Potentially-workable concept????

Discussion in 'The Business of Hockey' started by trahans99, Apr 4, 2005.

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  1. trahans99

    trahans99 Registered User

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    On sportsnet websites articles its reported that from a close source to the negotations that theres a "potentially workable concept" out there?

    Any ideas as to what this concept might be?
    I'm guessing a hybrid of lux tax and salary floor and cap and maybe revenue sharing.

    For example:

    Lux tax 1:1 at 35m
    Hard cap at 42.5
    Floor 25m
    25-35% revenue sharing

    I have no idea, just guessing what I think is fair and possible. There going to have to have something create to get this darn thing done and over with
     
  2. GoBuckeyes9

    GoBuckeyes9 Registered User

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    One would think that...What you have typed above is not only fair for both sides but hopefully has been said. That luxury money would also be put to lower rev teams.
     
  3. X8oD

    X8oD Registered User

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    i dont think there should be a tax level that low, and im pro-owner. You pay every player on your team 2 million on average, and you are right at that level.

    if teams need help to reach 35 million, they shouldnt have a team.
     
  4. trahans99

    trahans99 Registered User

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  5. MLH

    MLH Registered User

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    There were a number of teams that couldn't reach or were right around $35 million when the NHL was actually able to draw revenues. Next year will be even worse.
     
  6. X8oD

    X8oD Registered User

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    im all for making the NHL Profitable, but not on the backs of the big market teams. I dont think owners should be funding small market teams to compete with them. when do you start saying "You just cant run your team, shape up or ship out"

    I also dont believe teams should pay 50-60 mil to ice their team. IM all for the 40-45 mil cap range. But i dont agree with teams who have a team salary in the 20 mil range crying poor.
     
  7. Drury_Sakic

    Drury_Sakic Registered User

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    1:1 from 35 to 42 million is not that much money(7 million)

    The teams that would spend to 42 without the tax will with a tax... No doubt about it.... What the tax does is deter the teams that should NOT(really cannot afford) spend much above 35 million..

    A tax really benifits the players more than the owners in this type of situation as well... as teams that get some additional revenue(in theory) would put at least a small % of it back into their rosters..letting the players earn back some of the money that they would have gotten if a team like Colorado would have spent up to 50 million vs. the cap limit of 42 million...
     
  8. nyr7andcounting

    nyr7andcounting Registered User

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    Yea, so in theory it really means that maybe $44 or $45 million is coming out of Colorado's pockets and going to player salaries. Not only is that number fine, and fair for both sides, but they won't lose money on that figure and neither will the team that is getting part of the $7 million they are getting in luxury tax.

    Everyone acts like there has to be a cap and the players should get nothing back for taking a cap. Revenue sharing and luxury taxes are two fair ways, meaning it helps both the players and the small markets, for the players to earn a little bit more under a cap. It's really not a problem.

    As for the deal, Sportsnet has usually been the first one to report a lot of things, most of them wrong. Weren't they the first major outlet that reported a deal was done the week the season was cancelled? I don't believe anything coming out of that site anymore
     
  9. Drury_Sakic

    Drury_Sakic Registered User

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    I believe the Hockey News was first.. everyone else reported off of that..

    :biglaugh:
     
  10. sveiglar

    sveiglar Registered User

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    Thanks... saves me from having to type the exact same thing.
     
  11. djhn579

    djhn579 Registered User

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    Yeah, just look at what happened to the NFL when they did that...
     
  12. The only workable deal is for a fixed number which includes profit sharing. When investing you are told to buy low and sell high. Well the NHLPA is doing the opposite. They are trying to buy high and sell low. If there was ever a time to jump on the fixed number, this is it. Going after a fixed number is just stupid for the obvious reason of ownership negotiating off of depressed revenues, and being able to hammer that through any court challenge or arbitrator that players hope to use. Goodenow is destroying his own position. He should be on the fixed number and profit sharing bandwagon and doing what he can to negotiate as big a number as he humanly can. The fact that he continues to hammer away at a fixed number shows he is living in the past and doesn't really see the opportunity he has infront of him.

    If I were on the PA negotiating committee I would be pushing for 60% linkage with a 60% profit share of anthing over $100 million. Its a liveable number for the league and would set up the PA for huge money down the road (of course I'm also assuming that in my position with the PA I DO care about the league and want to take an active role in improving and expanding the game, which has yet to be proven by anyone on the PA side to this point). I also push for concessions that all go to the NHLPA pension fund, working for all players past, present and future, and not just lining the pockets of those in the game at this moment. Most importantly I negotiate a partnership that gives the NHLPA a minority partnersip voice (51-49 owners) in all matters relating to the game on the ice and everything that has to do with the marketing and promotion of the game.

    Now based on these figures that I've tossed out, and working from the $2.1 billion number for revenues, the players take a modest hit, dropping from $1.3 billion in salary based expenditures to $1.26 billion in salary expenditures. But the players get a 60% share of all profits over the $100 million mark. So what are the goals of the NHLPA from that point? To make the league more profitable and to push in highly profitable revenue areas. That means working with the team in the areas of local promotion and making the game more visable in the markets the NHL is already in (won't cost a cent and will allow the players valuable tax breaks for volunteer time in the community) as well as working hard at getting the NBC TV contract working for the league as best as possible. These are two areas where the PA can have a huge impact on how things are done and move the game forward quickly to a higher profile and more profits. That small hit the PA took on the front end can quickly be erased on the backend and in spades.

    Frankly I think focusing on the fixed number is stupid. The NHL will get the PA to negotiate down to projected 2005-06 revenue levels which will hurt the long term amount the PA could potentially get. A $35 million cap in $1.5 billion market is a pretty good number, but a $35 million cap in a potential $3 billion market just plain sucks. Only by getting that linkage to revenues do you guarantee that your slice of the pie remains the same size should revenues grow like you project. Of course maybe that is why Goodenow is not going for linkage and IS focusing on the fixed number. Maybe he doesn't think the game can be grown any more than it already has and he's just making a money grab. Either way he is doing a dis-service IMO and has missed the boat completely.
     
  13. trahans99

    trahans99 Registered User

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    :bow: :handclap: :clap:

    Right on the money!!!
     
  14. hubofhockey

    hubofhockey Registered User

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    I still want to see added:

    FRANCHISE PLAYER EXEMPTION

    To work in concert with cap. To wit: Hard cap of $38M. However, teams can add the one exempt player, but his total gross pay CANNOT exceed 20 percent of the cap ($7.6M per year). Total cap: $45.6 M (this is a touch better than the figure that would have closed the deal in Feb.). HOWEVER: club pays a luxury tax of 33-50 percent for that ONE player who exceeds the cap.
    This way, no club obligated to exceed $38M.
    Now, for argument's sake, let's figure:
    xx 20 teams spend to $38M
    xx 5 teams spend to $42M
    xx 5 teams spend to $45.6M

    TOTAL PAYROLL $1.198 billion* VOILA!

    * Let's assume a lux. tax of 50 percent for the 10 teams that spent above the cap. Total lux tax: $27M

    Total cost, $1.198B & $27M-- $1.225B

    Sure looks about where all this discussion began months ago, yes?

    So, hate to use this word, but it looks like a compromise to me. Owners would have the power to make payroll $1.14 b (if no one exceeds the cap). Or, if they are really dumb, all 30 could spend to the max: $1.368 billion, plus $114M in lux tax -- total is: $1.482B.

    As for floor - Something in the $25M - $30M range

    kpd/hoh
     
  15. Motown Beatdown

    Motown Beatdown Need a slump buster

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    I've always been in favor of a franchise player exemption, but there needs to be limits to who that player can be. I hate the way the NBA rules allows a team to trade for a player then 3 months later use the Larry Bird to protect/hide his salary.

    For this to work, IMO a players must have been drafted by his team or has had 6 years of continuous service with that team
     
  16. JohnnyReb

    JohnnyReb Registered User

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    The main problem with that is it has the players relying too much on the owners growing the game. What happens when you have owners like Wirtz, who refuses to allow Blackhawk games to be broadcast in Chicago, or Jacobs, whose only concern is the bottom line, or Leonis, who did such a bad job that his market is essentially destroyed, or Karmonos, who may very well be certifiably insane, or Ellman, who screwed up the team's new arena development project, or the Oilers, who are financially tapped out already, or Kumar, who looks like he might go to jail, or Rigas who DID go to jail, or...

    Well, you get the point. There are only so many charitable functions players can attend, and even at that, hockey players are generally regarded as the most charitable around anyways. Think of all the luxury boxes players have bought and donated to hospitals and such.

    In theory your idea is sound. Unfortunately, historically NHL owners as a group have shown little ability to really know what to do with their toys. Some do, but many don't. Most are only casual fans of the game (if that) with little understanding of its history, passion, or tradition. Is that not the biggest complaint against Gary Bettman? That he isn't "a hockey guy?" Remember the "Michael Jordan of hockey" comment?

    If you were an employee, wouldn't you be a little leery about tying your future to a group of men who in the past have not only lied and cheated you, but who have attempted to crush you over the last year (in the player's minds), and who have shown a rather poor ability to grow and market the game anyways?
     
  17. Let me start out by saying that I respect your writing and put you in the ranks with Duhatschek as guys that I think normally get it. You're usually right on the money and make sense, but in this instance I think you have bought into too much of the BS rhetoric going around and have not considered thinking like someone who owns the business. Instead you are acting like everyone else and are doing nothing but spending someone else's money (this is what this whole exercise has boiled down to, seeing who can spend someone else's money in the most frivilous way possible). No one is thinking outside the box or has not done the math to see how a deal would work for both sides and how it could lead to greater things for the league as a whole, players and teams alike. I would really like to see someone in the media pick up the ball and run with it in this regard and hope you would take up that gauntlet.

    What I am refering to is the challenge of linkage. The NHLPA fears it because Goodenow tells them its bad. That's BS. The problem is that there is risk. But what the players need to understand is that without risk you normally never attain great reward. That is the goal for everyone in this game IMO, great reward. Someone needs to spell it out and get the message out there that linkage IS good and IS good for EVERYONE. Linkage is the win-win where everyone comes out of this looking like a winner. The hard and fast numbers people tossing around are a sure way to define a loser and develop some long term hard feelings. We'll use your suggested solution as an example.

    A hard cap of $38 million seems like a reasonable number, based on 2003-04 revenues ($2.1 billion), which we'll use as the benchmark. We know for certain that the revenues are going to drop for the time being and likely sit at a ball park of (generously) $1.5 billion. So to put your number into perspective, that $38 million cap is really a $53.2 million dollar cap, using 2003-04 as our benchmark. So what does your solution do? Nothing. Its hurt the majority of the teams and has allowed the disparity to continue. Even looking at your arbitrarily assigned floor of $25 million, that is still a $35 million budget in 2003-04 dollars. You've set up the owners to be losers already. Conversely, what happens if the game turns around and the revenues increase well beyond the 2003-04 levels? Say the revenues rise up to $3 billion. What has happened the other way? The players have taken it in the kiester. That $38 million cap is really equivalent to a $26.6 million cap against the 2003-04 benchmark. That floor of $25 million is set at $17.5 million comparatively. What you have done is set up a definite winner and a definite loser and set up both sides to develop continued animosity toward each other.

    The only solution that works for THE GAME is to have the two sides partner. That partnering is only accomplished through linkage and profit sharing. As I have outlined in other posts it makes more sense for the player to get involved in linkage and start taking some responsibility for the game they play. The money is in the game long term and the players could set up their entire brotherhood, past, present and future, for a long and healthy existence by partnering with the league. Why is no one spreading this message? Why is no one looking out for the good of the game? I challenge you to take on that challenge and run with that message. You can be the one to think differently and promote the right solution. Do it for all of us!

    (Oh, and you can quote me)
     
  18. Boltsfan2029

    Boltsfan2029 Registered User

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    Are you attributing that quote to Bettman? If so, I'm afraid he can't take credit for it... (At least, if you're talking about the one regarding Lecavalier, it was actually made by the team's then owner, Art Williams.)
     
  19. ti-vite

    ti-vite Registered User

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    SO based on 2.1B$ in revenue, this is 58% of revenue.
    BUT
    based on 1.5B$ in revenue, this amounts to 80% of revenue.

    Continue the lockout: VOILA!
     
  20. JohnnyReb

    JohnnyReb Registered User

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    No, I'm not attributing that quote to Bettman, though in looking over my post I can see how that might seem like the case. I was merely trying to illustrate that the ownership group, led by Bettman, often seems clueless when it comes to actual hockey, and was using that comment (poorly placed as it were) as an example.

    Sorry for the confusion.
     
  21. The main problem with that is it has the players relying too much on the owners growing the game.

    There's the kicker. The players are the ones relying on someone to do something. If the players think it is being done wrong, then partner the hell up and do something about it! If they know the money is there, DO something about it. Christ, what are they? A bunch of spoiled children who have to wait for someone to wipe their butts?

    If you were an employee, wouldn't you be a little leery about tying your future to a group of men who in the past have not only lied and cheated you, but who have attempted to crush you over the last year (in the player's minds), and who have shown a rather poor ability to grow and market the game anyways?

    Of course I'm leery, but I also see an opportunity. If I look at this guy and I see that he's doing something wrong I'm going to negotiate with him and tell him that I can improve things. For a chunk of the action I will work with him and improve things. That's how partnerships work. I'm going to protect myself by having a well written contract drafted, but I'm not going to allow opportunity to knock and not answer the door. I have no idea why the players are not willing to take this same stance. The potential money sitting there is mind boggling.

    BTW, the "Michael Jordon of hockey" comment was never made by Gary Bettman. That was made by Art Williams, the then owner of the Tampa Lightning, and was about a player he had just drafted, Vincent Lecavalier. But don't let that fact get in the way of anything.
     
  22. JohnnyReb

    JohnnyReb Registered User

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    This is why linkage, without significant revenue sharing, is really just a red herring that does little to address the actual problems of the NHL. Lets take a hypothetical 2-team league, with one rich team, and one poor team:

    Team 1:

    Revenues: $100 million
    Salary: $50 million
    Percentage of salary to revenues: 50%

    Team 2:

    Revenues: $50 million
    Salary: $30 million
    Percentage of salary to revenues: 60%

    Say you then wanted to implement a 50% linkage salary cap, based on total revenues.

    Total Revenues: $150 million (100+50)
    Linkage at 50%: $75 million
    Salary Cap per Team: $37.5 million

    New League, with 50% salary cap/linkage:

    Team 1:

    Revenues: $100 million
    Salary: $37.5 million
    Percentage of salary to revenues: 37.5%

    Team 2:

    Revenues: $50 million
    Salary: $37.5 million
    Percentage of salary to revenues: 75%

    The REAL problem with the NHL isn't high salaries (though that certainly is a problem), its the disparity between the rich teams, and the poor teams. Until that disparity is reduced, or eliminated the problems will still remain. In the NFL, this is done, more or less, through revenue sharing.
     
  23. nyr7andcounting

    nyr7andcounting Registered User

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    Makes no sense. Don't you want a fair deal that will last for years? Why would you want to put the cap so low, based on revenues being down for a year or two, and than when revenues are back to normal in a couple of years we are going to go through the same thing over again. Why use a projected low-revenue year to set your cap?

    If revenues are down so far, than teams will cut spending. Fewer teams would spend $45 million and fewer would spend $42 million, under his plan. Either way the owners are going to have to adjust for a year or two and actually stick to a budget. So why not set the cap at the right level based on what your revenues are going to be, and owners stick to budgets for a year or two? Than as the game gets back to normal the CBA will be fine and we won't have another lockout in 5 years.
     
  24. hubofhockey

    hubofhockey Registered User

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    Ike -- I am in total agreement on your linkage idea.
    However, I am trying to work with April '05 reailty: PA has yet to state it will take linkage. This is the same JSNPA that said it would NEVER take a cap. So, maybe there is hope.
    However, I am trying to work with the numbers and concept(s) that are on the table today -- and fading fast.
    Me, personally, I'd go for linkage -- and as I have written for a long time, I would attempt, as players, to gain equity interest in all 30 franchises -- ie, a cut of the action when these franchises are sold.
    Underneath it all, I believe there truly could be a partnership (one even better than NFL--in theory, but not in gross dollars). I do not believe, however, it can be achieved with the leadership of these two sides. Impossible. If the respective leaders of the two sides cannot even be in the room on D-Day, then what hope is there for a true partnership.
    As for April '05 Reality, and trying to forge an agreement between two sides that don't want a partnership -- I say the franchise player, exemption element could be key in getting it done.
    On the whole, the two sides have made it far more difficult than it has to be -- that will be their lasting legacy, IMO.
     
  25. JohnnyReb

    JohnnyReb Registered User

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    Then what to make of the "you're just a bunch of glorified auto-workers who should have no say in our business" comment?

    Probably lots of reasons. One, they have no control, and based on comments and/or history of the owners, they will never have any control. Two, the opportunity may be there, but maybe they aren't the river-boat gamblers you appear to be. I certainly wouldn't hitch my livelihood to Gary and the Gang knowing how to grow and enrich my industry. How many people here think Nortel is going to turn it around, and are buying shares accordingly?

    See the post just above yours. Nice shot. Unneccesary, mind you, but what the heck, one should always insult somebody that disagrees with you, right?
     
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