Why are cartels like NHL legal in the US?

[Shawa666]

I agree with you, but I also agree with OP. The draft system can potentially prevent certain players from making the NHL... if you're drafted in Chicago or Pittsburgh, you might be seen as not good enough to make their 3rd line and stay in the AHL where another team would have played you in the NHL if you were part of their system.

I'll have to remind you of the existence of the Waivers system. It was created in the MLB so teams couldn't hide players away in their extensive affiliates system (We're talking about 20 affiliates, even 30 for some teams like the Cards and the Dodgers.)

On a more general basis the NHL can't be dismantled per se because anyone can create a rival league as was the case in 1972with the WHA. However the legitimacy of the NHL's quasi ownership of the Stanley Cup, if not it's legality is debatable.

 

[Bringer of Jollity]

OP sounds like a pro/rel soccer supporter. NA sports leagues being "cartels" are among their favorite talking points.

 

[Riptide]

But the biggest problem really is draft. Draft is essentially theft. Parity is again an excuse, the real purpose of the draft is to kill competition for players between clubs so they never have bidding wars and they can get best young players for peanuts. Jets paid only 300 000 dollars for Laine, which is laughable amount and just one example. It should have been three millions instead and probably would have been if there were no drafts and NHL teams would have to compete each other to get their players from other leagues. It is wrong for the other leagues which develop players through their most important years between 6-15 and then few years later these players are taken away with very little compensation. Draft is the reason for this, without it more money would flow to other leagues and teams would get an amount of $$$ you could call a real compensation. Again very little money goes for the game, most go to pockets of the owners. Money that should be used to develop the game, facilities, etc.

And I find it immoral that these megamoney (few are even even gigamoney) franchises take no part in developing young players. They just leave player development to other leagues, which have much less money and just pick finished product without having any part in developing them and total unwillingless to fund development, when they should be the biggest funders. The reason why hockey is so expensive is directly linked to the NHL, by far the richest hockey league, but still is a leech that just sucks and gives nothing back.

This is literally a corporated version of the Soviet Union. It is actually worse since this money doesn't even flow back and it is forever lost to the private bank accounts. But still somehow many people see Russian oligarchs funding a league from their own pockets a worse thing these NHL leeches sucking lot of money away from it with salary caps and drafts.

Jesus... where to start.

Laine. No, it never would have been 3 million dollars. Because the NHL will never get into those sorts of bidding wars. The player (Laine) will eventually no longer be obligated to his European club, and when he's free to sign elsewhere (at what... 19? 20? 21?), Winnipeg would sign him then - and it wouldn't even cost them 300k. Just like Chicago did with Paranin. You can moan and bitch about the fairness of the situation, but that's the reality of it. There isn't the competition in hockey like there is in soccer/football to drive up prices of players to warrant extravagant transfer fee's. The players for the most part will come to the NHL all on their own - simply because A) it's the best league in the world and B) because it pays the players the most money (out of all the pro leagues) - and by a significant margin. I mean lets see... The highest payroll in the SEL last year (or the year before?) was - for the entire team, 5m. Laine will make more than that on his next contract. That is why players come to the NHL. You don't like that... blame the players for being greedy and leaving to chase the money. But then you would probably do the same thing if you were in the same situation - I know I would.

Development. Seriously? You do not think that NHL teams take any part in developing players? They draft these guys at 18 - you think they're finished products at that time? And the NHL isn't why hockey is so expensive, I mean really, don't be absurd. Hockey is expensive, because the gear, facilities/icetimes, and travel is expensive. The NHL doesn't play into any of that. Even if Brauer or CCM or whomever wasn't paying the NHL and players a shit load of money in advertising and endorsements, they're still not going to sell their gear for any less... these are corporations who almost universally sell their products at the highest rates possible.

Money. You mean the money the players earn individually flows into their own private bank accounts? Funny... that's not quite how things went in the Soviet Union....MOD

 

[Bruins1233]

Wait until he hears about NCAA sports, which is essentially the modern version of slavery.

NCAA SPORTS ARE NOT SLAVERY.

Slavery was not a voluntary action.

here is a good thing to remember: If its isn't literally slavery, don't compare it to slavery.

 

[PaulieDanger]

Okay, first post, and I'm very upset that you're making me defend business owners.

Point by point:
The salary cap is not illegal. It was negotiated and agreed upon by the owners and the labor union. Not only is it not illegal, but I believe that you will find that most unions, particularly labor unions have very clearly defined salaries. You progress until you hit top rate (the salary cap). In an entertainment industry, such as sports, television, you are free to negotiate your own salary in the market. However, there is nothing that prohibits management and labor from negotiating salary floors or caps.

Limits on cost of products. There actually is a limit. It's called supply and demand. Teams charge what the market will bear for tickets and t-shirts. If you would pay $40 for a t-shirt, they will charge you $40 for a t-shirt, regardless of what their players are making.

And parity is the real purpose. And it has worked. Since the salary cap began in 04-05, only one team has repeated as Stanley Cup Champions. And while three teams have won the Cup in the last 7 years (and four in the last 9), the Cup runners-up have never repeated, and only in '07-08/'08-09 did a runner-up return to the Cup to win (Pittsburgh).

The draft is the only way to disperse talent throughout the league to promote parity. In leagues (and in times) prior to a draft, the richest teams in the biggest cities were able to control the majority of talent (eg: Montreal Canadiens, New York Yankees, Yomiuri Giants). It is in the best interest of the game that players be drafted into the league.

Now, development. The NHL drafts players at 18, many from the CHL, which is a system that they nurture through financial assistance as well as mentoring. These players who are drafted are either then reassigned back to the CHL, or sent to the ECHL or AHL, where they are...wait for it...developed. They are developed in the NHL system, which shares its young talent with leagues across North America. This is good for the game, because a hockey fan in central New York can see kids who will be playing for their favorite team (whether they're Sabres, Rangers, Islanders or Devils fans). Minor leagues often market themselves as a development system, "come see the future stars of the NHL", which helps them sell tickets, which keeps their barns at least partially full with fans. (I was at the Providence Bruins game, and fans were wearing Boston Bruins t-shirts than P-Bruins t-shirts).

You say Patrik Laine should have gotten $3million. He is, per year. He's in the 2nd year of a 3 year contract with a base salary just shy of a million dollars, with performance bonuses per year that push him to over three and a half per year on a $10million/3 yr contract.

If he is unhappy with those terms, he is free to negotiate with teams in the AHL, ECHL, FHL, KHL, or any European elite league. Mexico has a league now. Logos and sweaters look dope, too.

There are many good fights to fight, this is not one.

 

[JuniorNelson]

NHL is run by lawyers. Start there.

 

[Fugu]

And parity is the real purpose. And it has worked. Since the salary cap began in 04-05, only one team has repeated as Stanley Cup Champions. And while three teams have won the Cup in the last 7 years (and four in the last 9), the Cup runners-up have never repeated, and only in '07-08/'08-09 did a runner-up return to the Cup to win (Pittsburgh).

The draft is the only way to disperse talent throughout the league to promote parity. In leagues (and in times) prior to a draft, the richest teams in the biggest cities were able to control the majority of talent (eg: Montreal Canadiens, New York Yankees, Yomiuri Giants). It is in the best interest of the game that players be drafted into the league.

On the subject of parity, the cap is actually there for cost certainty -- not parity. There have been three teams who have 2-3 times (Chicago, LA and Pittsburgh) while Detroit actually could have back-to-back if they'd won in 2009.

 

[ijuka]

I guess that the only thing I really agree with is that the transfer costs from leagues of drafted star players like Liiga or SHL is too low. It's a huge loss for the team that spent all that time and money to actually develop these players.

 

[Tawnos]

On the subject of parity, the cap is actually there for cost certainty -- not parity. There have been three teams who have 2-3 times (Chicago, LA and Pittsburgh) while Detroit actually could have back-to-back if they'd won in 2009.

The cap is there for both. Parity isn’t defined by championships or even the playoffs. It’s defined by competitiveness during the regular season. The league as a whole is more competitive now than ever.

 

[Fenway]

On the subject of parity, the cap is actually there for cost certainty -- not parity. There have been three teams who have 2-3 times (Chicago, LA and Pittsburgh) while Detroit actually could have back-to-back if they'd won in 2009.

The genesis of the cap was to prevent several owners from spending wildly to buy a Cup. Mike Ilitch was willing to lose money to win a Cup, Jacobs on the other hand refused to do so. There is irony that Jacobs Bruins team has been hurt the most by cap issues since 2013.

The real battleground in the next CBA will be owners vs owners and even Jacobs might be changing his stance a little after seeing the Bruins missing the playoffs 2 out of the last 3 seasons.

In someways baseball has figured it out with the luxury tax instead of a cap.

 

[cbcwpg]

http://www.antitrustinstitute.org/sites/default/files/USandEuropeExemption.pdf

A good read.

The need for any antitrust exemption for sports leagues and clubs in the US hinges largely on whether the economic structure of a league is considered a collection of independent firms or a single entity. Cartel behavior is contrary to Section 1 of the Sherman Act. However, if the clubs are considered a single entity under the league’s umbrella, their actions would not be subject to Section 1 of the Sherman Act. Treating sports leagues as single entities for the purpose of antitrust laws arises from Copperweld Corporation v. Independence Tube Corporation , which held that firms cannot collude in violation of Section 1 of the Sherman Act when their relationship is that of a parent company and its subsidiary.

The NFL, NHL, and NBA’s decisions and agreements (excluding those pertaining to broadcasting rights and collective bargaining) are subject to Rule of Reason scrutiny. The Rule of Reason is an alternative to declaring that a particular action is anti competitive on its face. US law applies the Rule of Reason in sports cases because of a general recognition that with out horizontal agreements between clubs, no club could produce its product.

**

Are they Cartels... sure, but the leagues wouldn't exist if they were not IMO.

 

[Fugu]

The cap is there for both. Parity isn’t defined by championships or even the playoffs. It’s defined by competitiveness during the regular season. The league as a whole is more competitive now than ever.

I always figured the reason the NHL wanted the cap system was to stop the out of control spending on players, via competition among the owners. Parity may have been one of the results, but that was a by-product of the cost certainty result.

 

[Bear of Bad News]

I agree - "parity" was a press release topic, but not much more than that.

 

[Jumptheshark]

this thread is so silly on so many levels

translation

get rid of the cap and run 20 teams out of business

 

[mouser]

The genesis of the cap was to prevent several owners from spending wildly to buy a Cup. Mike Ilitch was willing to lose money to win a Cup, Jacobs on the other hand refused to do so. There is irony that Jacobs Bruins team has been hurt the most by cap issues since 2013.

The real battleground in the next CBA will be owners vs owners and even Jacobs might be changing his stance a little after seeing the Bruins missing the playoffs 2 out of the last 3 seasons.

In someways baseball has figured it out with the luxury tax instead of a cap.

I doubt there are enough owners that want to see the cap increased beyond the current formula to turn it into an owner vs. owner situation. At the end of the day increasing the cap doesn't add new players to the league, it just means you're paying the same current batch of players more.

NBA owners have been trying to do away with the soft cap / luxury tax for years now. The majority don't see it as a good thing. With each new NBA CBA the pressure/penalties of the soft cap have been increased.**

** They didn't technically increase the penalties in the most recent NBA CBA, however the luxury tax thresholds are in absolute $ figures and not adjusted for cap inflation. So the effective % overages before hitting luxury tax territory has been shrinking each year.

 

[Tawnos]

I always figured the reason the NHL wanted the cap system was to stop the out of control spending on players, via competition among the owners. Parity may have been one of the results, but that was a by-product of the cost certainty result.

Yes, but there’s also the idea that teams can’t succeed financially if they can’t compete on the ice. Playoff home games are big money even if you don’t go deep. Increasing the chances that small market teams can compete enough to get into the playoffs is the same as increasing the chances they can be solvent financially.

 

[BattleBorn]

The genesis of the cap was to prevent several owners from spending wildly to buy a Cup. Mike Ilitch was willing to lose money to win a Cup, Jacobs on the other hand refused to do so. There is irony that Jacobs Bruins team has been hurt the most by cap issues since 2013.

The real battleground in the next CBA will be owners vs owners and even Jacobs might be changing his stance a little after seeing the Bruins missing the playoffs 2 out of the last 3 seasons.

In someways baseball has figured it out with the luxury tax instead of a cap.

Meanwhile, the league championship series this year had teams from the four largest cities in the US in them.

 

[Crede777]

I agree with you, but I also agree with OP. The draft system can potentially prevent certain players from making the NHL... if you're drafted in Chicago or Pittsburgh, you might be seen as not good enough to make their 3rd line and stay in the AHL where another team would have played you in the NHL if you were part of their system.

The draft works as a dispersal of talent because teams are incentivized to maximize the return on their draft picks.

Why would Pittsburgh or Chicago waste a pick on a player who won't become good enough to make their NHL roster? They wouldn't. And once they draft the player, they are obligated to develop that player to the best of their abilities in order to maximize their return on investment.

But let's say they believe a player will be good enough for the NHL, draft and develop that player, but NHL team depth pushes that player to the AHL. 2 things:
1. Waivers mean that player would be selected by a team with more use for him once he has to be relegated at the start of or during the season.
2. More importantly, teams need to maximize their assets. If one team sees a player as an AHL'er and another as an NHL'er, a trade should be made so that the player goes to the team where he has more use and the other team receives more useful assets.

Hanging onto a player who is just playing in the AHL for the duration of his career doesn't really benefit anyone.

 

[PsYcNeT]

I like how the OP never comes back to address anything in threads like these.

Should be a forum rule where if you start a thread, you have to at least try to curate it for the first 3 days it's up, or be banned.

 

[golfortennis]

Meanwhile, the league championship series this year had teams from the four largest cities in the US in them.

Well the Yankees being in the LCS had more to do with Cleveland screwing up. Or did you forget they had the most wins in the AL, and were in last year's World Series. And the KC Royals played in 2 consecutive world series the years prior to that. Or were they big money teams then? And the Nationals were very close to being in there instead of the Cubs.

The poster was correct: baseball has it close to right. The Yankees don't want to pay luxury tax all the time, the Dodgers seem to be willing to do so, but other teams have been able to have success.

 

[Riptide]

The cap is there for both. Parity isn’t defined by championships or even the playoffs. It’s defined by competitiveness during the regular season. The league as a whole is more competitive now than ever.

Disagree. It's there for cost certainty. It has a by product, that it helps promote parity - but that was never the intended reason behind why owners wanted it. And I agree that you cannot define parity by who wins the cup, but parity wasn't why the NHL wanted a salary cap. It was a big talking point of theirs in the PR campaign during the lockout, but it wasn't what was driving the decision for a cap - that was always the money. It was also why the NHL refused to go with a hard cap, and wanted the cap tied to revenues - even though it would have been in their favor to have a hard cap at 39m for 4-7 years.

 

[Chet Manley]

Others have mentioned that there is nothing stopping the startup of a competing league as a rebuttal to collusion/monopoly. But that could be said of any monopoly situation The question I have for the business forum; will it come to a point where pro teams should be considered a monopoly in cities where they have full control of the arena? It's rare for cities to allow/fund competing arenas so a team having full control of it essentially shuts the door to competing sports and entertainment. Example the Edmonton Rush(NLL) had to move after being essentially shut out of Rodger's Place as Katz took over full control (as opposed to Northlands running the old building). Probably just semantics as the WHA had no ins to existing NHL citings, way before the trend of teams being given full control and revenues Just a thought that it's looking like an even bigger case of monopoly then in the past 40 years or so which could have implications down the road.

 

[Tawnos]

Disagree. It's there for cost certainty. It has a by product, that it helps promote parity - but that was never the intended reason behind why owners wanted it. And I agree that you cannot define parity by who wins the cup, but parity wasn't why the NHL wanted a salary cap. It was a big talking point of theirs in the PR campaign during the lockout, but it wasn't what was driving the decision for a cap - that was always the money. It was also why the NHL refused to go with a hard cap, and wanted the cap tied to revenues - even though it would have been in their favor to have a hard cap at 39m for 4-7 years.

Cost certainty alone does not guarantee financial solvency, particularly for small market teams, because it’s leaguewide cost certainty and not on an individual team basis. Cost certainty combined with being competitive on the ice goes a lot further. Again, I’m not denying that cost certainty was a major factor. But the need for parity was a major factor too. It wasn’t just a talking point.

 

[The Macho King]

Others have mentioned that there is nothing stopping the startup of a competing league as a rebuttal to collusion/monopoly. But that could be said of any monopoly situation The question I have for the business forum; will it come to a point where pro teams should be considered a monopoly in cities where they have full control of the arena? It's rare for cities to allow/fund competing arenas so a team having full control of it essentially shuts the door to competing sports and entertainment. Example the Edmonton Rush(NLL) had to move after being essentially shut out of Rodger's Place as Katz took over full control (as opposed to Northlands running the old building). Probably just semantics as the WHA had no ins to existing NHL citings, way before the trend of teams being given full control and revenues Just a thought that it's looking like an even bigger case of monopoly then in the past 40 years or so which could have implications down the road.

My guess is there will be a Noerr-Pennington exemption to things like arena-exclusivity (assuming they do this by lobbying local governments).