Why does the NHLPA want a Luxury tax system

Discussion in 'The Business of Hockey' started by RLC, Jan 29, 2005.

Thread Status:
Not open for further replies.
  1. RLC

    RLC Registered User

    Joined:
    Aug 7, 2004
    Messages:
    622
    Likes Received:
    0
    Trophy Points:
    0
    Occupation:
    Retired VP-Telco
    Location:
    Montreal
    I believe that the basic reason the players want a luxury tax system is rather simple. They think that by agreeing to a Luxury tax system and also allowing a few more concessions they would come off as trying to help the NHL situation but if anything, and I mean ANYTHING goes wrong with the luxury tax system of the course of the CBA, again it's the players who will benifit from the tax system.
    Baseball has a tax system and every week we hear that some player got huge contract. The top teams still overpay and the players are just rakeing it in. In baseball the same big market teams are in the world series very year. There is virtually no chance for small market teams, to the point that the bottom teams have become simply development teams for the players. If baseball was not the USA national sport and part of their culture this league would collaps due to it's injustice.
    Football has a cap BUT again, a huge TV contract is funding the success and most players are happy.

    For the NHL, their is no huge TV deal. so what are the chances that the players will a happy lot. A luxury tax system would give the NHLPA the best shot at keeping the contracts high. If a luxury tax system works like a charm then the NHLPA looks good and the players will rant that they saved the NHL. If the luxury tax system fails then the players will continue to get huge contracts so they really have no downside in a luxury tax system.

    Does all this sound like the players are trying to FIX HOCKEY ?
    Does all this sound like the players are concerned for the small market teams and parity ?
    Does all this sould like the players know the teams will continue to outbid eachother for top players therefore raising the bar for all players allong the way, regardless of what each team can realy afford.
    Does it sound like the players know that if a cap is installed the gravy train is over untill a huge TV contract changes the dynamics ?

    Hockey is Canada's national sport, it is NOT the USA national sport. The average American loves to back a WINNER not an "also ran". It is not nessessary that a US team win the cup BUT having a real chance to knock-off a rival and go into the second or even the third round "IS" winning something, and ratings "will" go up.
    With more parity, each team will afford their own "STAR" allowing non-hockey nuts to root for something on their club.

    A cap system will give the NHL the quickest road the build towards a big TV contract, more parity, better overall health of hockey, and yes the players are being asked to re-adjust as if to invest in hockey over the course of the next CBA.
    Less " ME,ME,ME" and more "US,US,US"

    Yes, some clubs will be raking it in with a cap vs a luxury tax but I doubt any team will fold or move with a cap. If it's a luxury tax and the tax does "not work perfectly" what will the NHL look like in 6-7 years ? The current players or at least most of them would have milked the system for all it's worth before leaving hockey and what kind of "scorched earth behind them".

    It's not that I am pro owner. IT'S that I am PRO HOCKEY.
    A fast way to get to parity coupled with rule changes to open up the game to more
    fast paced hockey with more " on the edge of your seat" scoring, will drive attendence all over the place and maybe just maybe get that long awaited TV BIG CONTRACT that will make EVERYONE HAPPY.
     
  2. EricBowser

    EricBowser Registered User

    Joined:
    Dec 8, 2003
    Messages:
    174
    Likes Received:
    0
    Trophy Points:
    0
    Occupation:
    Customer/Technical Support
    Location:
    Pittsburgh, PA
    Home Page:
    The cap and tax systems will work, it is up to the owners to design one of each that would address their problems and present it to the NHLPA.

    Goodenow, Saskin and Linden need a fair deal to take it to a vote and right now, neither side has created such a proposal.

    If the NHL wants to restrict salaries, they can't restrict the rights for ten or more seasons.
     
  3. LPHabsFan

    LPHabsFan Registered User

    Joined:
    Jul 14, 2003
    Messages:
    1,552
    Likes Received:
    7
    Trophy Points:
    141
    Occupation:
    Student
    Location:
    Montreal
    Home Page:
    I'm fairly certain that if the amounts for the luxury tax were steep enough, the owners would have no choice but to take a good long look at. The problem with the luxury tax that was put forth by the players in their proposals is that it was a joke. 20 cents on the dollar will not scare any team out there except for maybe like 4. That was the issue for the owners.
     
  4. Jobu

    Jobu Registered User

    Joined:
    Nov 17, 2003
    Messages:
    3,264
    Likes Received:
    0
    Trophy Points:
    94
    Location:
    Vancouver
    Home Page:
    And by the same token, players would likely accept an $80m hard cap (which, frankly, I think the owners would be best served to gun for -- say a $35-40m soft level after which luxury tax applies, and then a $65m or so hard cap; then, next time, owners can negotiate from that as it's a lot easier to make gains incrementally than all at once).
     
  5. HckyFght*

    HckyFght* Guest

    The luxury tax simply increases the financial risk to the owners and costs the players nothing. That's why the players want it...duh!

    Just remember, 54% of 2 billion is an awesome figure, but consider the possibility that they get it right for a change and the league flourishes, then 54% of, say 5 billion would include pay raises all around. Oh, excuse me, that would mean that the players would have to show up, play with some heart, and actually live up to their part of the bargain. No wonder they are being stubborn!
    -HckyFght!
     
  6. Jobu

    Jobu Registered User

    Joined:
    Nov 17, 2003
    Messages:
    3,264
    Likes Received:
    0
    Trophy Points:
    94
    Location:
    Vancouver
    Home Page:
    How does playing hard or well necessarily lead to an increase in revenues? That's virtually out of the players' control.

    A luxury tax targets the interests of owners who say they want to stop the so-called escalation of salaries (which, BTW, is totally overstated factually). What's the problem?
     
  7. barnburner

    barnburner Registered User

    Joined:
    Apr 23, 2004
    Messages:
    567
    Likes Received:
    0
    Trophy Points:
    0
    Exactly. Any luxury tax system would have to be so excessive as to really hurt even the deep pocket teams, in order for it to be effective. The thing is, that any luxury tax system that effective would effectively be a "cap" - and the players would not want any part of it if it were truly effective.
    Any system offered by the players is built around them keeping their bloated earnings.
     
  8. CarlRacki

    CarlRacki Registered User

    Joined:
    Feb 9, 2004
    Messages:
    1,438
    Likes Received:
    0
    Trophy Points:
    0
    So-called escalation? Does that mean hockey salaries really haven't escalated? Hmmm.

    The average team payroll has grown from $10 million in 1992-93 to $44 million last year. Call me crazy, but most would say a 400 percent average payroll increase would count as an "escalation."
    http://www.hockeyzoneplus.com/$maseq_e.htm

    Since the last CBA, the avergae salary has grown from $572,000 to $1.8 million. Again, is that not an escalation?
    http://www.tennessean.com/sports/predators/archives/04/02/46656226.shtml
     
  9. LPHabsFan

    LPHabsFan Registered User

    Joined:
    Jul 14, 2003
    Messages:
    1,552
    Likes Received:
    7
    Trophy Points:
    141
    Occupation:
    Student
    Location:
    Montreal
    Home Page:
    A luxury tax does absolutely nothing for pay raises and increases in the salary cap. The item that would do that would be linkage. To say in the CBA that the hard cap would be at 45 million, would mean for the entire duration of the CBA. To say that the hard cap would be at 54% of revenues would mean simply that. The cap would be at 54% of revenues. So right now at 2.3 billion in revenues, the cap would be at 38 million or so. But if the revenues increased to 2.7 billion. The simple wording of 54% instead of 45 million would mean that the hard cap would go from 38 to whatever 54% of 2.7 billion. That's the difference between a simple hard cap and linkage. If I were a player, I would be pushing for linkage rather than a simple hard cap because in a hard cap, there is no room for increases unless specified in the CBA.
     
  10. Jobu

    Jobu Registered User

    Joined:
    Nov 17, 2003
    Messages:
    3,264
    Likes Received:
    0
    Trophy Points:
    94
    Location:
    Vancouver
    Home Page:
    And in 1846 the average payroll was zero, making today's paryolls infinitely larger.

    In recent years, year-over-year increases have not been relatively significant.
     
  11. Jobu

    Jobu Registered User

    Joined:
    Nov 17, 2003
    Messages:
    3,264
    Likes Received:
    0
    Trophy Points:
    94
    Location:
    Vancouver
    Home Page:
    Revenues right now are $2.1b. When the come back, they will be significantly less than that for a long while. Why the hell would a player want a linkage unless it is upwards of 60-70%?
     
  12. nyr7andcounting

    nyr7andcounting Registered User

    Joined:
    Feb 24, 2004
    Messages:
    1,919
    Likes Received:
    0
    Trophy Points:
    0
    Revenues like that are atleast 20 years away for the NHL, and that's if everything goes perfect for the next 20 years.

    I think a linkage needs to be phased in...if the owners agreed to a luxury tax for a year or two, and the players agreed to a linkage after that once league revenues are steady again, they could get a deal and both could save face.
     
  13. The players based their luxury tax proposal on what the owners wanted after the previous CBA expired. I know this was back in like 1994 but you have to admit that the players at least attempted to listen to the concerns of the owners and tried to put together a proposal that the owners have asked for previously. And the luxury tax isn't the only thing in the player's proposal...they included a salary rollback, entry level cap and most importantly revenue sharing.

    Baseball's tax system is not totally effective at causing a drag on salaries. But that's because its just set too high for any teams other than the Yankees or Red Sox from reaching it. But that hasn't stopped small market teams from making it to the World Series and winning. The Florida Marlins won it 2 yrs ago, the Anaheim Angels won it before that...Arizona Diamondbacks won it before that. Small markets can win in a luxury tax system. But I think it's also dependent on the other features within the CBA.

    If the NHL were to propose a stiff luxury tax with a reduced rollback and significant revenue sharing and a virtual elimination of the arbitration system, the players would probably agree to it right away. If the league were smart, they would do a shorter term CBA (4 yrs) to see if it will work or if adjustments need to be made. Rome wasn't built in a day...if the plan doesn't work, you won't see the salaries escalate like they've done recently and you have a chance to get the salary cap in the next negotiations.
    Really, who's going to offer a big TV contract? ESPN has found that billiards and poker get better ratings than hockey. NBC's contract with the NHL is laughable and they probably won't ever be interested in a bigger deal. ABC or Fox probably won't offer anything better than what NBC is offering. Its just a fact of life now for the NHL...they'll never get the big pay day from a TV contract like the NFL. This has to be the first time I've seen someone use the salary cap argument to say a big TV contract is also a result. I think you'll see some disagreement with that idea.

    But there is room for the owners to find ways to produce stability without using either a salary cap or luxury tax system. Revenue sharing is vital to the current world of sports. The NHL sharing 9% of its revenue amongst its teams last season and that was mostly just its TV contract and a few other things. Both basketball & baseball share approximately 35% of gate revenue and other things. Football shares more but they have that TV contract in there's so its hard to use them to compare anything with the NHL. Point is, if the owners were seriously about fixing the problems of the whole league, real revenue sharing (not this "playoff revenues" or "we'll discuss that later" attitude) should also be at the fore front of these negotiations. Anything less than 40% of gate revenues (considering the NHL is a gate driven league this makes sense) and no cap will save teams from continuing to lose money. If teams like Florida, Nashville, etc were losing money with sub-$27 million payrolls, what is a cap going to do to really help them from continuing to lose money? Sure they may lose less money under a cap but they would probably STILL be losing money without a significant revenue sharing plan that the owners just aren't interested in.
     
  14. BLONG7

    BLONG7 Registered User

    Joined:
    Oct 30, 2002
    Messages:
    20,222
    Likes Received:
    2,001
    Trophy Points:
    231
    Location:
    Nova Scotia
    Home Page:
    The PA wants a luxury tax because they know the big spenders will still spend(Yankees,Sox,Angels,Dodgers,Mets,Cubs)The owners of MLB are cheering hard for the NHL this time around to get some form of cost certainty so that they can follow down that road the next time their CBA is up. I personally think if you were to talk to the PA members on a one on one basis, they would agree that any business needs some form of cost certainty, and then they would tell you that you can't repeat what they just told you...The group now maybe is starting to realize this and are finally trying to negotiate the best deal they can get, which is why Linden is running the show and Bob Goodenow is waiting for his pink slip...
     
  15. CarlRacki

    CarlRacki Registered User

    Joined:
    Feb 9, 2004
    Messages:
    1,438
    Likes Received:
    0
    Trophy Points:
    0
    1846? What an assinine argument.

    The undispited fact is that NHL salaries have grown far greater than NHL revenues. Not many businesses are going to last long at that pace.
     
  16. Jobu

    Jobu Registered User

    Joined:
    Nov 17, 2003
    Messages:
    3,264
    Likes Received:
    0
    Trophy Points:
    94
    Location:
    Vancouver
    Home Page:
    Of course they have; NHL salaries were depressed below market for years upon years prior to '94.
     
  17. RangerBoy

    RangerBoy TRUST THE PROCESS

    Joined:
    Mar 3, 2002
    Messages:
    38,536
    Likes Received:
    2,070
    Trophy Points:
    231
    Location:
    New York
    Home Page:
    It's a free market system at work :D
     
  18. PeterSidorkiewicz

    PeterSidorkiewicz Registered User

    Joined:
    Apr 30, 2004
    Messages:
    26,510
    Likes Received:
    2,387
    Trophy Points:
    186
    Location:
    Lansing, MI
    Why wont NHL owners of large market teams accept a meaningful revenue sharing plan to help out smaller market teams? Everyone calls the players greedy and this and that, but no one really brings this up. Is it because NHL owners of large markets dont wanna give up some of their revenue even if it could mean keeping the entire league healthy? Sounds just as bad as anything you say about the players.
     
  19. BLONG7

    BLONG7 Registered User

    Joined:
    Oct 30, 2002
    Messages:
    20,222
    Likes Received:
    2,001
    Trophy Points:
    231
    Location:
    Nova Scotia
    Home Page:
    Good point, revenue sharing has to one of the compromises on the owners side...
     
  20. CarlRacki

    CarlRacki Registered User

    Joined:
    Feb 9, 2004
    Messages:
    1,438
    Likes Received:
    0
    Trophy Points:
    0
    I agree, but it's a separate issue. Anything short of 100 percent revenue sharing (which will never happen) won't cure what ails the league if salaries are not brought more in line with revenues. Conversely, bringing salaries into line won't solve all the small-market teams woes without more revenue sharing.
     
  21. CarlRacki

    CarlRacki Registered User

    Joined:
    Feb 9, 2004
    Messages:
    1,438
    Likes Received:
    0
    Trophy Points:
    0
    I don't disagree, but the pendulum has swung far too far in the other direction over the past decade. Players deserve to be paid handsomely, but they don't deserve to suck the league's revenues dry. That's where the league's been headed since 1995.
    Again, no business can survive when its cost of labor is as much as 3/4 total revenues and growing at a rate far exceeding the rate of revenue growth.
     
  22. BLONG7

    BLONG7 Registered User

    Joined:
    Oct 30, 2002
    Messages:
    20,222
    Likes Received:
    2,001
    Trophy Points:
    231
    Location:
    Nova Scotia
    Home Page:
    Don't forget the fact that a regular joe fan and his family can barely(if at all) afford tickets to one of these games...
     
  23. RLC

    RLC Registered User

    Joined:
    Aug 7, 2004
    Messages:
    622
    Likes Received:
    0
    Trophy Points:
    0
    Occupation:
    Retired VP-Telco
    Location:
    Montreal
     
  24. kerrly

    kerrly Registered User

    Joined:
    May 16, 2004
    Messages:
    809
    Likes Received:
    0
    Trophy Points:
    64
    Location:
    Regina
    If they want a percentage like that, I don't care if it takes three years for hockey to come back. It would be almost impossible for a team to even break even having 60% of revenues going to the players.
     
  25. You see the NHL has just as much to lose from an extended lockout as the players. You think any of the owners that borrowed money from banks don't have to make payments during the lockout? Of course they do. Without revenues coming in at all, that's gonna be tough to keep doing that. And that's not going to be good for the league if teams start going bankrupt just to get a cap...and who would want to take a chance and buy an organization in the middle of stalled labor negotiations??

    The "No matter how long it takes" stance by both sides is stupid and assinine because it solves nothing. Until I start hearing about significant revenue sharing that goes along with the league's salary cap stance, I'm just more likely to not come back when this does get resolved. And the players keep talking about this themselves: 'Sources also say the players aren't pleased with the NHL's proposal on revenue sharing, citing it as not "meaningful" enough.' And the NHL is using the same tactics that the players are...its HARD CAP and that's it (well now its triple cap too). I think you'd see some more possibilities of discussion if the league just considered moving off of the hard cap and maybe towards a combination soft cap/luxury tax system with 40% gate revenue shared among all teams that met certain financial criteria (minimum team payroll, minimum attendance figures, etc).
     
Thread Status:
Not open for further replies.

Share This Page

monitoring_string = "358c248ada348a047a4b9bb27a146148"