TSN article: Harsh fines over 60 mil?

Discussion in 'The Business of Hockey' started by speeds, Dec 7, 2004.

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  1. speeds

    speeds Registered User

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    http://tsn.ca/nhl/news_story.asp?id=107268

    Doan says there are also changes in the qualifying offer and a luxury tax of 75 cents on the dollar on budgets over $40-million as well as harsh fines for teams exceeding a $60-million threshhold. As well, the entry-level salary cap for rookies has been trimmed to $850,000 from $1.2-million.


    If the harsh fines over 60 mil can be seen by the NHL as acting roughly as a hard cap, might this thing be working itself out sometime soon?
     
  2. speeds

    speeds Registered User

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    If true, it'll be interesting to see the form of the "harsh fines." Will it be a specific dollar amount, or an increased luxury tax rate above 60 mil?
     
  3. Pepper

    Pepper Registered User

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    My bet is a 150% tax on payrolls exceeding $60M. It's a de-facto hard cap in essence.

    I like it.

    Soft cap at $40M and hard cap at $60M.

    I'm starting to be more and more optimistic.
     
  4. Egil

    Egil Registered User

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    The problem is that the NHL doesn't want a Cap on a specific number. They want to link player salaries to a set percentage of revenue, not that teams can't spend over X amount of dollars. The NHL is open to ANY system that will acomplish this, and the players still apear opposed to it.

    My guess is that the Owners reject the players proposal, and repond with a proposal that has a very similar structure, but adds in the escrow concept from the NBA CBA. In the NBA 10% of salaries go into a pool, if salaries are over a set % of revenue, then the money is payed to the owners to get them below that % of revenue, the rest goes to the players. The NBA also removes the luxury tax IF salaries (after the escrow) are below the set amount (55%).

    Again, the owners arn't looking for a Salary Cap, they are looking for ANY system that links player costs to revenues. Adding a Salary Cap that isn't linked to revenues isn't really what the owners want, unless the players make it rediculously low, at which point you would wonder why they don't go % based.

    Adding Salary Caps at huge payroll numbers also doesn't adress the owners needs, as a $60 Mil cap could produce players salaries of $1.8 BILLION, which is certainly not what the owners are looking for.
     
  5. jratelle19

    jratelle19 Registered User

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    "My guess is that the Owners reject the players proposal, and repond with a proposal that has a very similar structure, but adds in the escrow concept from the NBA CBA."

    That would be fine, as long as the NHL comes back with a counter-offer. If they don't, and then pull this "we're further apart than before" crap, then we know that Bettman is full of sh*t and does not want to negotiate in good faith. We will then know that his original agenda to break up the PA and institute a hard cap is all he is interested in. He can't drop dead soon enough for me.
     
  6. Egil

    Egil Registered User

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    The owners WILL be submitting a counter offer, now that the players have actually moved (which they hadn't done in the previous 15 months). They arn't idiots, and they know that cancelling the season isn't the "best option" to get what they want. It IS an option, but it surely isn't the first idea that popped into their heads (lets cancel the entire season, and then we will try to do something).

    Again though, the PA still apears to refuse to link salaries to revenues. So although this is a much BETTER proposal, it isn't going to work. Simply adding in the NBA escrow, and making the luxury tax only kick in when needed to further drag salaries will be the main jist of the owners counter offer, IMHO. Then it will be the PA's turn to decide what to do.
     
  7. Just like the NBA soft cap, thats what I've been saying in so many threads. The NBA system can work in the NHL.
     
  8. Peter

    Peter Registered User

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    I have it on good authority that one of the "wants" by the NHL is hockey card revenue. Seems like a small thing but they lost this way back in 1992, I believe, and generates a lot of income for the NHLPA. Apparently the NHL wants the NHLPA to share their revenue with the league....

    Another "want" of the NHL, that the NHLPA is willing to give up on, is the lowering or "capping" if you will of bonuses earned, not only on rookies, but on all contracts. It is basically closing a loop-hole that agents have found and utilized to get the most for the clients. A fact which was shared by Goodenow to the agents when they met a while back.

    The players also will be giving the owners arbitration rights: that teams can take players to arbitration and more frequently. As well as change the way arbitration happens: each side gives a number and either figure is chosen by arbitrator (no more middle ground).

    The NHLPA wants UFA lowered to 28 (something I don't think they will get) while the NHL wants to see the UFA raised back up again.

    Finally there seems to be truth to the rumor that the players are offering a two-tiered salary taxing...or capping...whatever language you want to use. The 75% on the dollar for every dollar a team goes over 40 million and 200% on the dollar for every dollar a team goes over 60 million (with all proceeds going to the teams that come under 40 million dollars).

    The league, from what I hear, wants to reward those teams that come under $35 million dollars.

    Who is my source?? Let's just say a well connected ex-NHL'er who happens to make Medicine Hat his home. :)
     
  9. SENSible1*

    SENSible1* Guest

    Great post Egil.

    The NHL's first choice is to get a deal done and they will offer a soft cap scenario. If the PA chooses to slit their own throat by not accepting any linkage between salary and revenues, the NHL will in all likelyhood cancel the season.
     
  10. NHLPA will have to budge for the good of the game. I bet back when they where playing street hockey, they never imagined they would be making so much. They probablly would of said they would play for free.

    Harsh taxes at 60 million is not good enough. This will prevent escalating salaries, the same teams will stock pile, and the competivness of the NHL will still be crap.
     
  11. MarkZackKarl

    MarkZackKarl Registered User

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    boooo

    Only an idiot would think that the competitive balance that exists in the NHL is 'crap'.

    :amazed:

    Why has more to lose if a season is cancelled, the owners who have to respond to a fanbase backlash or the players?
     
    Last edited: Dec 7, 2004
  12. Pepper

    Pepper Registered User

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    And only an idiot would think there's competetive balance when 3 teams have won 70% of the Cups during the last 9 years.
     
  13. MarkZackKarl

    MarkZackKarl Registered User

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    Wow, what a convincing argument. Lets look at the years post the CBA, starting with 1995.


    1995- New Jersey (RU: Detroit)
    1996- Colorado (RU: Florida)
    1997- Detroit (RU: Philadelphia)
    1998- Detroit (RU: Washington)
    1999- Dallas (RU: Buffalo)
    2000- New Jersey (RU: Dallas)
    2001- Colorado (RU: New Jersey)
    2002- Detroit (RU: Carolina)
    2003- New Jersey (RU: Anaheim)
    2004- Tampa Bay (RU: Calgary)

    Years: 10
    Different champs: 5. (Detroit, New Jersey, Dallas, Tampa Bay, Colorado)

    Runner Up
    Years: 10
    Different Runner Ups: 10 (Detroit, Florida, Philadelphia, Washington, Buffalo, Dallas, New Jersey, Carolina, Anaheim, Calgary).

    Are you KIDDING ME?
     
  14. X0ssbar

    X0ssbar Guest

    The 40 million and 60 million dollar thresholds would just be the starting points for negotiation.

    If these numbers are indeed true I could see the final numbers looking something like 35 million w/ a 100% tax and a either a cap at 50 million or a super-tax of around say 200%.

    Anyway you slice it, if the NHLPA's proposal is the aforementioned this is very positive news and something NHL can't afford to take lightly.
     
  15. Epsilon

    Epsilon #TeamHolland

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    What's even funnier is that people seem to have no problem with:

    Champions:

    Montreal Canadiens
    Montreal Canadiens
    Montreal Canadiens
    Montreal Canadiens
    New York Islanders
    New York Islanders
    New York Islanders
    New York Islanders
    Edmonton Oilers
    Edmonton Oilers
    Montreal Canadiens
    Edmonton Oilers
    Edmonton Oilers
    Calgary Flames
    Edmonton Oilers
    Pittsburgh Penguins
    Pittsburgh Penguins
    Montreal Canadiens
     
  16. Taranis_24

    Taranis_24 Registered User

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    How many of those non-big market teams were able to that constantly? One-year wonders?
     
  17. NHLcrazy

    NHLcrazy Registered User

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    The Canadiens and Oilers of the 80's did not "buy a team" with overpaid UFA, star players were products of the team (drafted).
     
  18. MarkZackKarl

    MarkZackKarl Registered User

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    .é

    The Devils, Red Wings, Lightning and Avalanche didn't either.

    BTW, why is Anaheim, Florida and Washington considered a small market when they didnt win, when they are all comparable market size wise to Tampa, Detroit, Dallas and Denver?

    ...
     
  19. Brodeur

    Brodeur Registered User

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    Somewhat doubting Bettman and company will go for a luxury tax based proposal. Certain teams will still be able to outspend others by 15-20 million, just as they did before.

    Here are some rough numbers from last year (pre-trade deadline apparently): http://asp.usatoday.com/sports/hockey/nhl/salaries/totalpayroll.aspx?year=2003-04

    Wings: 77.8
    Rangers: 76.5
    Stars: 68.6
    Flyers: 68.1
    Avs: 63.4
    Leafs: 62.5
    Blues: 61.7
    Kings: 53.8
    Ducks: 53.3
    Caps: 50.9
    Devils: 48.9
    Bruins: 46.6
    Canucks: 42.1

    Say theoretically that all these teams were okay spending this much money. Say theoretically there was a 75% tax on every dollar over 40 mil, and 100% tax over 60 mil. This would be the adjusted figures:

    Wings: 61 mil -> 16 mil luxury tax = 77 mil
    Rangers: 58 mil -> 13.5 = 71.5
    Stars: 56.5 + 12.375 = 68.9
    Flyers: 56 mil + 12 = 68
    Avs: 53.5 + 10.125 = 63.6
    Leafs: 53 + 9.75 = 62.75
    Blues: 52 + 9 = 61
    Kings = 47.5 + 5.625 = 53.125
    Ducks = 47.5 + 5.625 = 53.125
    Caps = 46 + 4.5 = 50.5
    Devils = 45 + 3.75 = 48.75
    Bruins = 43.5 + 2.625 = 46.125
    Canucks = 41 + 0.75 = 41.75

    If for some reason these payroll figures stayed where they were at, 105 million in luxury tax would have been collected based on last year's figures. Assuming that the 105 mil is distributed equally to the non-taxed teams, that'd be 6.2 million to the other 17 teams.

    And we can all figure teams like the Rangers, Caps, Ducks, and Kings are all gonna go south payroll wise. So we'd still have about 10 teams spending more than others, which doesn't seem acceptable to Bettman. All of us know money does not equal success on the ice, but Bettman is more or less concerned with making everybody profitable, or achieving the dreaded "cost certainty".
     
  20. hockeytown9321

    hockeytown9321 Registered User

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    You might want to check what the hard cap has done to the NFL if you're concerned about one year wonders.
     
  21. SENSible1*

    SENSible1* Guest

    You might want to check out the definition of cost certainty before you post on its potential effects.
     
  22. hockeytown9321

    hockeytown9321 Registered User

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    Whatever you say, chief.
     
  23. Egil

    Egil Registered User

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    Cost Certainty != Hard Salary Cap

    Escrow + Luxury Tax works (as in the NBA ignoring the easily bipassable Salary Cap).

    Heck, Escrow alone could work, but it would need to be expandable past 10% of salaries if needed.

    A variable Luxury Tax based on what % of league revenues the players were taking would work. For example, start off draconian until player salaries are 55% or whatever of DHI, then loosen it acordingly, and jack it up as necessary to ensure teams are careful about going way over (for example, if player costs were over 60% of revenue, have a 50% Tax on payroll over 50% of league revenue, 100% over 55% of league revenue, and 500% on payroll over 60% of league revenue. Just

    As would a luxury tax on PLAYER contracts over set % of revenue (not that the PA would ever go for this). But instead of taxing the owners for overspending, tax the player contracts on teams that over spend.

    Also viable would be an anual re-indexation of player salaries. At the end of every season, the average league salary is computed, and then scaled to what the average league salary should be to provide X% of DHI to the players (up OR down), and all contracts are then scaled by that % (so if the average league salary is 10% too high, everyone takes a 10% paycut for the following season, including Qualifying offers)

    None of these are hard caps, and the NHL has essentially proposed an excrow only system already.

    Also of note, I would be interested to see if the PA is proposing a Luxury tax at $40 Million, or a Luxury tax at whatever % of some revenue figure produces $40 million. Any CAP or TAX at FIXED dollar amounts will not fly.
     
  24. Wolfpack

    Wolfpack Registered User

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    It quite honestly frightens me that the NHLPA has actually proposed ANY type of tax penalty for teams spending over $60 million. I am guessing that in the system the NHL is looking for, no team would be permitted to carry anywhere NEAR that high of a payroll. I mean, the six or seven teams that have $60 million+ payrolls right now are the reason why we are in this mess to begin with.

    Salary rollbacks, even of more than 10%, are a temporary band-aid solution that the NHL shouldn't even look at. I can see them coming back at the PA with a harsher luxury tax (soft cap) at about $35 million and either a hard cap at $50 million or a luxury tax penalty so insane that no team would dream of going over it.

    I am glad to see that the PA seems willing to move on arbitration and the rookie cap, but like has already been stated in a previous post, the NHL is going to want to limit bonusus for ALL players, IMO.
     
  25. Pepper

    Pepper Registered User

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    Are you kidding US? 70% of Cups won by only 3 different teams in the last 10 years. The point of every NHL team is to win the cup, very few can do it.
     
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