Cap implications of a relocation fee

[ColdSteel2]

Does the 50-60M the NHL takes in go towards raising the cap? If so, this most defininitely deserves it's own thread. If not, then please move to another thread. Thanks.

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[Fugu]

No. Relocation fees, or gains on franchise sales, etc., are not considered HRR for cap consideration purposes.

 

[mouser]

Details from CBA Section 50.1(b)

(b) Notwithstanding anything to the contrary in Section 50.1(a) above, HRR
shall not include the following non-exhaustive list of revenues:

(i) Revenues from the Assignment (i.e., Waivers) of any SPC;

(ii) Revenues from the relocation or sale of any existing Club (or any
interest therein) or the grant of any new franchise;

(iii) Revenues from the operation of teams, other than NHL Clubs, that
are owned or controlled by an NHL Club or a Club Affiliated
Entity;

(iv) Revenues from the sale of Club personal property, including,
without limitation, Club furniture, fixtures, and equipment, other
than a Player's Game-Worn, practice-worn, or NHL-event worn or
used jersey and/or equipment, or the sale of any other hockeyrelated
items whose value is directly enhanced by a Player's
personality rights;

(v) Proceeds from loans or other financing transactions;

(vi) Dues, loans, advances, cash calls, or capital contributions received
by the NHL or an NHL-affiliated entity (e.g., NHL Enterprises,
LP, NHL Enterprises Canada, LP), or a Club, any other entity
owned by a Club, or any Club Affiliated Entity, from one or more
of its owners, shareholders, members or partners;

(vii) Any amounts collected by the League from any Club, Player, or
other Club personnel, including, without limitation, fines or other
moneys collected by the League as a result of any League-imposed
disciplinary action;

(viii) Revenues received by any Club in connection with Player
Compensation Cost Redistribution that is paid by the League;

(ix) Interest income;

(x) Investments in, and the proceeds from investments in, currency
contracts, equities, options, and other financial derivatives;

(xi) Insurance recoveries and expense reimbursements from insurance;

(xii) Proceeds received by a Club as a result of any legal proceeding
that are in excess of any amount representing actual lost revenues
that would otherwise be included in HRR, less all costs and
attorneys' fees incurred in connection with such proceeding;

(xiii) Revenues from the sale or leasing of real estate;

(xiv) Revenues raised for charitable organizations or purposes that have
been raised by a Club with or without Player participation, for the
charitable organizations or purposes for which revenues have been
raised prior to the effective date of this Agreement, and all other
revenues raised for charitable organizations or purposes that do not
use current Player names and likenesses or make de minimis use of
such names or likenesses (e.g., a silent auction with one or two
Player-autographed sticks);

(xv) Any thing of value received in connection with the design or
construction of a new or renovated arena or other Club facility
including, without limitation, receipt of title to or a leasehold
interest in real property or improvements, reimbursements of
expenses related to any such project, benefits from project-related
infrastructure improvements, or tax credits or abatements, so long
as such things of value or other revenues are not reimbursements
for any operating expenses of the Club;

(xvi) Any thing of value that induced or is intended to induce a Club
either to locate or to relocate (e.g., amounts paid to enable a Club
to buy-out its lease obligations or enable it to pay any relocation
fee) or remain in a particular geographic location such that it will
enable the Club or its Club Affiliated Entity to enhance categories
or revenue streams constituting HRR, so long as such things of
value or other revenues are not reimbursements for operating
expenses of the Club;

Illustration #1: A Club leases the arena for its home games from a
public authority. The lease provides that the public authority will
construct or improve luxury suites in the arena. In lieu of making
the physical improvements required by the lease, the public
authority makes specific guaranteed annual payments to the Club.
Such payments would be included in HRR.

Illustration #2: In order to induce a Club to stay in its current
location, a public authority pays the Club a lump sum payment in
the form of a loan (e.g., $20 million), part of which (e.g., $10
million) is to reimburse the Club for improvements to the locker
room, construction of a practice facility and suite improvements,
and part of which (e.g., $10 million) is paid to the Club to induce it
to stay at the location over a stated period of time (e.g., twenty (20)
years). Each year 1/20th of the loan is forgiven by the public
authority so long as the Club remains in the arena and uses the
latter portion of funds loaned for operation of the Club. Should the
team relocate, any unpaid balance of the loan must be repaid to the
public authority. The $10 million portion of the loan devoted to
physical improvements of the arena and for the practice facility is
excluded from HRR. The remaining portion of the loan is included
in HRR (at $500,000 per year) because the funds are used for
operating revenues of the Club.
and

(xvii) Reimbursements to Clubs from the Escrow Account made pursuant
to Article 50.11.

The NHLPA acknowledges that, with respect to the above list of revenues,
there may be additional and/or new revenue streams that may be excluded from HRR.
No adverse inference shall be drawn against the NHL for the non-inclusion of any
particular additional and/or new revenue streams from the list of revenue streams that are
expressly excluded from HRR.