55% of Revenue

[Kodiak]

I'm suprised that no one has picked up on this (or maybe someone has, I haven't read every post). The 55% trigger in the NHL's proposal makes it a foregone conclusion that the hard cap would be in place within a couple of full seasons. With the rollback, player salaries take up 54% of revenue. The NHL is comprised entirely of guaranteed contracts, and there is going to be a significant dip in revenue over the next few years (maybe more) due to fan backlash to the lockout. Regardless of whether salaries were getting "out of control" again, player salaries were bound to take up a higher percentage of revenue due to those two factors.

Click to read more...

 

[AlexGodynyuk]

Even after the 24% roll back, there's more then 3 teams over $42 million (and these teams don't have a complete roster yet).
Also the difference between the top payroll and bottom payroll teams is way more then 33%.

The triggers were essentially designed to fail. I'm not sure if the NHL is willing to negotiate on the triggers.

 

[HF2002]

Even after the 24% roll back, there's more then 3 teams over $42 million (and these teams don't have a complete roster yet).
Also the difference between the top payroll and bottom payroll teams is way more then 33%.

The triggers were essentially designed to fail. I'm not sure if the NHL is willing to negotiate on the triggers.

If the teams are supposed to get down to the $42 million cap, aren't other teams supposed to move up to the $34 million (or whatever the number is)?

Doesn't this mean that the 33% difference would be based on the new system, not the old one?

 

[chiavsfan]

The triggers were essentially designed to fail. I'm not sure if the NHL is willing to negotiate on the triggers.

The NHL said those triggers were negotiable

 

[Lanny MacDonald*]

If the teams are supposed to get down to the $42 million cap, aren't other teams supposed to move up to the $34 million (or whatever the number is)?

Doesn't this mean that the 33% difference would be based on the new system, not the old one?

Exactly. Teams have to get up to the salary floor of $32 million as well, so there is going to be some serious salary dumping and some serious bidding for quality players that provide some bang for the buck. There is lots of movement to take place so I don't buy this "sky is falling" crap from the players. I don't see anyone getting shafted other than being traded to a team that can handle their salary.

What I find very ironic is that the big market teams are going to go through exactly what the small market teams have gone through, except in reverse. They have to find a buyer for their over-priced players and try to make the best deal they can. I find this to be a very interesting exercise, one that could be exciting to watch.

 

[Brent Burns Beard]

The NHL said those triggers were negotiable

link ?

dr

 

[Kodiak]

Exactly. Teams have to get up to the salary floor of $32 million as well, so there is going to be some serious salary dumping and some serious bidding for quality players that provide some bang for the buck. There is lots of movement to take place so I don't buy this "sky is falling" crap from the players. I don't see anyone getting shafted other than being traded to a team that can handle their salary.

What I find very ironic is that the big market teams are going to go through exactly what the small market teams have gone through, except in reverse. They have to find a buyer for their over-priced players and try to make the best deal they can. I find this to be a very interesting exercise, one that could be exciting to watch.

You're missing the point. Even if the other three triggers were met by salary dumping and the like, and even if teams do not inflate salaries AT ALL, salaries are going to take up more than 55% of revenue due to the facts that revenue will drop in the next few years and guaranteed contracts cannot be continuously adjusted to fit the revenue stream.

Someone with more time on their hands than me should do me a favor and do this bit of mathematical analysis. Assume current salaries (with the 24% rollback) stay at the same level, and assuming that the salaries take up 54% of $2.1 billion, how much would revenue have to drop to make current salaries take up 55% of revenue.

 

[chiavsfan]

Everything is negotiable...that's the main point of the process. In the NHL's case though neither side is Negotiating

 

[Kodiak]

Okay, here's the quick and dirty assuming the NHL made $2.1 billion in revenue last year. I know these numbers aren't completely accurate, but it's a valid estimation to illustrate my point.

54% of revenue is $1.134 billion. Let's assume that's the salary level with the rollback. If salaries stayed at $1.134 billion, revenue would have to drop from $2.1 billion to $2.06 billion for that level of salary to hit the trigger. That means is if league-wide revenue drops by 2% or more over the next few years, then the cap kicks in regardless of the rate of inflation of salaries. Does anyone honestly believe that revenue will not drop when hockey starts up again?

 

[Schlep Rock]

Kodiak, here is what I posted in another thread (which everybody actually ignored)

What was NHL revenue last year? $2.2 billion?

53% of that is $38.9 million per team in a salary cap.

Of that $2.2 billion, approximately $120 million of that was from the TV deal which is now gone so, now we're down to $2.08 billion in revenues and now down to a $36.7 hard cap.

I'll estimate the NHL's revenue stream will see a 3.5% hit for every month the lockout goes on (approximately 5 months for a 17.5% drop) which will be good for about a $364 million dollar hit bringing the revenues to $1.72 billion. We are now down to (using 53% again) a $30.32 salary cap/team.

While it might make sense that this is what needs to happen for the game to survive, there is no way (unless it is phased in over an extended period of time), this can work. Don't make an arguement back it only losers the NHL average salary to $1.32/player, the average number now is greatly inflated by guys like Pavel Bure, etc. The median NHL salary last year was $850,000.

A hard cap of $45 million for the first 3 years of the deal, then phasing in a 57% of revenues cap could work. It would give hockey 3 years to recover and hope to be brought to levels of last year (approximately $2.2 billion). At $2.2, 57% will equal a $41.8 hard cap with a floor (hopefuly) at 42% ($30.8).

 

[Charge_Seven]

Everything is negotiable...that's the main point of the process. In the NHL's case though neither side is Negotiating

Nothing has been negotiable the entire time from Bettman, that's why nothing has gotten done. It's been "Cap, Cost certainty". Goodenow isn't much better, it went from "Old system, to 24% rollback + pathetic sized tax" but at least he's moved off his original stance.

 

[chiavsfan]

Meanwhile the PA is negotiating what?? On the crappy PR proposal they made on December 9th?

It works both ways. Instead of rejecting everything all the time, why dont they come up with something different? Then maybe they can talk

 

[Motown Beatdown]

Exactly. Teams have to get up to the salary floor of $32 million as well, so there is going to be some serious salary dumping and some serious bidding for quality players that provide some bang for the buck. There is lots of movement to take place so I don't buy this "sky is falling" crap from the players. I don't see anyone getting shafted other than being traded to a team that can handle their salary.

What I find very ironic is that the big market teams are going to go through exactly what the small market teams have gone through, except in reverse. They have to find a buyer for their over-priced players and try to make the best deal they can. I find this to be a very interesting exercise, one that could be exciting to watch.

Thats not true, in the players December 9th proposal there was no mention of a salary floor.

 

[shnagle]

Meanwhile the PA is negotiating what?? On the crappy PR proposal they made on December 9th?

It works both ways. Instead of rejecting everything all the time, why dont they come up with something different? Then maybe they can talk

You make a good point in that neither side has come up with something different. I've seen several great hybrid proposals on these boards. What makes them great in my mind is that neither side wins. That's what makes them a true compromise and is what a CBA is supposed to be about. Bettman summed it up in his news conference iwhen he said that the two sides were unable to find a middle ground. In reality, there is a "middle ground" deal to be made it just seems that each side is more concerned with winning rather than finding a solution.

 

[Schlep Rock]

My post yet AGAIN gets ignored... what the heck people.

 

[Kodiak]

My post yet AGAIN gets ignored... what the heck people.

I've noticed a lot of people tend to ignore arguments that don't suit their purpose and are not readily refutable.

 

[Motown Beatdown]

My post yet AGAIN gets ignored... what the heck people.

Sorry every time you post my guys seem to focus on Brady's woman

 

[Schlep Rock]

Sorry every time you post my guys seem to focus on Brady's woman

LOL... she is one fine looking female specimen but instead of turning this into a "babe thread"... BACK ON TOPIC!

 

[AM]

Hello?

You're missing the point. Even if the other three triggers were met by salary dumping and the like, and even if teams do not inflate salaries AT ALL, salaries are going to take up more than 55% of revenue due to the facts that revenue will drop in the next few years and guaranteed contracts cannot be continuously adjusted to fit the revenue stream.

Someone with more time on their hands than me should do me a favor and do this bit of mathematical analysis. Assume current salaries (with the 24% rollback) stay at the same level, and assuming that the salaries take up 54% of $2.1 billion, how much would revenue have to drop to make current salaries take up 55% of revenue.

What do you think this process has been about?

Yes..... the players have to make less.... so your assumption dosnt work very well.

 

[krandor]

Nothing has been negotiable the entire time from Bettman, that's why nothing has gotten done. It's been "Cap, Cost certainty". Goodenow isn't much better, it went from "Old system, to 24% rollback + pathetic sized tax" but at least he's moved off his original stance.

The NHL has said everything is negotiable outside of the cap. So there is lots of ground there that is open to negotiations.

 

[Kodiak]

What do you think this process has been about?

Yes..... the players have to make less.... so your assumption dosnt work very well.

And the players would make less. In fact, they'd make an amount that the owners deemed to be workable. But the point of these triggers (or at least the public perception of these triggers) is to save the league if it goes down the same path again, i.e. rapid inflation of salaries. My point is that these triggers would almost definitely force an implementation of a salary cap even if there is no inflation of salaries.