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. hockeytown9321

    hockeytown9321 Registered 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 Ron

    Captain Ron Registered 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. NotJT

    NotJT Registered 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. Kritter471

    Kritter471 Registered 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.
     
  5. NotJT

    NotJT Registered User

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    I think why its not based on the escrow, the 15% escrow on revenues would increase the floor and ceiling, but that floor and ceiling is a fixed and negotiated number.

    The formula makes sense, it allows the big market teams to spend (especially as revenues grow), but combined with a % cap of total league revenues and individual player cap there are enough brakes to keep things reasonable.
     
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