What happens with salaries, when revenues fall down

alko

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Oct 20, 2004
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Every year we see, that the revenues are bigger and bigger. And with that the salary cap is higher and higher. And also salaries (max. salary).

Now lets imagine, there will be some crash and the revenues will fall down very fast. What will happen with player salaries?
 

Fenway

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Every year we see, that the revenues are bigger and bigger. And with that the salary cap is higher and higher. And also salaries (max. salary).

Now lets imagine, there will be some crash and the revenues will fall down very fast. What will happen with player salaries?

I think we have seen that the owners stick together in the NHL.

That said there is little fear of a revenue collapse unless fans stop buying tickets in the key markets as TV money is locked in for a few more years.
 

Noldo

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May 28, 2007
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If the revenue decreases the players will receive less than 100% of their salaries because a larger portion of the funds paid to the Escrow during the season would be distributed to the owners in order to ensure that the players and owners both receive 50% of the total (hockey related) revenue in accordance with CBA.
 
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Riptide

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Dec 29, 2011
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If the revenue decreases the players will receive less than 100% of their salaries because a larger portion of the funds paid to the Escrow during the season would be distributed to the owners in order to ensure that the players and owners both receive 50% of the total (hockey related) revenue in accordance with CBA.

This. Escrow would be the mechanism that the owners would use to ensure that they're getting 50%. The cap would go down, and that would hurt everyone, and honestly, that would be a bigger issue then anything, as EDM would still be paying McDavid a 12.5m cap hit, and Drai a 8.5m hit. But after a couple of seasons, things would level out. All those high end long term contracts would suck for GMs, but people would move on. It would just be the UFA/RFA's in those years that would get boned, as teams would be in such a cap crunch that they wouldn't be able to give them "market" rate (or rather the market rate would have changed).
 

NSH615

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This. Escrow would be the mechanism that the owners would use to ensure that they're getting 50%. The cap would go down, and that would hurt everyone, and honestly, that would be a bigger issue then anything, as EDM would still be paying McDavid a 12.5m cap hit, and Drai a 8.5m hit. But after a couple of seasons, things would level out. All those high end long term contracts would suck for GMs, but people would move on. It would just be the UFA/RFA's in those years that would get boned, as teams would be in such a cap crunch that they wouldn't be able to give them "market" rate (or rather the market rate would have changed).

We'd probably see more short term 1-2 year deals as a results during that period.
 

cheswick

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Mar 17, 2010
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Every year we see, that the revenues are bigger and bigger. And with that the salary cap is higher and higher. And also salaries (max. salary).

Now lets imagine, there will be some crash and the revenues will fall down very fast. What will happen with player salaries?

Player salaries are a proportion of revenue. They are directly linked. So if revenues fall so do players salaries. The value listed on a players contract isn’t really what they receive, it’s adjusted for what revenues are.
 

dechire

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Depending on the drop there could be a serious cap compliance issue around the league. But that's the real purpose of the NHLPA's escalator: to protect the players in case of a bad situation, not to artificially inflate the supposed league growth every year.
 

Yukon Joe

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Aug 3, 2011
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This. Escrow would be the mechanism that the owners would use to ensure that they're getting 50%. The cap would go down, and that would hurt everyone, and honestly, that would be a bigger issue then anything, as EDM would still be paying McDavid a 12.5m cap hit, and Drai a 8.5m hit. But after a couple of seasons, things would level out. All those high end long term contracts would suck for GMs, but people would move on. It would just be the UFA/RFA's in those years that would get boned, as teams would be in such a cap crunch that they wouldn't be able to give them "market" rate (or rather the market rate would have changed).

I don't believe under the CBA the cap can go down - the PA can always apply the escalator clause.

What would happen though is a much larger portion of players salaries would be swallowed up in escrow.
 

dechire

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I don't believe under the CBA the cap can go down - the PA can always apply the escalator clause.

What would happen though is a much larger portion of players salaries would be swallowed up in escrow.
The cap can go down. I believe the escalator is capped at 5% and it has to be approved by the players. There isn't anything to guarantee that the cap won't decrease although it's very unlikely that it would.
 

Riptide

Registered User
Dec 29, 2011
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I don't believe under the CBA the cap can go down - the PA can always apply the escalator clause.

What would happen though is a much larger portion of players salaries would be swallowed up in escrow.

Yes the NHLPA can just apply the escalator to inflate the cap. But that only goes so far... AND if revenues are going down, and the cap remains static, then it's just the players shooting themselves in the foot, as they're going to be getting hammered in escrow. Right now, the NHL deducts ~18% each paycheque, and then in Sept/Oct the players get back 5-8% of that (with interest), depending on what the NHL revenues for the year were. But if the cap remained static due to the escalator clause, but revenues fell by 300m, the players are going to lose a lot more to escrow then what they're currently paying - because the owners are still going to get their 50%.

And yes the cap can decrease, that's actually why the NHL refuses to unlink the cap to HRR. It's their insurance mechanism if things go down hill. Now it doesn't look like it's going to happen any time soon... but it's absolutely possible.
 

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