Allowing teams to trade cap room?

Discussion in 'Fugu's Business of Hockey Forum' started by speeds, Jan 23, 2005.

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  1. speeds

    speeds Registered User

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    The following all assumes a hard cap is adopted, perhaps quite a bit to assume.

    On the one hand this would seem to fly in the face of the purpose of the cap.

    But this kind of thing might well be helpful to individual teams and shouldn't make much of a differnce to the players.

    - there hasn't been much of an explanation as to how a hard cap of, say, 35 mil, helps a team that's losing money even with a 28 mil payroll. Perhaps if that team is allowed to trade away 7 mil in cap room, to a team close to the limit who would like to go above it, that team might be better off financially, as well as would the team acquiring the cap room. This also might be advantageous to the player's in that it could stop a team from having to trade a guy just to get under the cap. From a dollar standpoint it doesn't hurt the union; why would they care where the dolars come from so long as they are spent.

    This would kind of work as a luxury tax but instead of spending money to go above the cap, you'd have to spend trade assets. ie, PIT trades 5 mil in cap room to TOR in exchange for TOR's 2005 1st rounder. Certainly helps PIT, helps TOR keep the players they want, helps the players not have to arbitrarily move from TOR to whoever has available cap room

    If you don't want this kind of thing to get too far out of hand (whatever that might mean) you could always impose limits on it - perhaps say a team can take on or trade away no more than 20% of the minimum cap value, and as a protection for the union the excess cap money must be spent by the acquiring team, or some high percentage of it.
     
  2. That might be an interesting idea. I think that the cap space is only for one season and cannot be for multiple seasons. Like the example you use, Toronto acquires $5 million in cap space from Pittsburgh for the Leaf's first round pick, that transaction is only for this season and cannot be made for multiple seasons. I think that would work very well, especially come trade deadline time (which I think should be moved up to the middle of January). But at the termination of the season all cap space reverts back to its base number, what ever that is.
     
  3. speeds

    speeds Registered User

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    I think you might be able to stretch it to the current season as well as next seson, but perhaps reduce it to something like (just numbers off the top of my head):

    20% of minimum cap in current year tradeable, 10% of next season, none past that.

    That might make it a bit easier for teams to budget. If the NHL doesn't want to get into that kind of stuation though, even allowing trading of some amount of cap room in just the current year could potentially help everyone out.
     
  4. I wouldn't extend it at all. I think that part of the appeal, at least to me, is seeing all teams forced into making hard decisions and living with them. I would love to see a team have to make a very calculated risk to dump an asset like a first round draft pick to bump their space, and then have to make an even more difficult decision as to who they cut loose the next season to stay under the cap. Fans love to second guess management about their decision making, well this opens up an entirely new avenue of second guessing. I think it would be extremely interesting and would make the trade deadline that much more fun as well. Now you're definitely talking about rent-a-players and the onus for these guys to perform is transfered to all players. Once a deal like this is made, everyone is playing for their job next year.
     
  5. X8oD

    X8oD Registered User

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    if a cap at 35 mil doesnt draw player saleries down enough that you arent able to ice a competetive, Money Drawing team and you are still paying only 28 million a season. You and any team like that either needs to be sold or Contracted.

    because if you cant turn a profit with a Cap that low, you dont deserve a hockey team. You would be, hands down, the worst Owner\GM combo in the history of Sports.
     
  6. ScottyBowman

    ScottyBowman Registered User

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    Amen. I'm still trying to figure out how a team like Carolina who is allegedly losing $19 mil a year on a $35 mil payroll is going to be better off with a cap.
     
  7. nyr7andcounting

    nyr7andcounting Registered User

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    - what would stop the richest teams from trading money to the smaller market teams for their cap space. Wouldn't the rich still have an advantage?

    - what would stop a few teams from having a lot of cap space and not spending it, thus decreasing the % of revenue going to the players?
     
  8. speeds

    speeds Registered User

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    the answer to both could be rules set up to stop just what you speak of.

    With regards to the first point, maybe that's not even a bad solution. So a rich team sends PIT 3 mil in exchange for 3 mil in cap room they wouldn't have wanted to use anyways. win/win. Saves them a net 6 mil to structure their team as they want. Great for them, and presumably good for the team acquiring the cap room since they enter teh deal voluntarily as well.

    point #2 - you could force the team acquiring the cap money to spend it, and the team that is trading away cap room would need to be at least at the min cap level minus whatever room they've traded.

    Let's pretend it's a min cap at 32, max is 36. Pit trades COL 4 mil in cap room (for whatever, cash, draft picks, a player)

    Each team was previous allowed to spend somewhere between 32 and 36 mil, for a range of 64-72 mil going to the players.

    Now Pit MUST spend 28 mil to the players, and can go up to 32 should they so desire. And COL MUST spend 36 mil, but can go up to 40 mil should they desire as well. Still the same guaranteed 64 mil going to the players, still the same max of 72 mil, no difference to them (collectively, anyways).
     
  9. chriss_co

    chriss_co Registered User

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    Trading cap space is intriguing... i think that to make this plausible revenues sharing must be a major part of the CBA. Thats how teams like Carolina will be able to operate at a min level and not lose money. It will also make trading cap space less of a luxory if teams operating at low team salaries still cant turn a profit.

    The players have to accept a strong team salary cap AND the owners have to accept a large percentage revenue sharing plan. Thats how this CBA needs to be fixed.
     
  10. MeatTornado

    MeatTornado I was born ready

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    So at the trade deadline, a team wanting to go through a huge firesale, can trade off all of their real players and use their insanely cheap minor leaguers and prospects, then trade off like 25 million in salary cap room aswell? Interesting idea i guess, but might not work as well as anticipated, as it only gives firesaling teams more reason to trade off all of their players.
     
  11. In theory I like it but it's not like the struggling team would get a franchise player with the pick they're awarded from such a highly competative team.
     
  12. I don't think the slary cap was designed to help teams like the Canes. The way I see it is that it's supposed to keep salaries locked, maybe lowering it a little.
    The owners and nhlpa need to get their head out their arses and try being a little creative.
     
  13. Coffey77

    Coffey77 Registered User

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    Or better yet what about a team that's losing a lot of money with a payroll around $20 million. How is spending $10 million more going to help them?

    Don't know. With a cap that team would have a better chance at winning and therefore should get more fans that way. However, that's the thing, a better chance. A team like Carolina could still lose a lot of games (and not get many fans) even with teams that are weakened by a cap.
     
  14. PecaFan

    PecaFan Registered User

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    Foamy on the Canucks newsgroup brought up this "Kyoto" proposal, and I kind of like it actually. It's yet another variable that allows managers to work the system, to do what's best for their team.

    And it does it in a way that's not too inflationary, like cap exceptions can be like basketball, etc.

    A team needs three million in cap room for a couple of years to make that Cup run they want, so they trade for it. It helps both sides, giving six million dollars to a lesser team, in essence revenue sharing.

    I'd make it for limited terms, two or three years tops. If you're concerned about some teams always trading the space away and constantly being a low budget team, then make some rules about how often you could do it, etc.

    I wouldn't make any rules about how teams used the cash. If a team needs to use the money to pay bills to stop from losing money, they should be able to do that.

    The one concern is that the extra cap is used to overpay, and again drive up salaries across the league. Perhaps bought space could only be used on UFA's, or something like that.
     
  15. me2

    me2 Calling out the crap

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    There is only so much money. Its a fixed sized bucket. If someone is overpaying, someone is underpaying. If there is an overpayment and it stuffs up arbitration, then some other player group is going to have to get a lower share. What I suspect would happen is that the union and players will recognise overpayments and not try to exploit them like they do now because of the side effects. Screwing over owners is different from screwing over other players.

    Arbitrators would work it out pretty quickly, especially if teams started walking away from their rulings.
     
    Last edited: Jan 23, 2005
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