COVID-19 and Short Playoffs Could Cause Havoc With Penguins Payroll

The COVID-19 pandemic has wiped out businesses across the United States, crippled companies, and left other companies waiting for payments and revenues from partners that never come. The U.S. economy tanked in the second quarter and experienced the worst losses since the Great Depression. The Pittsburgh Penguins are not immune, and according to a team source, the crippled economy and a lack of playoff revenues over the last three seasons have put the Penguins in a bad spot.

The situation is bad enough the Penguins may not be a “cap team” next season and might spend into the mid-70 million range, but not to $81.5 million.

The source told PHN the Penguins ownership allowed the team to deficit spend in each of the last two seasons. The short playoff exits put the organization into the red, and lack of home playoff revenue this season, combined with the tumultuous business climate means the Penguins will most likely spend less in 2020-21.

Playoff revenue is essential for the Penguins to turn a profit, or spend to the salary cap.

The source warned PHN for weeks that cuts were a possibility. However, the quick and embarrassing playoff loss exacerbated the situation.

The Penguins were one of many sports teams that furloughed or laid off employees during the pandemic. Also, being only the 22nd largest market of 31 teams not only limits the Penguins organization in good years but also makes the bad years even worse.

Extrapolating the knowledge, it would seem the Penguins hockey ops will need to move one or more veteran players with multi-million dollar salaries. The Penguins have a few players near or over 30-years-old, whom they do not consider part of the core and who make several million or more per year: Nick Bjugstad, Jack Johnson, and Patric Hornqvist.

Unrestricted free agents Justin Schultz, Conor Sheary, and Patrick Marleau are unlikely to return, especially under constrained financial circumstances.

The Pittsburgh Penguins also have a handful of RFAs, including Jared McCann, Tristan Jarry, Matt Murray, Juuso Riikola, Dominik Simon, and Evan Rodrigues.

While it seems Murray is likely the odd-man out of the Penguins goalie situation, Jarry is also due a new contract.

Most of the Penguins RFAs, including McCann, Jarry (or Murray), and Simon, are also arbitration-eligible, which adds an expensive wrinkle. Last season, the Penguins were able to force defenseman Marcus Pettersson to sign his qualifying offer, which was less than $1 million because he did not yet have arbitration rights. The Penguins eventually signed Pettersson to a much more lucrative five-year, $20.125 million contract in January.

The Penguins won’t have the power over their more valuable restricted free agents this season.

As if the Penguins on-ice situations were not already riddled with questions, changes, and angst, the financial specter may also push the Penguins hockey ops decision-makers to check with the business side, first.

The Penguins have been bankrupt three times in their more than 50-year history. The last time was a lengthy process in the late 1990s, which culminated in former Penguins player Mario Lemieux purchasing the team using back salary owed and additional investors.

The NHL revenue sharing models, coming expansion payments, and new TV contracts will keep teams away from the brink and enable them to ice a competitive team, unlike past generations.

The Pittsburgh Penguins will tighten their belt next season. Success could loosen the belt and earn additional resources, or negative results could determine how much tighter that belt gets.