mossey3535
Registered User
- Feb 7, 2011
- 13,714
- 10,598
You certainly are missing something here. Owners are spending to the cap, when the team doesn't have the money. They want their team competitive at any cost. In their minds, if they become a solid playoff team, maybe even win the cup, they'll start becoming profitable! If they don't make the playoffs, or the fans still don't come to games, then it's, "oh well, let's cry how poor we are and hammer the players in the next CBA negotiations".
In my mind, you can't just mismanage a team and then blame it on the player's salaries. I think the player's do need to give back a little, but the revenue sharing model makes sense. How is it fair that if the player's gave in, that the remaining 20 teams become profitable (despite poor management/location/performance), and the 10 already immensely profitable teams start raking in even more profit. There needs to be compromise.
But it isn't mismanagement when a team currently HAS to make the playoffs to make a small profit or break even.
Let's say you own a team and you have a mid-tier market. You are doing ok under the system, losing only in the single-digit millions (let's say $5 million a year). You spend like 85% of the cap. In the first years of the cap, the floor was like 41% of the cap. Now, at $54M floor and $70M ceiling it is more like 77% of the cap. The difference as we all know is around $16M.
So at 85% your salary cost is $59.5M. The floor is $53.9M. So you are only spending an extra $6M a year over the cap and you are actually at a pretty high %. There is only another $10.5M to actually spend.
If you were at the cap, you might be making a small $1M profit, or just breaking even. But your team would probably not be that good and you are looking at just trying to maintain your current revenues while working against fan disinterest. Meanwhile, the cap will go up every year if the league revenues grow, but your revenues might now. So the floor will force you to lose money in a year or two anyways.
So by incurring a debt of $5M a year you are probably doing just enough to make the team look ok. If you look at those financial post numbers again, this is pretty consistent with the situations of: DAL (83%, +$18M), COL (78%, +$11.8M), STL (81%, -$11.6M), CAR (86%, -$16.3M), TBL (87%, -$18.7M), NSH (82%, -$18.7M), FLA+CLB+PHX (~85%, >-$30M).
Now, your GM comes to you and says look, give me an extra $5M. We can get player X and he will help us get to the playoffs. All we have to do is frontload his contract and circumvent the CBA, for which there is no penalty to us.
What would you do? You're losing money now. If you spend less, your team is less competitive and you will inevitably lose money later as the floor continues to rise. Another $5M doesn't sound like that much of a gamble to get at least three home playoff dates in the first round if you don't get swept. At $2M a pop, that would recoup your investment right there. You're already losing money, so why not?
Heck, the ceiling is only another $5M on top of that. Why not spend to >95% of the ceiling, and swing for the fences. It's only another $10M, and you could possibly stabilize your team, make the playoffs regularly - which would hopefully increase your regular season revenues too.
Of course it's a gamble. But so is giving away freebies or launching a big marketing campaign or expanding to another location would be in a non-sports business. When so much hinges on whether the club makes the playoffs and when you are constrained to already pay a large amount in player salaries, I could see myself gambling if I owned a team.
I'm sure there are 30 NHL GM's convinced they can turn their teams around with just X more dollars or just by getting Y player. Of course, they can't guarantee that will happen, because those new players could be dogs, or the coach isn't that good, etc. These things are unpredictable, so more often than not the team fails and loses money.
Look, I'm just saying 'well don't give out these big contracts' isn't as simple as it seems because of where the floor is in relation to the ceiling and given the competitive nature of the businessmen and GMs who run the teams. Not to mention that it completely ignores how much the actual cap hits and up-front bonuses are, and the fact that the players are expected to retire far before the contracts are up.