Revolutionary Salary/Contract Idea

Discussion in 'The Business of Hockey' started by Devils Advocate, Jul 13, 2006.

  1. Devils Advocate

    Devils Advocate mmmmmm....Crow.

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    I preface this post, by asking you to ignore what the players would think of this as the good old days of players who played for the sheer love of the game is the exception as opposed to the rule nowadays.

    What if contracts were negotiated based on a percentage of team payroll. This is practically in place today for those seeking the max contract as it is 20% of the payroll.

    Using this years $44M salary cap, what if players were offered a % of a teams payroll each year and written into the contract the team would spend a minimum % of the salary cap, as opposed to a specific dollar amount. Using the Senators as an example....suppose Muckler/ownership agreed to utilize $40M of the cap (ie 10/11s of the salary cap - assume this same ratio for the next 4 years), saving $4M for transactions during the season. Prior to July 1st, what if he negotiated with Chara & Redden based on a % of the $40M payroll? I'll give each of you 15% of the payroll for the next 4 years ($6M this season, ??? the following season, etc). Other players would account for the following:
    alfreddson - $4.677 - 11.7% of payroll
    heatley - $4.5 - 11.25% of payroll
    Phillips - $2.2 - 5.5% of payroll
    spezza - (2 years @ 10% of payroll = $4M this year)
    gerber - $1.2M - 3%
    fisher - $1.5 - 3.75%
    volchenkov - $1.5 - 3.75%

    etc..

    so that's about 73% of the teams payroll thus far spent on 10 players (albeit the higher end ones)...

    Kind of points out a couple things...No way the Senators could afford both Chara & Redden. No way to afford Havlat.

    Regardless of what the Senators situation is, if teams were to negotiate this way it would result in the following:

    Players being more financially aware of how their salary demands can negatively impact their own teams ability to sign other players and therefore potentially their chances at success. Not to mention their teammates increased awareness.

    Provides an incentive for the players to sell the game....bigger salary cap, bigger payroll, bigger salary (remember their contract would include a promise by ownership to spend a certain % of the cap)

    It would point out mistakes made by ownership when you see players like Yashin taking up as much cap space as a Chara/Redden.

    If enough marquee players on a team donated 1% of their salary back to ownership, it might make it possible to sign another marquee player & increase chances for success.

    I think it would enhance the fiscal responsibility to be shared by the players and ownership, as well as between players. Players might feel a little bit uneasy going into the lockeroom after they have insisted they are worth more than their teammates

    it might also prevent players from feeling underpaid 2 years into a contract if there is a substantial jump in the cap figure.

    Interested in thoughts around this idea, not in the reality of all the selfish players who just want their money....although I think some of them don't quite get it, when they are just seeing a dollar figure...if they could grasp that they are taking 1/5 of a teams payroll....it would seem to me that they should consider themself pretty fortunate..and maybe willing to give a little back to get that centerman to set them up, or the goalie to take them to a stanley cup.

    thanks for your thoughts.
     
  2. Bear of Bad News

    Bear of Bad News HFBoards Escape Goat

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    Why would players do it?
     
  3. joolzie

    joolzie Registered User

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    It's a nice idea, but it's prohibited in the CBA. Salaries have to be in dollar amounts, not percentage of cap/budget/etc. And it's probably for that very reason-- there's a cap, and then many teams have internal budgets.
     
  4. GSC2k2*

    GSC2k2* Guest

    Don't kid yourself.

    Players have always played for the money. The "good old days" never existed, IMHO.
     
  5. Boltsfan2029

    Boltsfan2029 Registered User

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    I like Phil Esposito's idea, impossible as it is: take the team's payroll budget, i.e., $40M, hand it to the players & tell them to decide amongst themselves who gets what.

    Impossible, of course, but it would be awfully interesting. :)
     
  6. Fugu

    Fugu Guest

    Ah come on, GC! Everyone is in it for the money. The owners and the players. The thing is everyone acts like trying to make a profit or to maximize one's earnings is bad. That is the capitalist way. Why do people protect this way of life but then feel like they have to act like its worse than communism when they actually implement it?

    Greed is good according to Hollywood...
     
  7. GSC2k2*

    GSC2k2* Guest

    My point exactly. I am simply discrediting the romantic notion that it was ever otherwise.
     
  8. RTWAP*

    RTWAP* Guest

    Because it doesn't cost them anything and it's more fair. :shakehead

    I think the question is wouldn't something like this be an interesting component of a different CBA.

    One clarification though, players would be signing for a percentage of the max cap, not the team's payroll or budget.
     
  9. Bear of Bad News

    Bear of Bad News HFBoards Escape Goat

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    Shaking your head at me aside, it very well could cost the players something and you know it.
     
  10. RTWAP*

    RTWAP* Guest

    Since the players are assured of a fixed percentage of league revenues, it can't cost them any money overall. Individual players would get more or less money but that is where the 'fairness' argument comes in. Why should last year's contract signers lose money to escrow to pay for the increases for this year's contract signers.

    I'd be interested to hear your thoughts on what it could cost the players. And I hereby invoke a :shakehead on my previous use of :shakehead. You comment really wasn't :shakehead -worthy. :)
     
  11. Irish Blues

    Irish Blues Worth waiting for :)

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    So assume we follow this idea.

    Take a player who's going to get 15% of the upper limit (here assumed to be $50M) on Toronto - he'd be scheduled to get $7.5M. Now say he gets traded to Chicago where Bill Wirtz has decided he's not spending more than $30M - does the player's salary get slashed to $4.5M? Or does his percentage get added to those of everyone else and rebalanced so he'd get even less than $4.5M? Is he entitled to the difference, and if so then who pays for it?

    Or the other way - the player is going to get 10% of Chicago's $30M payroll so he'd get $3M but then gets dealt to Toronto. Does he stay at $3M, does he get 10% of Toronto's salary and get a raise to $5M, or do we do the rebalancing thing and he gets between $3M and $5M? And again, who pays the difference?

    OR, say Toronto is willing to spend $50M this year but halfway through decides they only want to spend $40M - do you adjust the player salaries? If so, what do you tell the guy who signed a 4-year contract to get 10% of Toronto's payroll thinking he would get $5M and suddenly finds out halfway through the season he's only going to get $4M?

    Conceptually, it sounds like a decent idea - but when you start to look at the possible scenarios, it gets incredibly complicated *very* quickly ... even more complicated than what we have right now.
     
  12. Bear of Bad News

    Bear of Bad News HFBoards Escape Goat

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    Basically take IB's points as ones I agree with, and add one more.

    Take a team...say, the New York Rangers.

    Let's suppose that they have a $40 million budget. They can either allocate that money using the current method, or under your method. Either way, they're going to spend $40 million.

    If you're saying that players cannot possibly lose money under your method, then they all have to get paid at least what they're being paid under the current method.

    But the Rangers are going to spend $40 million either way.

    In other words, if your conjecture (that players can't lose money under your system is true), then each player has to get exactly what they got under the current system.

    So either (a) some players will lose money, or (b) everything will be identical to the current system except more complicated.

    At which point I'll repeat: why would the players do this?
     
  13. william_adams

    william_adams Registered User

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    theses are actually simple problems that a math genius such as yourself could figure out, there's no need to ever get *vry* cmplicated... simply put, the player gets X% of the max cap and that stays with him whereever he is traded. There is no need to get team budgets invoved here.

    All teams have the same upper and lower limits. These are league wide limits. The only uncertainty is year to year uncertainty.
     
  14. Captain Ron

    Captain Ron Registered User

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    The idea is so that players don't lose money due to escrow......but that is not possible.....the escrow account is so that 54% of the money is guaranteed to the players based on revenue for the ENTIRE season....including playoff revenue. Under this proposal you are assuming what the league is going to make for the next season....which is impossible. The escrow money is not "officially" taken until the end of the season. So does that mean under this idea that no player gets a paycheck until June?:dunno:
     
  15. chi777

    chi777 Registered User

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    I see this as more of a benefit for the players. If you are signed for 3 yrs adn make 10% of 40mil you made 4mil this year. If the cap goes up to 50mil next year you just earned a 1mil raise without having to do anything.
     
  16. Captain Ron

    Captain Ron Registered User

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    It also would not help teams keep players. Because when RFA's wanted their raises they would say well I was making 5% ......now I want 10%......You get 3 or 4 of these kind of guys and it still makes it hard for a team to stay under the cap. Changing the pay structure will not eliminate players trying to get a bigger piece of the pie.
     
  17. BringBackBerube

    BringBackBerube Registered User

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    actually, then a cap raise would essentially have no effect on the game at all, just everyone presently under contract would make more money.
     
  18. chi777

    chi777 Registered User

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    But the team would never gain cap space from the cap going up.
     
  19. BringBackBerube

    BringBackBerube Registered User

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    yeah, thats what i meant actually.
     
  20. william_adams

    william_adams Registered User

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    Actually that just makes transparent what goes on now.
     
  21. Irish Blues

    Irish Blues Worth waiting for :)

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    Could I figure it out? Very likely.

    Are league GM's going to want to mess with this? Absolutely not.

    It still doesn't address any of the questions I asked. If anyone thinks owners are going to sign off on a deal that essentially mandates that they all spend the upper limit regardless of each team's financial situation or the whims of the individual owner (something that would all but guarantee escrow withholding from the players - which the NHLPA *doesn't* want), they are being *very* naive.

    If anyone thinks the NHLPA is going to sign off on a deal that potentially sees one of their players take a paycut as a result of getting traded, they are being *very* naive.

    There's too many flaws in this idea as sketched out for me to even go through. If someone wants to go through this in detail and cover all the possibilities (and I've thought of a lot of them), I'll look again and might reconsider. But as is, I don't see how to make it workable and something that could possibly be accepted by both sides.

    P.S. - thank you for recognizing me as a math genius.
     
  22. RTWAP*

    RTWAP* Guest

    You're missing the point.

    No team is forced in ANY way to spend to the max. Player's can be traded and will make the same money on any team. Each team can decide (as they do now) how much they are willing to spend.

    Player's salaries are still guaranteed. Actually they're guaranteed more than they are right now, if you consider escrow more likely than a league-wide revenue drop.

    The only difference is what happens year over year on multi-year contracts. Do players in past years subsidize players in future years through escrow, or do all players rise equally when league revenues increase. It's about fairness, and nothing else.

    When it comes to GMs, they may not like a system like this initially, but I bet they'd love it if they tried it. You'd hear everyone talking about players using constant terms. "Is that goalie a 15% guy or a 12% guy?" Or "Would you give Staal a 10/11/12 contract?"

    The really radical thing is the numbers would make sense. Ten years later the questions would still be understandable without knowing anything about the actual dollar values of the day.
     
  23. Irish Blues

    Irish Blues Worth waiting for :)

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    It'll never happen. Sorry. The NHLPA isn't going to take the chance that revenues do drop and thus everyone takes a paycut. The owners aren't going to go for a system that hands out automatic raises to every player if revenues go up, nor will they go for something that potentially dictates how much they spend without regard to what they actually want to do. GM's won't go for it because it potentially handcuffs them even more come playoff time when they're looking to improve and they want to add a player, but would have to trade away a guy making equal money that they want to keep to make it all happen.

    The only reason player salaries are so hard to figure out is because of the 24% rollback; once the effects of it start to dissipate in another couple of years, we won't have guys making $738,045. Besides, it still does nothing to prevent teams from using the "Per team policy, terms of the contract were not disclosed" line so we could all still be guessing who's making what.

    $6M this year is 13.64% of the upper limit this year; maybe next year it's less, maybe next year it's more. But the players and owners know what the players under contract are going to make, regardless of what revenues do. If a team is at $28M for next year and the cap goes to $50M, the team goes from having $16M in cap space to now $22M in cap space. Under the proposed system, they'd still have 63.64% of the cap taken up, leaving them just $18.2M available.

    There's a lot to be said for being able to look at raw numbers and knowing, "If revenues go up, we have extra cap room available" instead of realizing that if revenues go up, a lot of that potential room is already eaten away by automatic salary increases - again, something the owners are not going to go for.

    Paying by percentages of the upper limit may sound good, but it'll never fly.
     
  24. GSC2k2*

    GSC2k2* Guest

    Sorry, but this entire concept is complete nonsense. Not only is it impossible, as IB points out, but it does not even make sense.

    This bit about it being more "fair"? Hogwash. As if that has anything to do with anything. Understand this - players care about maximizing earnings, with very few exceptions. What's more, every young player wants the stars to earn high salaries, because they - being elite athletes - believe in themselves enough that they believe that they will be stars and will cash in.

    That is all.
     
  25. william_adams

    william_adams Registered User

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    The lady doth protest too much, methinks.

    Just out of curiosity, where are you getting this stuff? If Crosby get's 10% of the max cap playing for Ottawa, then when he get's traded to Montreal, then how is that 10% different? And how does that affect Montreal's ability to fit him into their cap any more than adding a new salary does in the current system?
     

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