Speculation: Cancelled Season - Cap and Revenue Sharing

[GCK]

If the season is suspended and then eventually cancelled the effects on next year’s Salary Cap and this year’s Revenue Sharing will get interesting.

My understanding is that escrow has been 14% this year. If the season was just cancelled there would no playoff HRR which would mess up this years estimates. If the players share is over 50% of HRR after escrow then the difference comes off next years cap. Players have received 85% of their salary and 100% of signing bonus.

As far as Revenue Sharing, 50% of playoff gates go into revenue sharing pool. If the playoffs get cancelled then Melnyk takes a hit.

Click to read more...

 

[swiftwin]

The cap will go down, and we won't need to spend as much next season to hit the cap floor. We already had the lowest attendance, so losing that isn't as much of a hit.

Melnyk is probably going to be the least financially impacted owner from this virus. But on the other hand, with his health problems, he'd probably be one of the most vulnerable owners from a health perspective..

 

[Micklebot]

Revenue sharing is funded from multiple sources until it hits the target amount, so if playoff revenue doesn't exist, the 1st phase (reg and preseason revenue) which normally covers 50% of the target amount and the final phase (centrally generated revenue streams like the tv contract) would have to be used exclusively.

This means in order to get our revenue sharing portion, our National tv deal revenue and other centrally generated streams would be reduced to fund the revenue redistribution. I suspect centrally generated revenue would be enough to cover that last 50% but it might mean getting significantly less revenue than we normally would from that stream (ie if everyone normally gets 10 mil from centrally generated streams, maybe this year they only get 6 so that they can pay the poor teams). It's worth noting that the target amount for redistribution is reduced because revenues won't be as high. The redistribution is 6.055% of HRR, so for every 100 mil lost by not having playoffs, the revenue sharing pool is reduced by 6 mil less.

edit: Lastly, insurance will likely cover some of the loses, not sure how that gets counted in terms of HRR, would be funny if it isn't considered as such and the owners get all the insurance related relief

 

[ReginKarlssonLehner]

We might have a wealth of options to choose from with teams potentially having to move a very good core piece they didn’t envision moving originally.

 

[JD1]

This is an unprecedented situation

If they cancel the remainder of the season

Will TV deals be honoured?
Will players get paid?
Sponsorship revenue?

It's hard to think thru and provision for the unthinkable

I doubt all these scenarios were fully considered

 

[Micklebot]

This is an unprecedented situation

If they cancel the remainder of the season

Will TV deals be honoured?
Will players get paid?
Sponsorship revenue?

It's hard to think thru and provision for the unthinkable

I doubt all these scenarios were fully considered

Players get paid 50% of HRR regardless, this might complicate how they get that, but in the end, that's all they get. If anything, I`d worry about if escrow was insufficient to capture how much they are likely to have been overpaid, in which case it apparently comes off next years cap.

TV deals probably have a clause wrt cancelled games. They'd have something in place for lockouts for sure, I suspect something similar would be here.

No clue about sponsors. Likely depends contract to contract.

 

[danielpalfredsson]

Assuming they don't vote to institute compliance buyouts, the cap going down would present a great opportunity for the Senators to acquire young NHL talent from cap strapped teams. The threat of being unable to match even a conservative offer sheet might expedite a team like Tampa to trade one of their good young RFAs before we hit whenever "July 1st" will be.

I don't know enough about the mechanics of HRR to comment on how likely the cap going down would be.

A guy like Pageau must be thanking the hockey gods that he did not bet on himself. Good for him, the timing of his extension couldn't have been better.

This could be good for teams with cap space who have players to sign. Arizona with Hall comes to mind. If they put a solid take it or leave it offer up this month after the season is presumably suspended, there is more incentive for him to take it.

 

[danielpalfredsson]

According to Lebrun, a possibility would be the NHL and NHLPA agreeing to a fake cap ceiling for next season.

Meaning, even if it is supposed to drop, they could agree to keep it the same or even raise it. I'm unsure if the lost revenue would come out of player salaries or if they'd agree to some sort of alternate measure.

The point is, there is no guarantee that the cap goes down because of this.

 

[Laus723]

The league sent out a notice asking for teams’ arena schedules till the end of July. The NBA is only looking for a 2-3 week postponement as well.

I’d be surprised if they just cancelled it. Doesn’t make sense to do that.

 

[danielpalfredsson]

The league sent out a notice asking for teams’ arena schedules till the end of July. The NBA is only looking for a 2-3 week postponement as well.

I’d be surprised if they just cancelled it. Doesn’t make sense to do that.

That hinges on coronavirus not spreading, and this thing blowing over 2-3 weeks from now.

Even if it only infects 10-20 percent of the players, how will they hold a season?

I think they have to do their due diligence and plan for a continuation because there is so much money on the line, but I'd be shocked if they were able to finish this season.

 

[DueDiligence]

The league sent out a notice asking for teams’ arena schedules till the end of July. The NBA is only looking for a 2-3 week postponement as well.

I’d be surprised if they just cancelled it. Doesn’t make sense to do that.

The problem is that every expert in the infectious disease field say it will be 3-6 months before this will go away. 2-3 weeks does nothing.

 

[JimmySpaetzle]

This is an unprecedented situation

If they cancel the remainder of the season

Will TV deals be honoured?
Will players get paid?
Sponsorship revenue?

It's hard to think thru and provision for the unthinkable

I doubt all these scenarios were fully considered

I’m sure all of these scenarios were thought about... you really think all these rich billionaires wouldn’t wonder about that?

 

[Cosmix]

I’m sure all of these scenarios were thought about... you really think all these rich billionaires wouldn’t wonder about that?

I can think of one who would not.

 

[Cosmix]

The problem is that every expert in the infectious disease field say it will be 3-6 months before this will go away. 2-3 weeks does nothing.

I suspect you are right it will take 3 to 6 months of special measures to address this virus (lower the curve) and allow the current health care system to work given its current limited capacity; but I doubt that the virus will go away.