. In the long term? Things change, of course, but Edmonton’s hockey obsession is unlikely to fade. Its arena and district are the best things about our downtown, a shining light in a fading area. There’s plenty more land down there to develop around the arena, plenty of opportunity for Katz to continue with his major real estate play in the area.

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For all these reasons, I’d be OK with a different cap system for the NHL. At the same time, it would likely take another hideous year-long strike for the players to get such a concession from the owners. I’m not up for that, and I think it would be terrible for the NHL. With social media, our attention spans are getting shorter and shorter. If we get out of the habit of watching hockey, I wonder how high a percentage of fans will never come back. Twenty per cent? Thirty per cent? Fifty per cent? It will be utterly massive — far greater than either the players, the agents or the owners now imagine.

A more open cap system might well work for the Oilers, but I don’t see it coming. We might see some tweaks to the system, such as maybe allowing for buy-outs to be less expensive against the cap, but I doubt Walsh will get his wish. The current system came at great cost. It will be replaced only at even greater cost.  The players and owners would be foolish to head down that path.

P.S. The Oilers recalled Phil Kemp today, a surprise move, as many had expected Philip Broberg to be recalled. Brett Kulak has missed a few practices, but not any games. Perhaps Kemp has been recalled only as insurance and isn’t expected to get into any games. That might well work to give him a taste of the NHL, but Broberg has bounced around too much. He needs to stay in one place for a time, anywhere in a top league he can get regular playing time. That’s happening in Bakersfield right now, so it makes sense the Oilers organization does not want to interrupt that.

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