'Team by team payrolls'

Discussion in 'The Business of Hockey' started by LordHelmet, May 24, 2005.

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  1. LordHelmet

    LordHelmet Registered User

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    Since this seems to be the system we're going with, I'm curious as to how it works. Other than one horribly written article that just added to the confusion, I haven't seen any details about how this system that the PA has proposed will work out.

    What I can figure out:
    "an upper and lower limit" - there's a floor and ceiling, and it's a 'limit' or hard cap (for this discussion, assume it's 53% and 56%)

    "team-by-team" - tells me that one team's limits might be different than the next team's..

    "fluctuates ... depending on revenues" - provides the owners with some form of linkage..

    The simplest explanation for this is each team being able to spend between 53% and 56% of its own revenue. If Toronto makes $80M, their range is $42.4M to $44.8M. Carolina pulls in $50M, so their range is $26.5M to $28M.

    Although this explanation is simple and it fits the wording that we keep seeing, there's no way that this is correct. I don't think the players would agree to it because 53%-56% of team-by-team revenues is the exact same thing as 53% to 56% of league wide revenues. The owners (more specifically Bettman) wouldn't like it because it doesn't address the economic disparity between high revenue and low revenue teams. Fans wouldn't like it because it doesn't address the (perceived) competitive disparity between high-revenue and low revenue teams.

    There's gotta be something else to it. I have a few ideas, but what do you all think?
     
  2. davemess

    davemess Registered User

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    The system could definetly work as it would ensure that the owners of each team are not allowed to spend themselves into debt.

    The competative balance problem is a huge issue and would have to be resolved by extensive revenue sharing by the league. Something which i assume couldnt be done with a luxury tax in this system.
     
  3. LordHelmet

    LordHelmet Registered User

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    Here are some more clues from an article linked in another thread..

     
  4. Kritter471

    Kritter471 Registered User

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    This was my thought.

    The cap and floor would be set by the league limit (the PA originally proposed a $30-$50 range, but that was a bargaining stance). Teams can be anywhere within that structure. However, they are taxed according to their ratio of payroll to individual earnings. So the 'Canes would be taxed in some regard if they went over $28 million, while the Leafs wouldn't incur a tax until they went past $44.8 million, according to your numbers.

    But again, I have no basis for that reasoning. It was just my interpertation. However, imho, it does two things. One, it creates the upper limit the league was looking for and (perhaps) ties it to overall league revenues. And two, it allows teams that are more successful at bringing in revenue the discression to spent the money how they see fit. Some people see that as inflationary, but with an overall cap, I don't think it'd be as much of a problem.
     
  5. Habsaku

    Habsaku Registered User

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    Isnt a big part of this conflict about competitiveness for the weaker markets? This team by team payroll is the most absurd thing I've ever heard of. I hope they shoot the guy who thought about it(please make it BG and GB).
     
  6. Hockey_Nut99

    Hockey_Nut99 Guest

    Same thing I thought. How would this make teams more competitive? It's the same thing as before, but the ratio of spending would be down compared to what a team spent before.
     
  7. LordHelmet

    LordHelmet Registered User

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    That's why I'm posting this - the simple interpretation of the descriptions I've seen don't add up. The players would still have a hard cap at x% of revenues. Small market owners could still lose money. Fans (some of them) would scream about how poor their team is..

    There's gotta be something else to it - sorta like Kritter's idea..

    My thoughts are something along the lines of this: Set the base floor/cap at a range of __% to __% of average revenues. If a team pulls in above average revenues, those excesses are split between revenue sharing, additional cap space, and the team's bottom line. The 'haves' get additional profits and extra cap space to keep their players, the 'have nots' get additional revenue to improve their team & contribute to the bottom line. Fans of the 'haves' are happy because they have more space to keep their players. Fans of the 'have nots' are happy because their team gets extra money that can be spent on improving their team.

    This is just a wild guess, but there's not much info coming out so who knows... :dunno:
     
  8. mackdogs*

    mackdogs* Guest

    If they did this they would have to do away with actual numbers and just use percentages to pay players. Like Sundin makes say 10% of the leafs cap, whatever it is... and if he were to be traded to Edmonton he would continue to make 10%.. something like that. The take home pay would obviously be a lot different. Otherwise, we're back to an uneven playing field.

    The way I interpret 'team-by-team payrolls' is that it just means all teams are using the same numbers. It's looks like lawyer talk.
     
  9. Mess

    Mess Global Moderator

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    My interpretation based on an article that says the NHLPA suggested a ;

    Range 30 Mil Hard Cap floor - 50 Mil Hard Cap Ceiling

    All 30 teams need to be in this range ..

    Luxury tax system inside the range say starting at 40 mil. (specultive only no official number released)

    All teams below 40 mil pay no fines at all ..

    The teams that go above 40 mil start paying a luxury tax ..
    say $1 for $1 from $40- 42 mil .. $1.50 for $1 from $42-44 .. $2 for $1 from $44-46 mil etc as a example (actual fines not released but Brooks did some math) ..

    So for Toronto to go to $45 Mil they would incur fines of (1.0 mil +1.0 +1.5 + 1.5 + 2.0 mil) = $7 mil in fines ..

    The higher you go the greater the fines and the more teams that go up the more the weaker teams gain via Revenue Sharing..

    Say Calgary gets $ 1 mil from Toronto from fines as Revenue sharing .. and if Detroit, NYR, Philly and Col all go to say $45 mil ..

    Well then Calgary would start at own base $30 mil + 1 mil (Tor) +1 mil (Det) + 1 mil (NYR) + 1 mil (Phi) + 1 mil (Col) = 30 mil (own) + 5 mil (fines/revenue sharing) = $35 mil team Salary ..

    BENEFIT: Calgary nearly gets Iginla's contract paid by other teams going over $40 mil . Why would they not like that ?

    Parity Remains : So all those 5 teams are at $45 mil and they just bumped Calgary and all other small market teams to $35 = still a $10 mil Difference . .

    Theoretically if no team wants to incur and penalties they will keep all 30 teams in the 30 - 40 mil range .. still a $10 mil max difference)

    Fluctuates is covered by the whole 30-50 mil range shifting up or down based on a percentage of what the NHLPA call readily defined revenue .. not as all the detail of the Levitt..


    Not based on the the NHL 54% flat rate linkage as that is what got Jacobs to jump accross the table at Goodenow when he asked Bob were is that figure and Goodenow replied its not in there this is a different concept ..

    However if teams want to go over to increase the gap to make a better team or replace an injured player then they give fine money to the weaker teams which in turn brings them higher up and closer again ..

    I think its a great concept.. Sure they could drop the range $ 5 mil each to make it $25 - $45 mil .. but in theory it works .. and the NHLPA wants to review the numbers so the range can shift upwards as league revenue increases.
     
    Last edited: May 24, 2005
  10. Weary

    Weary Registered User

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    It would appear to be the same, but it's not. The difference between 53% and 56% is negligible when all teams are in that range. There will be not real incentive to spend up to 56% when it's only a 5.7% advantage over minimum teams. But, with varying salary caps, that advantage grows larger for the high revenue teams. By maximizing spending, high revenue team will gain a payroll advantage greater than 5.7% over teams with lower revenues. So they'll spend the money, which is what the players want: the teams with the most money being the biggest spenders.

    Team-by-team revenues are calculated after revenue sharing. So the league will have to determine what level of revenue sharing will give them "competitive balance."
     
  11. Weary

    Weary Registered User

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    If the NHL wants purely equal payrolls, all they would have to do is engage in 100% revenue sharing.
     
  12. GKJ

    GKJ Global Moderator

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    If this goes though, I can't wait for the server to explode because people will be making all kinds of outragous trade offers to free up salary space for other teams :dunce:
     
  13. Mess

    Mess Global Moderator

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    How so .. If the NFL is an indication of a ratio of player trades to Hard Cap world then I think people are in for a rude awakening .. IMO

    I think you will see very few trades in the future .. With a huge excess of UFA, why would a team trade for a contract rather then sign a player under their own terms,m unless its a marquee player and you just have to have Iginla for example?
     
  14. nyr7andcounting

    nyr7andcounting Registered User

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    I just think most media outlets are unclear in what they say because they don't really know what's going on. To have a different cap or luxury tax for each different teams is the stupidest idea I have ever heard.
     
  15. MU_Beerman

    MU_Beerman Registered User

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    I think hockey will still have some player movement via trades.

    For one, i doubt they'll change the fact that the deadline is near mid season.

    Second, the depth of talent in the sport simply isnt that great. In the NFL, you can find a guy off the street to block for your o-line or play special teams, but there aren't servicable NHL level guys sitting around without jobs like there are in football. This should continue, b/c hockey players will still have guaranteed contracts and cant just be released to get teams under the cap.

    In hockey there are minor leagues, so teams can still trade prospects for nhlers in salary dumps or what have you. How this will affect the cap is certainly a curious issue.
     
  16. Weary

    Weary Registered User

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    Life is an uneven playing field. If Edmonton has to live with a smaller budget than the Leafs, so what? Unless every team is brining in the same revenue, that's the way it should be.
     
  17. Icey

    Icey Registered User

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    I don't think it is at all. If all thirty teams have the same payroll cap what is the incentive for any team to increase their revenue? Absolutly nothing because it doesn't mean they can spend more on players, it just means the owner gets richer and that doesn't help the sport or the fans. And the same for the flip side of the equation, a teams revenues could go down season after season and their cap would never change. A team by team salary cap based on revenue makes sure owners and GM's continue to grow the sport and it rewards those who do TO A LIMIT, and I think the limit is key. It's not saying Toronto and Philadelphia can continue to spend whatever they want on payroll, but it says that since they are making more than their share of the revenues, they can spend a set amount more on payroll. This doesn't allow them to sign every FA on the market, it allows them to sign maybe one or two top notch players.

    It's not much different from a salesman working on commission. If every sales rep was paid the same salary regardless of what they sold, what incentive would anyone have to grow the business. But throw in a comission and things change. They know if they sell more they make more money, they sell less they make less money. It's no different here. More revenues means higher salary cap, less revenues mean lower salary cap.

    It's a great way to grow the sport. Teams like Carolina, Anaheim, Florida will no longer be able to just sit back and do nothing. They will be forced to do their share in growing this sport instead of leaving it to teams such as Toronto, Philadelphia, NYR, Colorado, Dallas, Detroit to make the money for the league.

    But there also has to be more to this then is being reported because it could be too subjective and too easy for an owner to fudge the numbers to his advantage.
     
  18. thinkwild

    thinkwild Veni Vidi Toga

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    I would of thought they were more discussing team by team revenues. One of the problems with the Levitt report is it tried to come up with a one-size-fits-all formula for determining revenues, but there are 30 different markets, different businesses, ownership structures, specific agreements, that each individuals teams revenues have to be determined independently. This might be what is taking so long now. Once the number/formula is agreed on, then they will try and negotiate some way to split it. Maybe they have some new ideas on that now.
     
  19. mytor4*

    mytor4* Guest

    MU_Beerman
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    Posts: 63 I think hockey will still have some player movement via trades.

    For one, i doubt they'll change the fact that the deadline is near mid season
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------sorry but trade deadline is not near mid-season but almost at season end.
     
  20. WC Handy*

    WC Handy* Guest

    How is it that when both the NHL and the NHLPA agree the playing field needs to be evened out that people like you still spout off this nonsense?
     
  21. Mess

    Mess Global Moderator

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    WHAT !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! :eek:

    Now I you are not paying attention anymore ...

    The NHLPA first choice for a NEW CBA would be the OLD CBA and in case you didn't notice that had nothing to do with evening the playing field ..
     
  22. WC Handy*

    WC Handy* Guest

    From day one the NHLPA has said that there needs to be revenue sharing. :teach:
     
  23. Weary

    Weary Registered User

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    I know that the NHL (or more specifically Gary Bettman) is in love with the idea of a perfectly level playing field. But since the NHLPA seems to be in favor of a team-by-team cap, I don't believe they 'agree.' And certainly the owners don't believe in it, or the would've engaged in 100% revenue sharing long before now.
     
  24. Mess

    Mess Global Moderator

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    They say that because they want rich teams to give excess money to poor teams in an attempt to make all 30 teams pay more on Player Contracts ..

    This motive in not very well disguised at all .. Don't mistake more money for players as evening the playing field intention..

    If they have you fooled than score 1 point for the NHLPA on that one ..

    Now ask the NHLPA if they would like to remove the Hard Cap to go along with meaningful Revenue Sharing..
     
  25. AXN

    AXN Registered User

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    Do you know what is the total revenue they are reporting?
     
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