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NHL Salary Cap Explained: How It Works and Why It Matters

1 August 2025
Hockey Knowledge

Photo: Bilbyrån

The NHL salary cap is one of the most influential parts of team building in professional hockey. It affects everything from roster construction to trades and even who lifts the Stanley Cup. But how does it actually work? And how do teams get creative to stay competitive under its constraints?

In this guide, we’ll break down the NHL salary cap in plain language, answer the most common questions, and look at a real-world example of how the 2025 Stanley Cup-winning Florida Panthers navigated the cap.

What Is the NHL Salary Cap?

The NHL salary cap is a limit on the total amount of money a team can spend on player salaries during a season. It’s a "hard cap", meaning teams cannot exceed it under normal circumstances, unlike in some other leagues (e.g., the NBA with its luxury tax system).

For the 2024–25 NHL season, the salary cap is set at $88 million per team, with a minimum “salary floor” of $65 million.

When Did the NHL Salary Cap Start?

The NHL salary cap was introduced after the 2004–05 NHL lockout. Before that, there was no cap, which allowed wealthier teams to spend heavily on star players.

The first capped season was 2005–06, with a salary cap of $39 million per team. Since then, the cap has gradually increased, tied to league revenues through a formula agreed upon in the Collective Bargaining Agreement (CBA). 

How Does the NHL Salary Cap Work?

Here’s how the cap operates:

  • Cap hit: A player’s “cap hit” (what counts toward the cap) is based on the average annual value (AAV) of their contract.
  • Roster size: Teams can have up to 23 players on their active roster.
  • Long-Term Injured Reserve (LTIR): Teams can exceed the cap by using LTIR, which provides temporary relief when a player is out long-term.
  • Trade retention: Teams can retain a portion of a traded player’s salary to make deals work under the cap.

Real-Life Example: The 2025 Stanley Cup Florida Panthers

The 2025 Stanley Cup champions, the Florida Panthers, provide a textbook example of working the cap creatively:

  • LTIR usage: The Panthers placed multiple players on Long-Term Injured Reserve (LTIR) during the regular season, freeing up cap space to acquire additional depth players before the trade deadline.
  • Trade deadline strategy: At the deadline, they made key acquisitions, with some trades involving retained salary from the sending teams. This allowed Florida to stay under the cap while strengthening their playoff roster.
  • Postseason flexibility: Once the playoffs begin, the salary cap no longer applies. The Panthers entered the postseason with a roster valued well above the $88 million cap — a strategy often used by contenders (famously, the 2021 Tampa Bay Lightning did this with Nikita Kucherov).

    This combination of smart cap management, trade creativity, and timely LTIR use was a major factor in Florida’s ability to ice a championship-caliber team.

NHL Salary Cap by Year (Past & Future)

The salary cap has steadily grown since its introduction in 2005, tied directly to league revenues. After a flat cap during the pandemic years, recent growth has been more aggressive, and the NHL has outlined expectations for future increases.

Season

Salary Cap (USD)

2005–06

$39 million

2010–11

$59.4 million

2015–16

$71.4 million

2020–21

$81.5 million

2023–24

$83.5 million

2024–25

$88 million

2025–26 (projected)

~$92 million

2026–27 (projected)

~$96 million

2027–28 (projected)

~$100 million

Why the Growth?

  • Post-pandemic revenue recovery: Ticket sales, TV deals, and sponsorships are rebounding strongly.
  • New media rights deals: U.S. and Canadian TV contracts have boosted league income.
  • Expansion revenue: Teams like the Seattle Kraken (and potential future expansions) add significant league-wide revenue.

    This growth means teams will have more flexibility to lock up stars long-term while maintaining depth — a crucial factor in building dynasties.

How Will This Impact Teams Like the Panthers?

For Florida, the projected cap increases could be critical. Their 2025 Cup-winning core includes several players on big contracts, but a cap jumping to $92 million in 2025–26 gives them room to extend key contributors and stay competitive without sacrificing depth.

Why Does the Salary Cap Matter?

The cap ensures competitive balance, giving smaller-market teams a fairer chance to compete with big-market franchises. It also adds strategic complexity, forcing general managers to carefully balance superstar contracts with depth players.

Frequently Asked Questions

What is the NHL salary cap?
 It’s a hard limit on how much each team can spend on player salaries in a given season.

When did the NHL salary cap start?
 It started in 2005–06, after the 2004–05 lockout.

How does the NHL salary cap work?
 It sets a maximum spending limit for player salaries, but teams can use tools like LTIR and retained salary trades to manage cap space.

Why do some playoff teams seem “over the cap”?
 The cap only applies during the regular season. In the playoffs, there’s no cap, allowing injured players returning from LTIR to rejoin the lineup without financial penalty.

 

Key Takeaways

  • The NHL salary cap started in 2005 to ensure fair competition.
  • Teams use LTIR and trade retention to stay compliant.
  • The 2025 Florida Panthers are a perfect example of how smart cap management can lead to a championship.
  • Future cap raises will reshape how teams build and keep competitive rosters.