The "incomplete" hybrid form of linkage

Discussion in 'The Business of Hockey' started by Crazy_Ike, Apr 7, 2005.

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  1. Crazy_Ike

    Crazy_Ike Cookin' with fire.

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    There's some confusion over this. Looking at the quotes in question, it seems moderately clear that the "incomplete hybrid form of linkage" is this: the players suggested a system that in effect linked their salaries to revenues, but only if revenues went *up*. If revenues dropped, the line (the previous link number) would stay the same.

    Putting it another way, with the PA suggestion the players were happy to share the good times but didn't want to share the bad.
     
  2. x-bob

    x-bob Registered User

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    It doesn't say anything close to that in the article
     
  3. ColoradoHockeyFan

    ColoradoHockeyFan Registered User

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    But that didn't appear to be what was reported elsewhere, right? It appeared that they were relating salaries to revenues in both rising and falling times, just without escrow, so that the adjustment would essentially be delayed by a year rather than paid out following the season. Isn't that what was understood from the article on Jacobs? I don't believe "hybrid" implies "upward only" in this case.
     
  4. Drury_Sakic

    Drury_Sakic Registered User

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    I have interpreted it as meaning there will be a top cap to the offer(say of 50 million) and a bottom (say of 32 million) and the scale will float between those two numbers depending on the previous seasons revenue(same with the floor)... thats what I have gotten from all that I have read......

    I interperet the imcomplete part being the things that trigger the cap to move...

    Clearly the players will ask for it to be more likely to increase and harder to decrease...(duh!) but I thought for sure that they were thinking(at least in regards to this rumor) about a possiblity to DECREASE the cap as well with revenue(within a certain structure)...

    What the players shoud have been asking all long is for a base(a value that the cap cannot ever fall below) in the low 30's and a high in the mid/low 50's with a cap in that range that floats each season depending on revenue.

    They have some measure of security, but still stand to risk losing something and also have room to grow and something to gain without putting the owners at risk of falling back totally into the current situation..

    but thats just what I have pulled from it..
     
  5. Munchausen

    Munchausen Guest

    There's nothing moderatly clear about the RDS article other than the fact the writer has such poor communication skills that he forces the reader to interpret what he meant.

    It says in the article that the players have accepted Monday the idea of a cap and also linkage, but in an hybrid form. If they did accept this on Monday, it cannot be only upward if this article is accurate, since they already shown they wanted to get upward linkage in return to their 52M proposal.

    If the players have caved on linkage on Monday, it can only be on both upward and downward linkage. If not, the article is pure BS. If they did accept the idea of 2-way linkage, I'd like to know in what way it is incomplete because incomplete can be both a negative and a positive. It is positive if the PA has suggested they were agreeing to 2-way linkage but needed to fine tune some of the concepts discussed on their own before meeting again, and it is a negative if it is a form of linkage that either is not realistic or is one-sided in the PA's advantage.
     
  6. hubofhockey

    hubofhockey Registered User

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    thoughts

    LF'ers -- A thought here (after day of reporting in Detroit):

    I think what is evolving is the PA warming up to linakage. Ultimately, that's ALL that can be taken out of the recent meeting--the one after Jacobs told me he was guardedly optimistic.
    Now, what does warming up to linkage mean? Likely the players will want some gurantee that, no matter how low revenues may plummet, they will get a hard-and-true X dollars--a floor. That, of course, is not true linkage, because they essentially are in a stop-loss situation (like in stock trading).
    As for linking to the upside, they can try to estabish that with a hard-dollar amount via the cap (remember, $49M), or over some time, who knows, maybe they can warm up to pctg. of the total take--but that presents the old problem, how to believe the books,etc.
    So, therein lies the confusion around this whole thing, I think. Truth is, no one knows, on either side--in the room, or out of the room. Call it a hybrid. Call it an evolving process. Call it a dart game. All expressions fit, I think.

    kpd/ktf/hoh
     
  7. PeterSidorkiewicz

    PeterSidorkiewicz Registered User

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    I brought this up before where I believe there really SHOULD be some kind of hard cap limit if revenues really do horrible. If revenues get so bad (which hopefully they wont) there should be some kind of like 32 million dollar limit, such as the cap cant fall BELOW 32 million or some other figure. It should never really get to this, but if the players accept linkage I think its totally fair to give them some kind of guarentee of some sort. Especially since the PA would be moving OFF the no cap stance, the no linkage stance as well.
     
  8. Scoogs

    Scoogs Registered User

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    The owners would never go for that. Simply because the risk is too great. If that ever were to happen (revenues drop drastically), then they would basically be in the situation they are in now.. Which is losing money.
     
  9. djhn579

    djhn579 Registered User

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    Maybe if revenues decreased, the players salaries can't decrease more than 10% a year (excluding this season). The owners may take a large hit for a year or two if something radical happens, but salaries will get back in line with revenues within a few years. The owners may want something in return for this guarantee though...
     
  10. Munchausen

    Munchausen Guest

    The question I'd then ask you is why? Why should the NHL be forced to pay what the league cannot afford? Because having a 32M cap for a 1B industry does the same as having a 60M cap for a 2B industry: nothing.

    There shouldn't be a guarenteed minimum payroll range. Linkage is a guarenteed % of revenues. What those revenues are is completely irrelevant. It's just an economical reality the salaries are based on. That's why it's called cost certainty.
     
  11. Drury_Sakic

    Drury_Sakic Registered User

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    Whats the difference?

    They are proposing a 37.5 million hard cap that would NOT ... would NOT go down if revenues tanked...


    if there was a cap floor of 32.... at least the cap would drop some if revenues tank...

    that is a BETTER offer than just a hard cap of 37.5...

    U blind???

    ;)


    if the NHL and the PA came together with proper triggers to pull it down to 32 or up to 45 (or whatever the numbers would be).. would that not be better than the set 37.5 for both sides? if revenues tank... at least the owners get down to 32.... if revenues go up.. the 45 won't hurt..(if the triggers are done right)...

    is it as safe as pure linkage.. NO... but its a big move by the PA(if it is true).. and one that needs to be strongly looked at...

    This is not the "owners get everthing" negotiations.... these are the "players are giving up a hell of alot" negotiations.... I have been on the side of the owners at most points in the season.. and I agree with the players giving up some stuff as they are the only ones in a position to make changes to fix the game and to put some safeguards in place to protect the future of the game(in regards to a CBA)... But the owners dug their own ****ing hole... and if you get 75% or more of what you want.. you take it..(which if a linkage system like this is set up, the owners will be getting at least 3/4ths of what they wanted in one form or another)...

    People need to think about this rather than just disregard it...
     
    Last edited: Apr 7, 2005
  12. Scoogs

    Scoogs Registered User

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    Show me where I said anything about 37.5 in my post.

    Oh thats right, you cant, because I didnt.

    U blind??

    ;)
     
  13. PeterSidorkiewicz

    PeterSidorkiewicz Registered User

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    The question I ask back is, why when if it gets that bad can't teams take it into their own hands and NOT pay the payroll that would make them lose money? When do you finally cut off the training wheels for these owners? All it is is a SAFE guard for the players for accepting linkage.
    Lets say revenues get so bad that linkage should make the payroll 30 million, but they AGREED it cant drop below 32? WHY CANT THE OWNERS JUST NOT SPEND 32 mill IF THEY KNOW THEYLL LOSE MONEY. I just DONT understand this, someone please explain it to me. This would be the TOP of the hard cap, so teams can spend 25 mill and what not. Wasnt the whole purpose of the cap to bridge the gap between the rich and poorer teams, and not to guarentee an owner a profit no matter what he or she does?
     
  14. nyr7andcounting

    nyr7andcounting Registered User

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    How about an absolute floor of $28 million and an absolute ceiling of $50 million.

    In between there it is linkage between x% and x%...but if it gets close to either the floor or the ceiling it is stopped within $5 million of either (so that if revenues drop so low the linkage ceiling isn't at $29 million when there is a $28 million floor). There should always be at least a $5 million payroll range at all times, to allow flexibility.

    So when the league is in the worst financial shape the floor is $28 million and the ceiling is $33 million. In the best financial shape the floor is $45 million and the cap is $50 million.

    Between that arbitrary area the league works on linkage of the previous years revenues, with payroll ranges being about $8 or $10 million.

    The owners get linkage in all years when revenues are somewhat normal, which might be the entire CBA except for 05-06. If it gets really bad, at least the players are guaranteed ($28x30) million per season.
     
  15. Munchausen

    Munchausen Guest

    Why? Simple, because we'd be back to square one. Small market teams spending 15M and big spenders being the only ones who can afford the 32M cap. Competitive balance is all screwed up once again. It's the same thing as now, only on a smaller scale.

    Based on the 55% figure:

    2B / 30 teams = 66M per team
    55% of 66M is 36.3M
    So let's say a payroll range of 31M - 41M

    1B / 30 teams = 33M per team
    55% of 33M is 18.15M
    So let's say a payroll range of 14M - 22M

    If the NHL wants a payroll range between 31M-41M for a 2B pie, it is only normal that range would drop significantly if the pie shrunk significantly. If not, you either have once again too wide a gap between big and small market teams (since the cap limit is out of wack with average revenues per team), or worse, you have small market teams being forced (due to too high of a floor) to spend what they can't afford. Doesn't work either way, it's pretty basic mathematics.
     
  16. PeterSidorkiewicz

    PeterSidorkiewicz Registered User

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    I would never want to see a team fold, but if a team cannot make the salary floor its not the NHL's fault it is that teams fault and they would have to look long and hard whether they belong in a professional league or not. Because im pretty sure the salary floor would be set up so it would be pretty fair for teams to make it, and if they can't thats their own problem. It's pretty obvious the owners will get their cap now but theyre going to have to give up something, whether its a limit on linkage or a significantly lowered UFA or both, you can't get EVERYTHING you want because then it would be pointless for the players to sign a CBA that rapes them in every way.
     
  17. Munchausen

    Munchausen Guest

    The thing is, a fair floor is based on the revenues generated in the league. If you don't take gross revenues into account to set the floor, linked to revenue fluctuation, you end up with a ridiculously high or ridiculously low floor (and cap for that matter). Putting a floor at 25M for a 1b industry would be the equivalent of putting the floor at 45M now. It doesn't work.

    I agree that the owners will need to give up something in return, but that something will never interfere with what the NHL judges as bare minimum for league wide health.

    Lower UFA age seems to be in the cards already. It's just a matter of deciding on the new age.

    What is likely to become the PA's condition on caving heavily on all issues is revenue sharing. That allows to artificially reduce the gap in revenues between top and bottom teams, so that both the floor and the cap can be set higher. More money for the players. I think this is something the owners need to consider seriously.

    I don't like the escrow system as far as linkage goes. I think the league should be prepared to raise the % of revenues they're ready to give to the players, or determine the payroll range more loosely. So say a range between 50% and 65%. Out of 2 Billions, this would amount to a cap of 43M and a floor at 36M. No need to escrow the numbers, the players will always get between 50% and 65% of revenues. That would only work with revenue sharing though, because lots of teams could not afford the 36M floor. Again, I think once the owners agree on revenue sharing, everything else will fall into place. The PA has raised the white flag regarding everything else.
     
    Last edited by a moderator: Apr 8, 2005
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