NHL Salary Cap Increasing; General Managers Beware!

There have been whispers around the NHL about the salary cap for months now. It was initially projected to rise to between $92-93 million, but league revenue led insiders and agents to theorize that it would go higher. The NHL’s cancellation of escrow payments on January 18th only fueled those rumors.

Now, it’s official: the salary cap is going up to $95.5 million for the 2025-26 season. 

Interesting part of today’s #NHL / #NHLPA memo to teams is that this isn’t merely a projection of cap increases, but an agreement between the two parties.

2025-26
Upper Limit: $95.5m
Lower Limit: $70.6m

2026-27
Upper: $104m
Lower: $76.9m

2027-28
Upper: $113.5m
Lower: $83.9m

— Frank Seravalli (@frank_seravalli) January 31, 2025

The rising salary cap is certainly a good thing, but I can’t help looking back on the 2016 Free Agency. If you don’t remember that specific crop of signings, allow me to set the scene.

The Edmonton Oilers signed Milan Lucic to a seven-year contract worth $6 million per year. Lucic was coming off of a 23-goal, 50-point season with the Los Angeles Kings. After signing that deal, Lucic scored 10 goals and just 34 points in 2016-17. After that, he never broke 25 points in a season.

In 2015-16, Andrew Ladd played 78 games split between the Winnipeg Jets and the Chicago Blackhawks and finished the season with 25 goals and 46 points. In Free Agency, the New York Islanders inked him to a seven-year deal worth $5.5 million per year. How’d that work out for them? Ladd scored 23 goals in 2016-17 but finished the season with just 31 points. In 2017-18, his production dropped to 12-17-29. He played just three more seasons in the NHL and never broke 12 points.

The Boston Bruins gave David Backes a five-year contract worth $6 million per year. Previously, Backes had been a two-time 30 goalscorer. Though he had only elapsed the 60-point mark once, he was pretty much a lock for 20+ goals and 45+ points. But that’s not how things went when Backes was a Bruin. His scoring decrease was subtle at first– he had 38 points in 2016-17 and then 33 in 2017-18– but in year three of the deal, Backes scored just seven goals and 20 points in 70 games.

During a contract year with the Boston Bruins, Loui Eriksson scored 30 goals and finished the season with 63 points. The Vancouver Canucks signed him to a six-year deal with a $6 million AAV. Eriksson never played a full 82-game season again, but the production dropped off nonetheless. He did not break 30 points for the remainder of his career.

After a 22-goal, 64-point year with the New York Islanders, Kyle Okposo signed a seven-year contract worth $6 million annually. I’m sure you’re sensing a pattern here, and the song remains the same. Okposo isn’t the most extreme example, however, as he only saw a 10-point dropoff in the first two years of the deal. But in 2018-19, Okposo played 52 games and finished with just 19 points. He did, however, have an offensive resurgence in 2021-22.

I think you get the picture.

Yes, every Free Agency class has a few big misses. In 2018, James Neal signed a five-year, $5.75 million AAV contract with the Calgary Flames; he never again hit the 20-goal mark. Desperate to fill the hole left by Alex Pietrangelo, the St. Louis Blues handed Torey Krug a seven-year, $6.5 million contract that he never lived up to. But the 2016 Free Agency class was somethin’ else.

Now, I’m not saying that will happen again. But I’m also not… not saying it.

Mitch Marner and Mikko Rantanen currently headline the 2025 Free Agency, but they’ll inevitably live up to whatever contract they sign. They’re two of the best wingers in the league right now, and I don’t see that changing any time soon.

You start to enter dangerous territory when you move away from the big names— Marner, Rantanen, and even lower-end stars like Brock Boeser and Nikolaj Ehlers. 

For example, I like Sam Bennett a lot. His style of play is a rare commodity in the league these days. But if he hits Free Agency, there’s going to be a bidding war, and that’s something the Golden Knights should want no part of. A few weeks ago, AFPAnalytics projected Bennett’s next contract to be six years at around $6.3 million AAV. That’s a good deal. But if he hits Free Agency, with the salary cap going up the way it is… he might make upwards of $8.5 million.

I’m not saying you shouldn’t be excited about the salary cap going up. You should be excited about it. It means the league is generating revenue in a way it wasn’t before.

But five years from now, I imagine we’ll look back at some of the contracts players signed on July 1st, 2025, and quite a few of them will look pretty bad.