Globe and Mail -"Sides Agree to Salary Cap system" -all talk here !!!!

[Phil Parent]

See? What I'm saying. This "Deal Hype" has more meat to it than The Hockey News' one did when they tried to save the season and failed. This isn't an internet site reporting it, it's the paper press. When it gets to the paper press, I take it very seriously.

 

[tantalum]

I don't think anyone is saying that it isn't the case. The argument is what exactly does the fine print, which makes all the difference in the world, actually say. Does sit say Toronto can spend $36 mil while other teams only $34 mil (taxes incl on both)?

The interesting thing from the Stars President is that not only is there a tax but there are punishments for continually being in that territory. So perhaps teams can spend to that limit only a certain amount of the time. The end result is that if these reports are true they can not be based on a strict percentage of team-by-team revenues as if they were the leafs would be able to spend a heck of a lot more tha $36 mil and they all seem to agree that they won't be able to. If the highest payroll you are going to see is $36 mil (with bonuses and taxes incl) and the biggest discrepancy between teams will be ~ $10 mil (as much of that increase in payroll from $29 mil up will be tax) it is nothing but a huge win for the owners IMO. The average payroll will be in the $28-30 mil mark. Even if the leafs get to spend a couple million more than others the owners appear to have gotten themselves exactly what they wanted all along.

 

[arnie]

AS i mentioned in another thread it seems to me that the author of the story is saying that the payroll range will span a low of $22 mil and a potential high of $36 mil. I think he is saying that the formula for the calculation must be a complicated one because if you used direct percentages then the leafs would have a cap higher than $36 mil when that will not be the case. The allowing high revenue teams to spend more seems more to do with the tax system that lower revenue teams may not be abel to afford. SO if the PA folks are correct and that a cap doesn't act as a magnet then the richer teams will be able to spend $14 more million than the poor teams. No more than that.

I read that article 10 times and still don't know what he is trying to say. It is one of the most confusing and poorly written newspaper columns that I've ever read. Trying to decipher what he means is a waste of time.

 

[Colorado Avalanche]

horribly deal

 

[tantalum]

I read that article 10 times and still don't know what he is trying to say. It is one of the most confusing and poorly written newspaper columns that I've ever read. Trying to decipher what he means is a waste of time.

Absolutely agree. Terrible article. I have a feeling what it may be is a direct link to league wide revenues to set the limits and then some minor adjustments for market size either up or down from the cap. I don't think these adjustments are going to amount to anything more than a couple million dollar spending differences.

 

[CGG]

I don't think anyone is saying that it isn't the case. The argument is what exactly does the fine print, which makes all the difference in the world, actually say. Does sit say Toronto can spend $36 mil while other teams only $34 mil (taxes incl on both)?

The interesting thing from the Stars President is that not only is there a tax but there are punishments for continually being in that territory. So perhaps teams can spend to that limit only a certain amount of the time. The end result is that if these reports are true they can not be based on a strict percentage of team-by-team revenues as if they were the leafs would be able to spend a heck of a lot more tha $36 mil and they all seem to agree that they won't be able to. If the highest payroll you are going to see is $36 mil (with bonuses and taxes incl) and the biggest discrepancy between teams will be ~ $10 mil (as much of that increase in payroll from $29 mil up will be tax) it is nothing but a huge win for the owners IMO. The average payroll will be in the $28-30 mil mark. Even if the leafs get to spend a couple million more than others the owners appear to have gotten themselves exactly what they wanted all along.

Maybe there's something along the lines of the PA's cap proposals, that teams can exceed the cap (or a soft cap number) by up to 10% in 2 years out of 6?

The one thing I don't believe is that luxury tax payments are included in a $36 million cap. If that's the case, and it's a dollar-for-dollar tax after $29 million, why wouldn't they just set the cap at $32.5 million without lux taxes? Makes life a lot easier. I assume there's some kind of logic behind the $36 million (i.e. somehow related to the magical 54%) so therefore if the $36 million cap includes luxury taxes, players are getting hosed, since they don't actually receive the full 54%.

 

[helicecopter]

In my mind, there's a big win for the players in hiding in this. All along they've been concerned with underreporting of revenue. To some extent this has been addressed with the formula that has been negotiated, but with a linked/escrowed system like the hardliners were wanting, ownership would still have an incentive to hide revenue - or at least try to.

This system flips it around the other way. Owners will now have an incentive to report every single penny of revenue - as this gives their team a higher cap to work with.

This looks like a very good (and important) point to me.

 

[tantalum]

Maybe there's something along the lines of the PA's cap proposals, that teams can exceed the cap (or a soft cap number) by up to 10% in 2 years out of 6?

The one thing I don't believe is that luxury tax payments are included in a $36 million cap. If that's the case, and it's a dollar-for-dollar tax after $29 million, why wouldn't they just set the cap at $32.5 million without lux taxes? Makes life a lot easier. I assume there's some kind of logic behind the $36 million (i.e. somehow related to the magical 54%) so therefore if the $36 million cap includes luxury taxes, players are getting hosed, since they don't actually receive the full 54%.

ON the surface a $32.5 no tax cap is the same as a $36 mil tax incl. cap. BUt what is a luxury tax? It's simply revenue sharing from the higher payroll teams to the lower payroll teams. That tax may simply be one component of the revenue sharing the players wanted.

As well there could very well be provisions that any luxury tax given to lower revenue teams must be used for salary....though of the top of my head I don't know how that would be policed.

Basically until we know every single little detail we don't know anything.

 

[gobuds]

Well, that's all well and good but the story does not specify a lot of that detail. Plus, I think it is very misleading to say team by team caps will be determined by a percentage of individual club revenue when it's pretty obvious, it would appear, that the entire payroll range is based on a percentage of LEAGUE revenues. If you want to slot teams according to team revenues within the framework of a league-wide revenue pool, no problem, but don't make the blanket statement that a team's cap is directly related to revenue, because if it were there would be a much bigger spread than $2 million on the bottom or the top of the scale. I mean, if Toronto's range is 24-36 and Phoenix's range is 22-34, can you honestly say that reflects a percentage of the teams' individual revenues? If the system is as you spelled out, you're right, it's a good one for the league because not only are benefits and bonuses part of the cap, so is the tax. We'll see when it all comes out. Until then, this story seems cloudy and confusing.

I agree. I think, as you better then anyone here can attest, the author of the story was clearly trying to do 2 things: tie together mulitple sources accounts and perhaps more importantly, get a scoop. When you try and be first, sometimes attention to detail is forgotten.

Personally, the thing I love is the PA appologists (spector) saying this isn't a bad deal for the players as the numbers reported are only in year 1 where the revenues are going to be at their lowest. This is true, however, if the system is as I have descirbed, and I believe it is, then the players salaries will only increase as leauge revenues do! The players wanted a partnership- they got one. The only thing that could have been better for the owners is non-guaranteed contracts.

I don't believe for 1 second the 04-05 contracts will be honored, do you Bob?

 

[WC Handy*]

Stars President Jim Lites confirmed the report

NHL and players union negotiators have made significant breakthroughs, and Stars president Jim Lites said Wednesday he is hopeful a deal can be worked out within 30 days to end the almost 9-month-old lockout.

The two sides have agreed on the framework for a salary cap -- the largest stumbling block in negotiations -- Lites said, confirming a report Wednesday in The Globe and Mail of Toronto.

Lites, who is not involved in the negotiations, said he didn't know all the specifics but said what he had heard seemed to match that report. Unidentified sources were quoted as saying the two sides had agreed to a salary-cap formula based on team-by-team revenues.

"I know they have broken through in a bunch of areas," he said. "I also know the ultimate goal was to not spend more than 54 percent on salaries. I think that has been accomplished. ...

"I am hopeful we will have a deal within the next 30 days."

A cap formula based on team-by-team revenues would seem to give the Stars and other high-revenue teams more money to work with when fielding a team.

"Probably," Lites said. "I mean our cap would be higher. But if you're facing a tax, if it's in the 30s [in millions of dollars], it should be accomplishable."

Discussing the latest salary-cap numbers he had heard, but not necessarily the final numbers in an agreement, Lites said: "I think the high was $35 million and the low was $22 million, with the mid-range being the place where a dollar-for-dollar tax started, and you could spend up to that, but there would be punishment if you spent more than that over a sustained period of time."

http://www.dfw.com/mld/dfw/sports/hockey/11852021.htm

Which is ENTIRELY different than different teams having different caps.

 

[Blueshirts4me]

On Leafs Lunch they just said that the floor will be 24 million, soft cap at 36 to 38, with 2 to 1 tax up to a hard cap at 42.

EDIT: Now they are repeating what everyone else is saying.

 

[LordHelmet]

Which is ENTIRELY different than different teams having different caps.

Yeah, but Lites followed up with this:

A cap formula based on team-by-team revenues would seem to give the Stars and other high-revenue teams more money to work with when fielding a team.

"Probably," Lites said. "I mean our cap would be higher. But if you're facing a tax, if it's in the 30s [in millions of dollars], it should be accomplishable."

I've been curious about the 'team-by-team' phrase that's been talked about. Remember, this was the PA's idea some time back in April..

I agree with the general consensus here - there's no way the league would go for a straight up 54% of a team's revenue being their cap number. That would create too much disparity.

 

[Hi-wayman]

The one thing I don't believe is that luxury tax payments are included in a $36 million cap. If that's the case, and it's a dollar-for-dollar tax after $29 million, why wouldn't they just set the cap at $32.5 million without lux taxes? Makes life a lot easier. I assume there's some kind of logic behind the $36 million (i.e. somehow related to the magical 54%) so therefore if the $36 million cap includes luxury taxes, players are getting hosed, since they don't actually receive the full 54%.

Setting the cap at $32.5 million without lux tax would mean no taxes collected to share with the lower income teams and thus less league wide general revenues that will be spent on total league player salaries. The luxery tax ensures the NHLPA of higher average player salaries than without the tax.

The various news stories quote that the limits are based on a formula based on team by team revenues. The reports also state that the NHL had been previously seeking a limit on player salaries to be no more than 54% of revenues.

No where in any of the news reports I've seen so far does it say any cap would be based on every team being allowed to spend 54% of that team's revenue, only that the bottom and top limits would be based on a FORMULA which was based on team by team revenues. That description could easily include a sliding scale formula on which each individual team's income would be compared to the league average income to determine the range a team can spend and still equate to a maximum spending limit of $36 million.

 

[WC Handy*]

Yeah, but Lites followed up with this:

I've been curious about the 'team-by-team' phrase that's been talked about. Remember, this was the PA's idea some time back in April..

I agree with the general consensus here - there's no way the league would go for a straight up 54% of a team's revenue being their cap number. That would create too much disparity.

I think, that just like Shoaltz, that's his translation of the phrase 'team by team'.

 

[ti-vite]

In my mind, there's a big win for the players in hiding in this. All along they've been concerned with underreporting of revenue. To some extent this has been addressed with the formula that has been negotiated, but with a linked/escrowed system like the hardliners were wanting, ownership would still have an incentive to hide revenue - or at least try to.

This system flips it around the other way. Owners will now have an incentive to report every single penny of revenue - as this gives their team a higher cap to work with.

Excellent point, so

1) do you expect teams to have an incentive to falsely increase reported revenu? Don't see the NHLPA having a problem with that...

2) So ticket prices and concession items prices arent going down...

 

[GSC2k2*]

Quote:
Originally Posted by EndBoards
In my mind, there's a big win for the players in hiding in this. All along they've been concerned with underreporting of revenue. To some extent this has been addressed with the formula that has been negotiated, but with a linked/escrowed system like the hardliners were wanting, ownership would still have an incentive to hide revenue - or at least try to.

This system flips it around the other way. Owners will now have an incentive to report every single penny of revenue - as this gives their team a higher cap to work with.

Excellent point, so

1) do you expect teams to have an incentive to falsely increase reported revenu? Don't see the NHLPA having a problem with that...

2) So ticket prices and concession items prices arent going down...

Um, this entire point is pretty silly.

First off, NHL teams produce audited financial statements. Reported revenues are not capable of being misrepresented.

Secondly, why would you want to fake an increase of revenues to increase cap size? That just increases your salary requirements, which increases player demands, which increases other player demands, etc, which increases your cap issues?

Accordingly your theory is deficient in both logic and available opportunity. Long story short: can't happen, and would not happen if it could

 

[MojoJojo]

What is going to be really interesting now is to see if the leauges big complainers, teams like St Louis that spend a lot and then complain about low revenue, will start inflating their numbers. If they had incentive to lower their reported revenue going into the CBA talks, they will now hav incentive to inflate it if they want to retain a competitive edge.

 

[MojoJojo]

First off, NHL teams produce audited financial statements. Reported revenues are not capable of being misrepresented.

 

[SENSible1*]

Do people seriously think teams are going to inflate their revenue figures to be allowed to spend 2M more???

 

[Morbo]

First off, NHL teams produce audited financial statements. Reported revenues are not capable of being misrepresented.

Aha...ahaaaa..ahahahahahahahahahahahahahahahaha

 

[Bobs your uncle]

Yup. They just said a big FU to the defending champs of the west the Flames. Its master plan to get Phanuef and Iginla out of Calgary and to New York ASAP, and this is how they can do it.

You're right. The whole lockout was a league-wide conspiracy concocted by Sather & Feguson just to get the good players out of Calgary.
Damn, he figured it out ..........................

 

[CGG]

Setting the cap at $32.5 million without lux tax would mean no taxes collected to share with the lower income teams and thus less league wide general revenues that will be spent on total league player salaries. The luxery tax ensures the NHLPA of higher average player salaries than without the tax.

Sorry, I misspoke. The question is why would they have a $36 million cap if that meant you could only pay $32.5 million in salary and $3.5 million in luxury tax? Why wouldn't they just call that a $32.5 million salary cap? The luxury tax would still be there, it just wouldn't count towards the cap.

Too confusing to do it that way, which is why I believe all this talk of $36 million is not including the luxury tax (i.e. if you want to pay $36 million, you pay an additional $7 million in luxury tax, total of $43 million)

 

[blamebettman*]

the cap will probably be team by team, but I can't see a majority of the owners agreeing to something where a team like the Stars has only a small advantage over the coyotes even though they make a ton more money.

even lites quote is confusing. "our cap will be higher" "tax in the 30's" well what kind of tax? The other story said the tax kicked in at 29? tax in the 30's means some teams can spend in the 40's.

 

[Mess]

Aha...ahaaaa..ahahahahahahahahahahahahahahahaha

I think his comment Pep gives us a pretty good idea of his of his accounting understanding and background ..

I wonder how many businesses each day receive payment in cash and somehow that is forgotten to be included in the accounting books.

I wonder how many times services are exchanged as currency in real life ..


I wonder if a company owns multiple businesses like Hockey and Basketball and the Arena they play in.. When a sponsors sends in their money in order to have the owner put up his Nike or Ford banner in the arena .. I wonder if its perfectly legal to record that money against either Hockey or Basketball or Arena books? Whatever suits your financial means best?

 

[LordHelmet]

Um, this entire point is pretty silly.

First off, NHL teams produce audited financial statements. Reported revenues are not capable of being misrepresented.

But don't you agree that an owner could structure certain things so as to maximize the revenue reported in that audited financial statement?

Secondly, why would you want to fake an increase of revenues to increase cap size? That just increases your salary requirements, which increases player demands, which increases other player demands, etc, which increases your cap issues?

Good question. By their own admission though, owners aren't exactly the brightest bunch when it comes to controlling their spending & balancing financial responsibility with the desire to have the players they want.

Accordingly your theory is deficient in both logic and available opportunity. Long story short: can't happen, and would not happen if it could

In every sport that has a cap, owners & GM's are constantly trying to find ways to circumvent the restrictions. Agree or not?

NHL owners are extremely competitive even at the expense of their team's financial well-being. Agree or not?

NHL owners intent on contending for a championship will want as much cap space as possible so as to sign the best players they can. Agree or not?

I'm don't think that teams will over-report revenue, although I wouldn't be suprised if it did happen. I am convinced that this type of deal uses the competitive nature of some owners as an incentive for them to report every dime of revenue - which is why the players would love a deal like this.