Is there truly a cap floor?

Discussion in 'The Business of Hockey' started by Stealth JD, May 24, 2006.

  1. Stealth JD

    Stealth JD You're Sicilian huh?

    Joined:
    Jan 16, 2006
    Messages:
    11,099
    Likes Received:
    565
    Trophy Points:
    170
    Location:
    Bonita Springs, FL
    ....meaning, does a team have to spend a certain amount on its roster? Could a team conceivably field a roster of $10M if it's in such financial distress, or does the CBA require that each club pay at least $xM on player salaries? I understand the 54% of revenues and how that's tied to profit sharing....but can a team forfeit profit sharing and instead save money?

    Could somebody pass along the minimum $ that an owner must spend on his club to reach both this year and next year's (expected?) floor?
     
  2. Geogaddi

    Geogaddi Registered User

    Joined:
    Nov 2, 2005
    Messages:
    1,401
    Likes Received:
    0
    Trophy Points:
    0
    Location:
    Dallas
    im pretty sure the floor for this season was 20 mill...not quite sure what the projected numbers for next year are.
     
  3. jumptheshark

    jumptheshark McDavid Headquarters Sponsor

    Joined:
    Oct 12, 2003
    Messages:
    78,864
    Likes Received:
    817
    Trophy Points:
    170
    Gender:
    Male
    Occupation:
    being an idiot
    Location:
    Lord of HFBOARDS
    The Washington Capitals were below the cap and got a phone call from from the NHL

    24hours later they got a Reison from devils

    The league plays the heavy until Jan and then ignores the floor
     
  4. Captain Ron

    Captain Ron Registered User

    Joined:
    Jun 9, 2003
    Messages:
    17,409
    Likes Received:
    0
    Trophy Points:
    0
    Location:
    Gardnerville, NV
    Home Page:
    What would lead you to believe they "ignore" the floor?

    I think there would be a double standard if the league allowed a team to go below the cap floor and not to exceed it. Therefore I am inclined to believe that the league would always enforce the the cap floor just as vigorously as they do the ceiling.
     
  5. USF Shark

    USF Shark Zôion politikòn

    Joined:
    Aug 19, 2005
    Messages:
    22,185
    Likes Received:
    1
    Trophy Points:
    114
    Location:
    DC Area
    The reason for the cap floor is to keep players salaries competative. If there was no cap floor and only a max that teams could spend then it would be possible for owners to continually underpay players with no real penalty. The cap floor forces teams to pay fair value to players, otherwise they wouldn't be able to meet that number.

    If teams were under the floor the NHLPA would have a fit.
     
  6. Stealth JD

    Stealth JD You're Sicilian huh?

    Joined:
    Jan 16, 2006
    Messages:
    11,099
    Likes Received:
    565
    Trophy Points:
    170
    Location:
    Bonita Springs, FL
    so......what i'm hearing is that if a club is not at $xM for it's opening day payroll......something happens? What could the NHL do.....really....impose fines? Seems against the best interest of individual franchises to force them to spend money.

    Hypothetically....an individual team could sustain no revenue increases over a......let's say.....3 year period. Yet is the rest of the league's revenues increase.....so does the salary cap. That would in turn, increase the payroll that a team would have to spend. If a team has increasing costs (salary floor) on an annual basis.....and no revenue increases....it could be impossible to sustain profitability. Wouldn't the NHL prefer to have 30 profitable and healthy franchises.....instead of a few teams that can't make money because of their individual economics (bad leases, long-term debt, etc.) and increasing costs??? I don't see how this is in the best interest of the league as a whole. Why not let those that can afford to....spend up to the cap?? Those teams that can't afford to...have the responsibility for managing their own budget......and must find ways to compete with a smaller payroll while keeping fan interest and long term stability.

    IMO, the cap floor hurts the league.....and was obviously a 'win' on behalf of the NHLPA....

    do we know what happens if a team is below the floor??? or what the floor is next season????
     
  7. Fugu

    Fugu Guest


    The cap is based on the 54% of NHL total revenues for this year. Divide that number by 30 and you get the midpoint. The 30 teams can spend anywhere from $8 million above the midpoint or no less than $8 million below the midpoint.

    The belief is that next year the upper limit will be $43-46 million. The floor will be $16 million below that. Teams have to fall within this range.

    A team that ranks in the lower 15 of NHL revenue rankings AND is in a small market (<2.5 million TV households) is eligible for revenue sharing. There is also additional escrow money (if there is any left in the NHL's favor) that gets divided up, favoring teams that spend below the midpoint. I've seen estimates that say this can be about $6-7 million per team, but the number is highly dependent on what actual playoff revenues and escrow funds end up being. If there is still escrow money left after some complex formulae are done to divide up playoff revenues and the first third of the escrow funds, the rest get divided up equally by all 30 teams.

    Yes, the floor potentially can make it tough on smaller market teams. Yes, NHL revenue increases overall may not necessarily help the teams that need it most. Yes, a cap at $46 million favors the bigger markets but some will say not as much as a no cap system. You decide if it is splitting hairs or not.
     
  8. Fugu

    Fugu Guest

    This is in the sticky on revenue sharing (mentioned in another discussion on Brad Richards here

     
  9. Captain Ron

    Captain Ron Registered User

    Joined:
    Jun 9, 2003
    Messages:
    17,409
    Likes Received:
    0
    Trophy Points:
    0
    Location:
    Gardnerville, NV
    Home Page:
    What Fugu said.
     
  10. jumptheshark

    jumptheshark McDavid Headquarters Sponsor

    Joined:
    Oct 12, 2003
    Messages:
    78,864
    Likes Received:
    817
    Trophy Points:
    170
    Gender:
    Male
    Occupation:
    being an idiot
    Location:
    Lord of HFBOARDS
    the fact that the caps finished under the floor at the end of the season
     
  11. Captain Ron

    Captain Ron Registered User

    Joined:
    Jun 9, 2003
    Messages:
    17,409
    Likes Received:
    0
    Trophy Points:
    0
    Location:
    Gardnerville, NV
    Home Page:
    But they didn't. Can you account for every dollar team the team spent this year ......including call ups and bonuses???.......I didn't think so.
     
  12. CarolinaCapsFan

    CarolinaCapsFan Registered User

    Joined:
    May 26, 2005
    Messages:
    331
    Likes Received:
    0
    Trophy Points:
    0
    Occupation:
    Educational Sales
    Location:
    NC

    Source?
     
  13. AdmiralPred

    AdmiralPred Registered User

    Joined:
    Jun 9, 2005
    Messages:
    1,923
    Likes Received:
    0
    Trophy Points:
    0
    Injuries ... send-downs. If you're using TSN as a source, salary info I've seen posted there are the committments for next season.
     
  14. lemieux32*

    lemieux32* Guest

    The salary floor is in place for one reason and one reason only, to try to create further competitive balance. It is their to prevent huge differences in payroll like MLB has. By having the floor a team has to spend within a certain percentage of the top payroll.
     
  15. Irish Blues

    Irish Blues Worth waiting for :)

    Joined:
    Dec 15, 2002
    Messages:
    21,800
    Likes Received:
    0
    Trophy Points:
    0
    Occupation:
    Actuary
    Let's distinguish between "they spent less than $21.5M on player salaries over the course of the season as set in the CBA" and "at the end of the season, their total player salaries were less than $21.5M."

    In the first case, the Caps absolutely were *not* under. I'd have to check my spreadsheet, but I think they were somewhere near $22.5M for the season as defined in the CBA. In the second case, yes - the players on the Caps roster had salaries (cap hits) that added to less than $21.5M.

    The CBA states that teams are in compliance if, given the current roster, they will not fall below the lower limit or exceed the upper limit if that was the roster for the remainder of the season. So if the upper limit was $45M, the lower limit was $27M, and the trade deadline was 4/5ths of the way through the season, in theory a team could start the season at $35M, get to the trade deadline, then add players to get a roster whose total cap hits came to $80M, and still be in compliance with the cap.

    $35M x 4/5 = $28M
    $80M x 1/5 = $16M
    ------------------
    Total Cap Hit, Season = $44M

    Or ... a team could start at $35M in the same scenario, trade off everyone at the deadline, and carry a $10M roster and still be in compliance.

    $35M x 4/5 = $28M
    $10M x 1/5 = $ 2M
    ------------------
    Total Cap Hit, Season = $30M

    It's not "how much you're carrying now" as much as it is, "if you carried this roster for the rest of the season, how much would you have spent".
     

Share This Page

monitoring_string = "358c248ada348a047a4b9bb27a146148"