# Any info on how the cap number is determined?

Discussion in 'Fugu's Business of Hockey Forum' started by hockeytown9321, Jul 15, 2005.

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1. ### hockeytown9321Registered User

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We know the cap number itself is arbitrary, since 54% of the projected \$1.8B revenue works out to about \$32M per team, but has there been any word on exactly how that number is determined?

2. ### Captain RonRegistered User

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Actually the supposed projection is \$1.7 billion which would work out to a \$30.6 million average per team. Someone else around here said the range is suppose to be +/- about \$8.5 million from that figure. Not entirely sure though.

3. ### NotJTRegistered User

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Here is the formula that seems to explain everything:
LR=League revenue for the previous season
NP=Negotiated percentage of league revenue the players get (as a decimal)
.54 for revenue below 2.2billion
.55 for revenue between 2.2-2.39 billion
.56 2.4 billion to 2.69 billion
.57 2.7+
GAP=Negotiated gap between floor and ceiling
17.5 million this season
16 million for next year (and beyond?)

((LR * NP)/30)+/- (GAP/2)

If the NHL gets to 2.2 billion in revenues (pre-lockout) the floor-cap would be 32.3-48.3, 2.4 billion 36.8-52.8, 2.7 billion 43.3-59.3 million

4. ### Kritter471Registered User

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That's an interesting take, and one that makes a ton of sense for both sides in this mess.

Here's another formula that seems to make sense, at least with the numbers. 54 percent of \$1.7 billion is \$30.8 million per team. Much like the players put 15 percent in escrow, the owners allow for a 15 fudge if it's high. 15 percent of \$1.7 billion is \$8.5 million a team, leaving a "high cap" of \$39.3 million, right around what's been reported at next years cap.

Under this system of math, the floor/cap at \$2.2 billion would be \$51.33 million - \$35.33 million.

It'll be really interesting to see what the formula is when this comes out.

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