Just a few days ago, Connor McDavid signed a contract that’ll make him the highest-paid player in the NHL at $12.5 million per year. It’s a commitment so large that there’s been discussion about whether the Edmonton Oilers will be able to comfortably build a Stanley Cup winner with their franchise cornerstone eating up so much cap space.
The same week, the Houston Rockets of the NBA announced that star James Harden had completed a contract extension with the team covering six years. The average annual salary? $38 million. In 2022-23, when McDavid is still making $12.5 million, Harden will get $46.8 million.
For many hockey fans, this is one of the most puzzling dynamics of the sport. How could McDavid, the best player in the NHL, get paid similarly to an NBA journeyman like Miles Plumlee? Why is there such a massive difference between what NHL and NBA stars get paid?
The answer is both very simple, and very complicated. There are a lot of factors that go into compensation for professional athletes, and over the years, we’ve seen those factors push NBA salaries to new heights. So why does Harden make so much more than McDavid? Let’s dig into the reasons.
1. NBA revenues are significantly higher than NHL
Thanks to its massive presence on the internet and a shiny new cable TV deal with TNT, ESPN, and ABC, the NBA projected revenues around $8 billion for the 2016-17 season. It’s unclear whether they hit that exact mark, but that estimate is substantially higher than any number the NHL could possibly reach.
For the 2015-16 season, the NHL totaled about $4 billion in revenue, while its projection for the past season was at $4.5 billion, per Sports Business Daily. There were reports concerning the salary cap that said revenues didn’t increase substantially for 2016-17, so it’s possible revenues stayed closer to $4 billion.
No matter what, you’re talking billions in extra revenue that the NBA creates compared to the NHL. That ultimately trickles down to the players, who have the same revenue split in each league now.
Under the current collective bargaining agreements for both the NBA and NHL, the players receive 50 percent of basketball- or hockey-related revenue, respectively.
For NHL players, that’s down from the previous CBA, which gave them 57 percent of hockey-related revenue before owners instituted a lockout in 2012. When you see how much more revenue is made in the NBA, that accounts to a massive difference in total payments to players each year.
In the NBA, 50 percent of related revenue is roughly $4 billion. In the NHL, it’s more like $2 billion, or closer to $2.25 billion if the league reached its projected estimates for the season. And that’s before you factor in roster sizes.
2. NHL teams have to pay significantly more players
The official NHL active roster size is 23 players, and they can have up to 50 players under contract. The official NBA active roster size is 12 players, and they can have up to 15 under contract.
Even if you exclude all the NHL prospects who aren’t in the league yet, you’re talking up to 713 active roster spots across 31 teams in the NHL vs. 450 active roster spots across 30 teams in the NBA. That’s an average of eight extra players per NHL team that need to be paid on a league-wide budget roughly half of the size.
There are also lots of costs associated with development and prospects, which NHL teams pay to sustain their pipelines of talent. NBA teams are just beginning to invest a lot more there with the growth of the NBA Gatorade League (formerly known as the D-League, but the NBA found another way to get more income).
3. A hard cap, a soft cap, and term limits
In the NBA, there’s a hard cap on how much one player can make, but teams are able to go over the soft cap for their rosters if they’re willing to pay luxury taxes. In the NHL, there are hard caps on both individual players and team payrolls.
This limits flexibility for NHL teams, as they cannot spend their way out of problems in the way that some richer NBA teams can. It makes it harder to want to commit big money to one player when you know it gets you closer to a firm limit you cannot go past for any reason.
The NBA also limits contract terms to five years or less. This has the impact of lowering risk on the part of teams, which can feel more comfortable taking a gamble on someone because they can’t demand more than four or five years.
We’ve seen this happen regularly in the NHL, where players get a higher salary in exchange for lower term. In the NBA, this is basically how every contract operates because nobody is getting locked in for that long. It limits the risk on the part of the team, which can make it easier to dive into big-money deals. Even with max-contract rules, small roster sizes and big revenues mean massive salaries for most NBA players.
If the NHL had term limits similar to the NBA, you might see more teams willing to take gambles on guys if it’s only for four or five years. When those same players demand seven- or eight-year terms, teams get more easily locked into bad deals that can create problems under a hard cap.
4. NHL stars don’t have the marketing power or individualism of NBA stars
McDavid is a big deal, without a doubt. But given the team-first attitudes that have permeated through the hockey world over the years compared to the more individualistic vibe of the NBA, McDavid simply isn’t a star on the same magnitude of LeBron, Harden, or Kevin Durant. He’s just not, whether you’re looking at endorsement deals, social media following, or another gauge of popularity.
When an NBA team has a star like Harden, that’s not just a chance to win a lot of games, it’s also a massive marketing opportunity with a name and face that have transcended popularity in the sports world. NBA stars, partially by virtue of being very tall people, tend to have a tough time going about their lives publicly without people noticing them. There are probably a lot of American cities where McDavid, on the other hand, could comfortably walk around without anyone realizing who he is.
That kind of individualism extends to contracts, where there’s not nearly as much pressure on NBA players to take smaller deals in order to win. Yes, it still happens, whether it was the Spurs’ stars, the Heat’s Big 3, or Durant in Golden State, but given how NHL teams operate under hard caps, there’s a cultural pressure for every star to take less money to stay competitive. McDavid reportedly did just that with his Oilers deal, even though you could argue he was worth even more than the bigger deal he may have turned down. There’s not nearly as much of a “let me get my own” attitude in the NHL, where Stanley Cups are the prime measurement of success.
5. NBA stars have a much larger impact on their teams
Going beyond the dynamics of how much teams can spend and how many players they need to employ, the reality is that an NBA superstar like Harden will likely have a greater impact on his team’s chances of success than an NHL superstar like McDavid.
The reason for this is simple: The NBA superstar is on the court far more than the NHL superstar is on the ice.
Last season, Harden played 81 games at an average of 36.4 minute per night. That’s a total of 2,947 minutes out of 3,936 minutes by the Rockets during the regular season. Harden was on the court nearly 75 percent of the time.
McDavid, even as the Oilers’ best player, comes nowhere close to that kind of usage because no NHL player does beyond the goalies. Last season, McDavid played all 82 games at an average of 21:08 per night. That’s 1,733 total minutes out of 4,920 possible regulation minutes by the Oilers (the actual minutes total is higher given overtimes). McDavid is on the ice closer to one-third of the time.
This is something NHL players will never be able to change. Yes, McDavid can still have an outsized impact on the game relative to other hockey players, but the dynamic of the sport is different than in basketball, where a single player can play the majority of the minutes and swing the odds in his team’s direction. LeBron James, for example, plays an average of 42 minutes per game in the playoffs. His teams only have to weather roughly 13 percent of each game with him on the bench, so it’s no surprise they’ve reached the NBA Finals in seven straight seasons.
An NHL player, even the best of the best, will never be able to do that on his own. In the end, with all those other factors included, it’s no surprise McDavid can’t sniff the kind of salaries commanded by the LeBrons and Hardens of the world.