Use Linkage For Rollback!

Discussion in 'The Business of Hockey' started by regehr, Feb 14, 2005.

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  1. regehr

    regehr Registered User

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    YEAR 1 (2005/06) ROLLBACK = 24% ACROSS-THE-BOARD CUT OR 57% OF REVENUES, WHICHEVER ROLLBACK IS GREATER.
    YEARS 2-5: USE A LUXURY TAX SYSTEM BASED ON NHLPA DEC 9 PROPOSAL.
    NEGOTIATE SYSTEM DEFLATORS – QUALIFYING OFFERS, ARBITRATION, ENTRY-LEVEL SYSTEM, ETC.

    NHLPA has offered a 24% rollback which would result in a share of 57% of 2003/04 revenues.
    So, propose to make rollback equal to 24% cut or 57% of year 1 revenues, which rollback is greater.
    If 2005/06 revenues are > 2003/04, rollback = 24% across-the-board cut.
    If 2005/06 revenues are < 2003/04, rollback = 57% of year 1 (2005/06) revenues.
    This will ‘reset the system’ calibrated to 57% of new revenues.
    Going forward, institute the NHLPA’s luxury tax/revenue sharing plan.
    (i.e. if you want to go over the soft cap, you get taxed – money gets shared with low revenue teams)

    Scenarios for year 1 (2005/06) only:
    If revenues = or > $2032 million (100% of 2003/04), share = $1158 million = avg payroll = $38.6 million = NHLPA’s 24% rollback.
    If revenues = $1930 million (95% of 2003/04), 57% share = $1100 million = avg payroll = $36.7 million = 27.8% rollback.
    If revenues = $1829 million (90% of 2003/04), 57% share = $1043 million = avg payroll = $34.8 million = 31.6% rollback.
    If revenues = $1727 million (85% of 2003/04), 57% share = $984 million = avg payroll = $32.8 million = 35.4% rollback.
    If revenues = $1626 million (80% of 2003/04), 57% share = $927 million = avg payroll = $30.9 million = 39.2% rollback.
    If revenues = $1524 million (75% of 2003/04), 57% share = $869 million = avg payroll = $29.0 million = 43.0% rollback.

    By tying the rollback to revenues, you can achieve a rollback that will re-start the system proportional to revenues. Then, going forward, you use the NHLPA’s luxury tax proposal (you would still need to negotiate qualifying offers, arbitration, a revamped the entry-level system, and possibly increase the luxury tax percentages).

    Both sides win – NHL gets to reset the system by linking the rollback to revenues and NHLPA gets their luxury tax system.
    What is wrong with this proposal?
     
    Last edited: Feb 14, 2005
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