Owners could easily collude with a soft cap luxury tax system if they wanted to.

Discussion in 'The Business of Hockey' started by eye, Dec 10, 2004.

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  1. eye

    eye Registered User

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    I think most of us agree on one thing. We want hockey to start up ASAP. Could owners get away with collusion and not going over an agreed soft cap amount without being charged or convicted of collusion? Say 35 million soft cap with 100% tax rate and 200% on anything over 45 or 50 million. Nobody could blame owners for not going over the cap. How many NBA teams actually go over the cap?

    Another thought would be to tie salaries to annual ticket sales (attendence) which would be much easier to monitor by both sides.
     
  2. me2

    me2 Calling out the crap

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    They would have to be subtler than that. Most could stay under, some would have to get over $40m.
     
  3. David A. Rainer

    David A. Rainer Registered User

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    Get away with collusion? Well, let's look at it. Collusion is any kind of agreement or encouragement, either overtly or covertly, between two or more legally distinct entities competing in the same market (in this case, owners) designed to suppress wages. A salary cap, luxury tax, or any other mechanism you can think of designed to suppress wages is technically "collusion". Essentially, it is the "conspiracy" charge for violating the Sherman Act.

    HOWEVER, if that mechanism is approved by labor through the collective bargaining agreement, the "collusion" is made legal. In other words, the legal system is saying that if you want to do something like collusion, you've got to get your labor to agree to it. Otherwise, we'll protect labor and make it illegal for you to just artificially deflate wages.

    So, let's presume that a luxury tax has been approved through the collective bargaining process. Any time an owner willingly and without encouragement from another owner decides to stay under the luxury tax threshhold, then there is no collusion. Again, HOWEVER, if after there is a luxury tax, two or more owners get together and agree (overtly or covertly) to not go over the luxury tax no matter what, then you have collusion. Basically, once there is a luxury tax (if there is one), each owner is obligated to decide for himself and himself only whether or not to go above or below the threshhold.

    I hope that makes sense.
     
  4. eye

    eye Registered User

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    Thanks for the explanation but wouldn't you think it would be almost impossible to prove collusion if owners all refused to go over the amount that would cause them to have to pay a payroll tax?
     
  5. garry1221

    garry1221 Registered User

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    the simple way to get around it would be each owner individually stating that he doesn't want to have to pay the lux. tax and therefore made his GM stick to a budget lower than the tax. then the onus would be on the PA to find out how the owners colluded.
     
  6. dunwoody_joe

    dunwoody_joe Registered User

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    Problem is that these competitive guys will always try to find a way to game the system--usually by paying a top salary to get a player. One or two GMs do it, then the rest have to do it too (and so on...)

    Ergo, back in the same soup!

    No hard cap=no cost certainty. Unfortunate but true.
     
  7. Lionel Hutz

    Lionel Hutz Registered User

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    I think the explanation is that it is not collusion at all if it is reached through the collective bargaining process. So your question is rendered mute.
     
  8. Lionel Hutz

    Lionel Hutz Registered User

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    It makes perfect sense, nice post.
     
  9. bernsy74

    bernsy74 Registered User

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    The owners are not discipline enough to stick to a plan of not exceeding certain salary thresholds. (See NRY, TOR, ETC.)

    I think the owners should unionize. Then they could, in thier own CBA, set rules and limitations with regards to player signings and salary ceilings.
     
  10. Trottier

    Trottier Very Random

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    Sure, if they shared your apparent disregard for labor laws. ;)

    One is certain that they don't, for they surely remember the penalty that major league baseball owners paid for collusion back in 1988...to the tune of >$200M.
     

  11. If the owners were willing to go so far as to collude to keep salaries down, then why do they need anything like a salary cap in the first place.
     
  12. Lionel Hutz

    Lionel Hutz Registered User

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    B/c collusion is illegal?
     
  13. thinkwild

    thinkwild Veni Vidi Toga

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    The NHLPA proposal gives them collusion for RFA salaries. They are encouraged to use the new reset comparables system to collude to ensure that all are paying the same amount for RFAs. Big markets do not throw this out of whack.

    All our RFA's are now affordable and on a predicatable salary schedule that is non inflationary. Who cares what they spend on UFAs?
     
  14. Buffaloed

    Buffaloed webmaster

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    Actually that's permitted unless it's specifically prohibited in the CBA. I can't get the pdf of the player's proposal to fully load to see what kind of anti-collusion langauge it contains. Baseball's CBA specifically prohibits collusion. I'd assume the NHLPA proposal does too. Given the cast of characters in NHL management they'd never be able to get away with it. There's too many volatile personalities, personal feuds, and big mouths. It would leak out. Treble damages can be awarded in collusion cases. The league also makes itself vulnerable to extortion. Suppose an owner or someone high in management has money problems. He threatens to blow the lid off if he doesn't get a "loan". Conservatively, the league is looking at a minimum $300 million if collusion is proven. Collusion is a ticking time bomb the league should scrupilously avoid.
     
  15. Tom_Benjamin

    Tom_Benjamin Registered User

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    There is no anti-collusion clause in the CBA, but I don't think it is required. I believe it was necessary in the baseball CBA because of the anti-trust exemption.

    I really don't think it is an issue in hockey. The owners know perfectly well what they are allowed to do, the risks are far too great and the benefits far too small. They would not get away with it. I'm pretty free with my owner bashing, but even I can't believe they would be this stupid. Nobody has made a free agent offer to an RFA in several years and nobody has suggested there is any collusion.

    Tom
     
  16. David A. Rainer

    David A. Rainer Registered User

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    Bingo. That was what my response was going to be.

    Buffaloed (not meaning to call you out, just a friendly request), if you could show me the authoutiry that exempts that example from collusion litigation, that would be greatly appreciated. I know that it is not statutorily permitted, but there might be some case law out there that carves an exemption for it. Although my area of expertise is in labor law, it is not in sports labor law (although it's not that different) so I might be wrong.
     
  17. Buffaloed

    Buffaloed webmaster

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    I'm just using reverse logic. There's anti-collusion language in every CBA I've ever looked at whether one of the parties has an anti-trust exemption or not. The NBA CBA has extensive anti-collusion provisions http://www.nbpa.com/cba/articleXIV.html . The NHL calls it "No Circumvention" ( http://www.nhlcbanews.com/cba/article26.html ) in its expired agreement. Labor agreements supercede anti-trust law, so you're rolling the dice if you take it before a judge and there's no anti-collusion language.

    I'm curious as to why the NHL has never tried to charge the NHLPA with collusion.

    Aren't the agreements the players are making among themselves regarding arbitration and free agency circumventing the intention of the CBA?
     
  18. Tom_Benjamin

    Tom_Benjamin Registered User

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    What agreements are being made?

    Tom
     
  19. Hockey_Nut99

    Hockey_Nut99 Guest

    Owners can't collude yet the NHLPA will rip a players A** apart if they take less money or something like that.
     
  20. I don't think there is any need for illegal activity in this. This can be settled properly if the players choose to cooperate with the NHL in creating a healthy league, and moving forward. There proposals and refusual to acknowledge problmes will only create a larger mess then this after its all set in and done. Once teams start fold jobs are lost, I would like to see these players come out and say we are doing it for the future players and so on.
     
  21. Buffaloed

    Buffaloed webmaster

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    There's an implicit agreement when contract offer information is shared. As you recall when the agent was decertified it came out that they were sharing that kind of information on their computer system. They can share information about contracts in force all they want, but here were talking about contracts in various stages of negotiation. The owners would be crucified if they put together a list of the contract offers they planned on tendering.
     
  22. YellHockey*

    YellHockey* Guest

    And you've never heard a GM rip another GM for signing a guy for too much money?
     
  23. David A. Rainer

    David A. Rainer Registered User

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    Well, I think under normal circumstances, you make a good argument. But I think you are falling a step short. Anti-trust law establishes a minimum threshhold for collusion. That is, any conspiracy to commit a violation of the Sherman Act is collusion. However, both parties (owners and labor) are free to vary the provisions of the Sherman Act in their collective bargaining agreements. That is, although Anti-trust law establishes the minimum threshhold for collusion, owners and labor can increase the threshhold. That is why there are some provisions in the CBA that deal with what will be considered collusion - because the two sides have decided to alter it.

    In other words, in contract law, a contract is defined as an agreement between the two parties AND any "gap fillers". Gap fillers are provisions from the state's civil code that govern a topic when it is silent in a contract. Anti-trust law acts as the "gap filler" for the collective bargaining agreement. If there were no provisions in the CBA that altered the definition of "collusion", then Anti-trust law would operate as the gap filler and supply a definition. So, when you see these provisions in CBAs, its only because the parties have agreed to alter the "gap filler". However, if the provision is not there, then Anti-trust law fills in the gap. As such, unless the "collusion" has passed through the collective bargaining process, the "collusion" is an a priori violation of the Sherman Act. It does not need to be specifically prohibited by the CBA, but the CBA can make it more stringent.

    Think of the relationship this way: labor law is set against the back-drop of anti-trust law. Labor law supersedes anti-trust law wherever the two are inconsistent with each other. Whereever labor law is silent, anti-trust law governs.

    Also, the reason no one has charged the NHLPA with collusion (nor ever will) is because the NLRA and its progeny has made "employees" exempt from any prohibitions in the Sherman Act. Owners are restricted by the Sherman Act, employees (in this case, players) are not. They can combine, agree, encourage, and collude all they want. That is kind of the point of labor unions.
     
    Last edited: Dec 11, 2004
  24. Buffaloed

    Buffaloed webmaster

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    They can't collude all they want if that conduct is specifically prohibited in the labor agreement. Article 26 includes employees. They signed away that right. It's my understanding that agents are required to enter information into the SCORE system regarding contract negotiations as a condition of certification. That definitely means they've entered into an agreement. Whether it meets the criteria of being designed to circumvent the intent of the CBA is something for an arbitrator to decide.
     
  25. David A. Rainer

    David A. Rainer Registered User

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    Well ya, that's what I meant (just kind of skipped over it).

    Absent a provision prohibiting it, players can collude all they want. If there is a prohibiting provision that is violated, then it is a breach of contract action and not collusion litigation (although collusion is the breach).
     
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