Mind the Cap

Discussion in 'The Business of Hockey' started by hubofhockey, Feb 28, 2005.

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  1. hubofhockey

    hubofhockey Registered User

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    Wanted some thoughts here on this possible cap solution (similar posted in Bruins section).


    Let's start with a a $40M cap. However, EVERY club is allowed to franchise ONE player, up to a value equal to 25 percent of the cap. Ergo, EVERY club potentially can spend $50M each year (or, $1M more than the PA's last formal request).

    This system would allow room for 30 PA members each to make $10 million a year -- far MORE than those who made $10M in 2003-'04 (the end of the NHL as we knew it).

    As for each club's $10M man, he comes with a couple of stipulations. To wit:

    -- His deal, unlike those under the $40M cap, it not guaranteed in full. If he turns into a dog--as if often the case with top-paid players--he can be terminated at a fixed percentage (maybe bought out at 10 cents or 20 cents on the dollar). He has to perform to make the money. If the club is under a financial squeeze, then bye, bye.
    -- Clubs must pay a hefty luxury tax (33 percent, 50 percent?), for their franchise guy.

    Now, not every club will go over $40M. Some might never go over $40M. The Leafs and Flyers willgo there tomorrow. Detroit and Avs and Dallas, too. But, at least they are capped at $50M.

    Not only does it freeze things at $50M, but it provides every club, potentially, with a true face of the franchise in that $10M (or less) guy.

    Obviously, the numbers and percentages here can be massaged, but I think, overall, it is a creative way to get the two sides talking again about addressing the cap issue. Such a system would have positives for BOTH sides, and some limitations for BOTH sides. Maybe as gross revenues grow (if they do), all numbers can be dialed northward.

    Might there also be a need for a salary floor as well as a ceiling? Or would the potential of 30 guys making $10M each remove that need?.

    Thoughts? Modificiations? Love to hear 'em.

    Thanks.

    kpd/hoh
     
  2. Jester

    Jester Registered User

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    i think the idea is fine... i think any kind of cap that compresses the difference between the haves and the have-nots would have been a major step in the right direction, but you have to deal with the hardliners on both sides. the problem is that the owners don't view this thing as a process, they want to hit a home run. i really think they should have taken the higher number, and then gone from there.

    i'm very pro competitive balance, but pragmatism has to exist at some point. if you can get a cap number and then go from there with that business model and try to build your franchise up. at some point the NHLPA is right in the sense that these are big boys and they should be able to show some self-control. ideally you get a cap and then the league gets stronger to the point where everyone can pay up to that cap number...
     
  3. Buffaloed

    Buffaloed webmaster

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    I would change that provision and modify the standard player contract so that only the first 3 years can be guaranteed for any player. After that they can be cut with no consequences. I'd also ban all non-performance bonuses (signing, reporting, etc.).

    I like the idea of a franchise player. It might allow the NHLPA to get their cap number, and claim victory, without being super inflationary. Another variation is to allow teams to trade or sell their franchise player designation to another team for a limited time. For example the Wings could acquire the Pens franchise player spot for 3 years for draft picks and cash.

    I'm not sure about a salary floor. Should a team that makes the playoffs with a $32 million payroll be punished by witholding revenue sharing? If there is a floor, I'd like to see it linked to the team record. For example, any team with a 45% winning percentage won't be punished regardless of how little they spend.
     
  4. Dr Love

    Dr Love Registered User

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    What about trading one of those $10M guys? Can a team have two of them if they trade for one? If so will that count against the non-franchise player cap (since he wasn't the new team's franchise player)?
     
  5. Buffaloed

    Buffaloed webmaster

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    I'd make them commodities as is done with air-pollution allowances. The franchise designation could be traded separately or along with the player and would carry the cap exemption. They would be valuable commodities for small market teams. A team could have as many franchise players as they wanted provided they acquired the franchise player designations. If a team already has a franchise player, it can't acquire another one unless it has another player designation available. I would make it so the designation reverts to the original team unless the agreement is extended.
     
  6. Wisent

    Wisent Registered User

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    Don't think it will work. The owners argument for not increasing the cap any more was that they assume that every team will spend that amount of money. So aside from "they don't have to" your offer would be a 50 mio cap.
     
  7. Habsfan 32

    Habsfan 32 Registered User

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    I like the ides of a Franchise Player but team like Detroit and Colorado would have hell of a choice to make with all the money they give. Colorado would have to choose between Sakic,Blake and Forsberg but he's not back. Detroit would probably take Lidstrom as their Franchise player.
     
  8. Drake1588

    Drake1588 UNATCO

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    Merits aside, I think that an owner stance taking guaranteed contracts off the table would be an effective way to ensure no NHL hockey for a very long time. Do players sometimes become lazy after signing long-term, lucrative deals? Yes. I follow the Capitals and recall Jagr's attitude with bitterness. Personal feelings make this no less of a non-starter for the union, though.

    Yet a $40M cap and a reasonable floor, a franchise exemption up to $10M, all contracts guaranteed, would be a compromise that I could see benefiting all sides.

    The hefty luxury tax (33 percent, 50 percent) for the franchised player seems very reasonable, particularly towards helping the lesser teams meet a floor. The structure of the deal would help to spread out the game's true stars and prevent one or two teams from stocking up, yet in a manner mild enough to upset neither the wealthy teams nor the union too strongly.


    I take it that this is not linked, meaning that the $40M cap number remains constant? Or is that number expected to fluctuate with league revenues?

    If the cap is fixed, then I think the PA would consider it -- provided guaranteed contracts were sacrosanct. Considering how little NHL teams are being forced to modify their behavior on their own (a cap is asking the players to take the hit to protect owners from themselves), it's not too much to ask for the teams to take the responsibility to stop handing out obscenely long-term contracts.
     
  9. wazee

    wazee Registered User

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    I do not like a franchise player exemption in any case because it widens the gap between the large and small market teams. I agree that it is one place the owners and player can compromise, so I can see it happening but my position on a cap is the fewer exceptions, the better.

    Your plan to allow teams to trade their 'franchise player designation' would totally destroy the notion of any kind of financial level playing field, which is, IMO, one of the greatest benefits of a cap. If large market teams were able to buy up franchise designations, teams like the Rangers, Flyers, and Wings could pick up a couple and be right back at the 70M they were before. And the Edmontons would be right back where they were before...forced to sell off their franchise player designation. Allowing a franchise player exemption is bad enough. Allowing teams to sell means there is not really a cap at all. And the NHL desperately needs a cap.
     
  10. hubofhockey

    hubofhockey Registered User

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    I think a club could acquire a second or third franchise player, however, he would be counted against the $50 million cap. Tricky business that, because eventually there is no money to pay anyone else, and the acquiring club has to pay steep luxury taxes on the second and third franchise players. Just don't see it happening much, if at all. kpd
     
  11. So basically you want a 50 million dollar cap? Thats the jist of it.

    Why on earth would the NHL reject a 49 million dollar cap, only to accept a 50 million dollar cap? :banghead:
     
  12. Chili

    Chili Registered User

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    The CFL had a similiar type of cap (one player above the cap, unlimited salary if memory serves). Don't know if they still do though. It allows you to go above and beyond for one star player/gate attraction.

    I'm thinking of a team like Calgary who could have to trade a player like Jarome Iginla with a hard cap in place...or be forced to dump a few others to make room for his salary, so it has some merit. Just not sure about the figure, maybe a tad lower scale?

    I still like some sort of linkage the best and I hope the owners continue to push for it.
     
  13. Dr Love

    Dr Love Registered User

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    Well, it's a $40M cap, with the option for $10M more. Which doesn't really solve anything because a player on say, Edmonton, who thinks--knows--he can get 'franchise player' money could just hold out to be dealt to a team that will pay him or just leave if he's a UFA and thus not solve anything.
     
  14. CantHaveTkachev

    CantHaveTkachev Still a joke of a team

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    exactly. no way the league ever has a "soft" cap at 40mil...with potential to go to 50. a hard cap at 40mil is great even 45mil is good (along with a LT revenue sharing plan, etc...)

    but I think the "linkage" will make a cap of roughly 35-38 mil
     
  15. hubofhockey

    hubofhockey Registered User

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    OK, let's try these numbers, to see if you guys feel better:

    $38M cap, with a 25 percent bump for the franchise player....maxes him out at $9.5M a year....
    TOTAL CAP: $47.5m
    Would that make it work?

    kpd/hoh
     
  16. Dr Love

    Dr Love Registered User

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    $9.5M, $10M, what's the difference in the long run? The teams that can't compete without a cap won't be able to compete this way either. It doesn't solve anything if Jerome Iginla (for example) wants $10M a year or he's not playing for the Flames--or if he's in a contract year he won't re-sign... and thus the Flames aren't any better off. I like the idea of the franchise player exemption, but you're going too high IMO.
     
  17. Guest

    Guest Registered User

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    I fail to see how any of these proposals are more acceptable than the NHLPA's last offer? Maybe I'm not reading enough of the details here.

    Trading the exceptions in a cap would be a major bad mistake as previously stated. You would still end up with a similar situation as today with the spending teams acquiring the exceptions and the small market teams trying to make due on payrolls at a percentage of the top teams.
     
  18. Drury_Sakic

    Drury_Sakic Registered User

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    True...

    But if you get the set cap at the right price..

    Say your hard cap at 35 million, with the 10 million dollar man on top.. teams won't be able to stockpile the elite players, or at the worst, an elite player will have to chose leaving his team for less than uber cash..

    Take Iginla...

    Take the Avalanche..

    Put it out from there..

    Avs will always be close to hard cap number... Sakic, Blake, or possibly Forsberg gets the 10 mill number..

    Lay a base team for roughly 28-30 mill or so around that man...Say they have that 5-7 million to spend up to the 35 mill cap(which I would suspect the Avs would not, as they would spend up to it each year) Iggy would have to chose between what I would assume the 4-6 mill the Flames would offer, vs the 5-7 mill the Avs would offer....


    It still gives a competitive advantage to a large market/money team... But as I think the Avs under the old CBA would have shelled out 7-10 mill for Iginla, it brings down the super contracts to a more stable level....

    And thats assuming the Avs have payroll room under the cap to get Iginla....



    A flip on it though, I would make that Franchise player UNTRADEABLE....3 year for sure money.. after that can be cut...

    Why, you may ask?

    A) If we are talking about identifying a Face with a Franchise, I want that guy to stick around, not be traded, not be cut, not be wavied...ext..

    B) Teams would think twice about who they gave that right too..and not toss money around willy-nilly..

    The result would either be a waste of money and a lesson learned by a Franchise... Or more hopefully, a hard working guy who dazzles the fans and works hard night in and night out(Think Sakic, Steve Y., Mario, Wayne, Ext)
     
  19. CantHaveTkachev

    CantHaveTkachev Still a joke of a team

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    what kind of tax are we talking about? is there a floor? is there still the rollback?? revenue sharing?

    I don't mind it...but still too high for a franchise player (when everyone else makes less than HALF of what you make, could be tough in the dressing room)
     
  20. Dr Love

    Dr Love Registered User

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    Good points all around. However, it doesn't stop a team from going to a free agent (one that wouldn't normally get $10M a year) and giving him the franchise and then giving him a new deal in the middle of the season and then you can keep that player and then franchise another player the next year. They get a ton of money up front, you get them for long term (relative to a one year deal) on the cheap for the rest of the contract. They do that in football, a team will franchise a player and then negotiate a contract during that season, in part because in the NFL if you do that before a certain date you can have a decent chunk of the signing bonus count on the current year's cap. If those type of loopholes exist, someone is going to do that in the NHL. They'd be fools not to. Some chips have to fall in the right places, but if you get a couple of guys to retire/let some guys walk in sucession (thus creating a void in on your books for a player with a high salary), you can make it work.
     
  21. wazee

    wazee Registered User

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    All the discussion about a franchise player exception has brought me back to my original position. I favor an unlinked hard cap with no exceptions. The less room for loopholes, the better...
     
  22. Drury_Sakic

    Drury_Sakic Registered User

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    See... but the loopholes can be closed..

    In my idea, the franchise player would be all or nothing.. you give him a contract.. and you are stuck with him.. and that contract for the duration of the contract.. no trades, no re-signing, no restructuring.. he is your franchise player... for better or for worse... thus, no loop-hole...

    Its about putting a degree of risk on the contract.. making teams really think about it...so that there is not that rush to sign the best player for the most money.. its about signing the right guys to the right amount of money..

    *edit*

    Regarding the rollback..

    Since alot of contracts expire this year, I think the rollback could be scaled back a bit.. Say 20% for next seasons contracts..Cutting back to 15% for the next year.. 10% for any remaining years under contracts... Makes a deal like this easier to stomach for the PA..
     
    Last edited: Feb 28, 2005
  23. Dr Love

    Dr Love Registered User

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    If you sign the guy for one year, there's no loophole. If you can't get him to agree to a long term deal, then you can either franchise him again and sign someone else to replace the expired contract that you had earmarked for the franchise player, or if you can franchise a player that isn't currently on your roster--don't know either way off of what we're going on--let him walk and bring in two new guys, one as a franchise player and one in the slotted salary.

    EDIT: I should add, I like KDP's idea, I just think it nees some tweaking.
     
    Last edited: Feb 28, 2005
  24. txpd

    txpd Registered User

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    Let's be honest. I think the chances of any NHL deal having a cap number hard or soft of $40m or more is next to nothing now.

    Even Mario points out that the pie only gets smaller from here. The initial suggestion of a salary cap that tops out at $50m is now a total pipe dream. there are not 10 teams that would ok that. there were barely half the teams that were in favor of $42.5m with a season this spring.

    With no season...there is not chance that it goes into the $40m range.
     
  25. Chayos

    Chayos Registered User

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    this will be a non starter for the 20 teams who turned down the players last offer.

    I think it would work as a framework. I would say if the cap was $37 million with an exception for a franchise player with a 100% tax on that player's salary then I think you could get big and small teams on board. Remember the $42.5 was contingent on their being a season, so the small market teams would be taking a hit with there being no linkage, so the player would have to throw them a bone. The UFA age would have to be lowered to get teh players on board, so make it 28 years old and then there is a good framework of a deal there. You would also have to have a clause where the franchise playe on a team has to be the highest paid player on the team to avoid teams naming a 2-3 million dollar guy just to get over the cap.

    I don't think you would ever get the players to agree to a smaller buy out on the stars, but maybe have a maximum contract length for the excepted player so no team would be tied his star at the cost of the franchise. Maybe 2 or 3 years.

    Big market teams could still have a superstar player and be above the cap. The league is under a cap system so they have cost certainty. The players get UFA at 28 and the ability to have a market for the "stars"

    This deal is a good framework for a deal, but we all know logic hasn't entered teh picture so far in these negotiations so why would it now!
     
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