Jeff Rubin is an author and former chief economist at CIBC World Markets. His latest book is “A Map of the New Normal: How Inflation, War, and Sanctions Will Change Your World Forever.”
How much does a player's net worth amount to? Baseball phenom Shohei Ohtani just signed a 10-year contract worth $700 million. As the world's wealth becomes more concentrated in the hands of a few, so too do the salaries of many sports teams. But as the NHL's Stanley Cup Final kicks off to determine the best team in the league, it's fair to ask whether this practice makes sense.
If that happens, the Toronto Maple Leafs will be in the finals because they represent one of the most egregious examples of this type of salary strategy. Under next year's contracts, the team is paying its top four forwards, Auston Matthews ($16.7 million), William Nielunder ($13.5 million), John Tavares ($7.95 million) and Mitch Marner ($8 million), more than $46 million out of a projected salary cap of about $87 million — an unprecedented 53 percent of the team's total payroll. No other team in the league is pumping that much salary into just four players.
Compared to their teammates, especially those toiling in relative obscurity on the team's third and fourth lines, players like Matthews are the Jeff Bezos and Mark Zuckerbergs of hockey. And just as the wealth of those men dwarfs that of their 19th-century predecessors, such as Rockefeller, Mellon and Carnegie, the salaries of Matthews and Nielunder are, in real dollars, many times what was paid to yesterday's golden stars, Gordie Howe, Bobby Hull and Bobby Orr.
Is such a skewed income distribution working better in professional sports than it does in the economy? There's no question. As the wealthiest gobble down bigger and bigger slices of the national income pie, the middle class is plummeting. All the indicators say the same thing. Whether you look at stock holdings, debt levels, or the fate of middle-class brands like Sears and JCPenney, the trends all point in the same direction: the economy is hollowing out. A strong middle class is the symbol of Western democracy and capitalism, so its disappearance is nothing short of devastating news. Do such inequalities bode well for failure in sports as they do in the economy?
Cathal Kelly: Should the Leafs take lessons from the Florida Panthers' Tkachuk trade strategy?
Just ask the sacrosanct Maple Leafs. The guiding principle behind their salary strategy is that a team can be made up of replaceable expendables, who they can pay with the little that's left over after paying their star players. The expendables' role is to waste game time until the team's highly touted star player catches his breath and scores the game-winning goal. Sounds plausible, right?
But the history of Stanley Cup-winning goals suggests otherwise. How many Cup wins have been scored by journeymen on the third and fourth lines? Let's look back in history: The Detroit Red Wings won back-to-back Stanley Cups in 1997 and 1998 thanks to third- and fourth-line expendables Marty Lapointe and Darren McCarty scoring the winning goal each series. If the Red Wings had paid their stars Steve Yzerman and Nicklas Lidstrom what Matthews and Nielunder are being paid today, would they have had the depth to deploy four lines?
And the Red Wings aren't the only team to have drunk Stanley Cup champagne thanks to the heroics of their expendable players. How about Travis Moen's game-winning goal in Anaheim in 2007? Or Dave Bolland's Cup-winning goal in Chicago in 2013? The expendable players often scored when it mattered most.
Sure, the Cup-winning teams had stars. But they also had depth. That's what ultimately led to victory. Without depth, nothing gets you anywhere in the heat of the playoffs. Hockey is inherently a team sport, and for a team to be successful, a club's payroll needs to reflect that reality. Failure to recognize that is a surefire way to fail. And this is where the Leafs excelled.
While the same is true for other team sports, if you measure the effectiveness of a star-biased salary structure by the actual playing time of the stars, hockey seems like a sport that is poorly suited to such a structure: after all, an elite hockey forward like Matthews is unlikely to actually play more than 20 minutes per game on the ice, and if you're not on the ice, you can't score.
In contrast, National Basketball Association (NBA) stars typically play 35 minutes per game. Basketball games are 48 minutes long, while hockey games are 60 minutes long. This means that NBA stars are on the court for more than 70% of the games, while hockey stars play only one-third of the games. NBA teams make more money from the actual playing time they pay their stars than NHL teams.
An NFL quarterback or MLB pitcher can change the course of a game even more because he controls nearly every offensive play in his hands.But a hockey team needs all four lines to play at their best to win.Promotion from the minor leagues can bring more than just a superstar.
Of course, winning may not be as important to the Leafs' owners as it is to other teams, but for owners of other NHL franchises, balancing salaries is the only strategy. Look at the teams competing in the finals. By the time the teams get close to the ultimate prize, everyone has done their part and the players in the locker room will agree that no one is more important than the other. The teams whose salaries best reflect that tend to win.
It's quite plausible that a player who managed to scrape through the salary envelope and produce a series winner could end up playing on the third or fourth line, but no one is going to call him expendable with a Stanley Cup hoisted over his head.
