Friedman: Cap to stay at around 81.5 million the next 3 years

[Golden_Jet]

You are literally the only one I’ve seen proclaiming teams are broke and can’t pay their players. I’ve yet to see a single hockey pundit mention it.

Well yesterday I heard there was a team that will lose 40 million this year, they didn’t say who, but right after he talked about how poorly Arizona was doing

 

[Legion34]

You are literally the only one I’ve seen proclaiming teams are broke and can’t pay their players. I’ve yet to see a single hockey pundit mention it.

Really????You aren’t paying attention then

Friedman said teams are looking at pandemic language and out clauses in contracts. He said many teams are going to follow the buffalo model and are looking into it on the 31 thoughts after the buffalo scenario.

mckenzie was just on the radio saying calling it a devastating financial crash.

buffalo fired everyone up to the hotdog guy


Billion dollar businesses are folding all over the states.

Teams that were already losing money are now are looking at half full arenas. If any....

Why do you think all this is happening? They are freezing the cap for what? Fun?

the idea that teams who have to lay off the hotdog guy are going to fork out 40 million in cap to players in a pandemic to play in front of empty arenas is kinda silly.

 

[Halla]

Leafs with $4.5M in cap space, if I am doing the math correctly. Maybe Kapanen or Hyman are sent packing? Dermott, Barrie, Ceci are all FAs. Gauthier, too. Other teams going to get railed, too.

Sandin and Rosen wont make the team. so thats 6 mil space with 9forwards/4d/2g

Mikheyev (RFA), Spezza (RFA), Barabanov (.925k)
Lehkonen (.925k) and Dermott (RFA)


If spezza takes 750k, they have 3.6 mil for dermott and mikheyev.

they dont have to move anyone unless they make a move for a dman

also the names you mentioned arent getting moved. the guys that could be moved for cap space would be johnsson/kerfoot

 

[biotk]

Really????You aren’t paying attention then

Friedman said teams are looking at pandemic language and out clauses in contracts. He said many teams are going to follow the buffalo model and are looking into it on the 31 thoughts after the buffalo scenario.

mckenzie was just on the radio saying calling it a devastating financial crash.

buffalo fired everyone up to the hotdog guy


Billion dollar businesses are folding all over the states.

Teams that were already losing money are now are looking at half full arenas. If any....

Why do you think all this is happening? They are freezing the cap for what? Fun?

the idea that teams who have to lay off the hotdog guy are going to fork out 40 million in cap to players in a pandemic to play in front of empty arenas is kinda silly.

There are two separate sets of issues here.

The first issue is the financial issues that many teams will have and how they deal with them. That results in the hotdog guy getting canned.

The second issue is the financial issues that the players are having. That results in the salary cap being frozen.

 

[Halla]

This really hurts teams like the leafs that signed RFA’s with the belief the cap would rise. Good for teams Signing RFA’s now. Bad for teams with cap problems we’re gonna see a lot of good assets go for cheap to get rid of cap space.

basically 2/3 of the league. canucks arent exactly sitting pretty either. 13 mil space with a 16man roster and Markstrom,Toffoli and Tanev as UFA and Gaudette,Virtanen and Stecher RFA

 

[Junohockeyfan]

basically 2/3 of the league. canucks arent exactly sitting pretty either. 13 mil space with a 16man roster and Markstrom,Toffoli and Tanev as UFA and Gaudette,Virtanen and Stecher RFA

As a Habs fan, i love it! Bergevin is gonna weaponize that capspace!

 

[biotk]

Sandin and Rosen wont make the team. so thats 6 mil space with 9forwards/4d/2g

Mikheyev (RFA), Spezza (RFA), Barabanov (.925k)
Lehkonen (.925k) and Dermott (RFA)


If spezza takes 750k, they have 3.6 mil for dermott and mikheyev.

they dont have to move anyone unless they make a move for a dman

also the names you mentioned arent getting moved. the guys that could be moved for cap space would be johnsson/kerfoot

If the Leafs are going into the next season with no cap space (and none coming for the next couple seasons), no player like Clifford and 6 D who consist of Rielly, Muzzin, Dermott, Holl, Lehtonen and either Marincin or Liljegren, they would be better to just blow it up as far as I am concerned.

 

[Dache]

Sandin and Rosen wont make the team. so thats 6 mil space with 9forwards/4d/2g

Mikheyev (RFA), Spezza (RFA), Barabanov (.925k)
Lehkonen (.925k) and Dermott (RFA)


If spezza takes 750k, they have 3.6 mil for dermott and mikheyev.

they dont have to move anyone unless they make a move for a dman

also the names you mentioned arent getting moved. the guys that could be moved for cap space would be johnsson/kerfoot

Doesn’t that still leave you with 5 d?

 

[biotk]

Doesn’t that still leave you with 5 d?

I assume he slotted either Liljegren or Marincin in there as he said Sandin and Rosen would not be on the team, and had Lehtonen and Dermott filling in for the 5 and 6 spots.

 

[Dache]

I assume he slotted either Liljegren or Marincin in there as he said Sandin and Rosen would not be on the team, and had Lehtonen and Dermott filling in for the 5 and 6 spots.

Ah ok. That doesn’t change the $ portion then?

 

[biotk]

Ah ok. That doesn’t change the $ portion then?

I think there was still 6M available with 9/4/2. It's just a badly losing roster.

 

[Dache]

I think there was still 6M available with 9/4/2. It's just a badly losing roster.

Well they’re a good team, definitely would help to have more cash to fill the d out, but if they get some career years from some guys they can win.

 

[Legion34]

As a Habs fan, i love it! Bergevin is gonna weaponize that capspace!

Yep. This time for sure!

 

[Legion34]

There are two separate sets of issues here.

The first issue is the financial issues that many teams will have and how they deal with them. That results in the hotdog guy getting canned.

The second issue is the financial issues that the players are having. That results in the salary cap being frozen.

agreed. They are separate issues. But they both combine to Determine the landscape of the cap.

Many are suggesting that teams with space will be spending Big money. But the point is they can’t. Many teams lose money every year. With revenue sharing and no restrictions on seating and an economic boom in the state’s.

We are what a decade removed from Mario being forced to take shares of the team.... Altanta folding and Arizona being owned by the league?

this is the worst financial crisis in forever with mass unemployment and a virus that specifically makes gate revenues incredibly hard.

the idea that teams with cap space will just pay tons of money to half empty stadiums is nuts.

 

[North Cole]

It doesn't. You simply don't understand it. You have done a whole of talking based on knowing nothing about the system I outlined and being completely wrong about every single thing you have said about it.

I'm glad you think so highly of me, you seem to be a lot better at passive aggressively insulting people then you do at properly articulating your idea, since you seem to reply to everyone with the same tone, while chastising them for not getting it.

This is not what happens at all. It works out the same. You can easily model it.
They wouldn't be. Currently when a player signs an 8 year contract they estimate what the cap is going to be in 8 years and factor that in. So idea under the current system that their cap hit is too high for year one which is tough on the team and then too low in the final year which is good for the team. The middle years (4 and 5 in this case) are where the cap hit is designed to be just right if their future cap projections end up being correct. In the unit system players and teams would be negotiating for that sweet spot to occur across contract length.

Currently if a player signed a contract for 6 years at 6.43M in 2013 then it was 10% of the cap in 2013, but by the time the cap expired in the summer of 2019 that 6.43 was now only 7.9% of the cap. Over the 6 years it averaged 9% of the cap, but while when the player signed that amount of money was 10% of the cap, a player signing the exact same contract in 2019 would be signing for only 7.9% of the cap - a 21% decrease in pay. That is why the cap needs to continually increase with revenue - which it has by 21% in this case - so that it can make up for that shortfall - which in this case is about 1.7M.

Under my system the same player would sign a contract for 6 years at 9% of the cap in 2013. When that contract ends 9% is freed up. It works out exactly the same. In the first case the player signed for 10% of the cap in 2013 and when the contract ended it freed up 7.9% of the cap, which was supplemented by a 21% increase in the cap over those 6 years. They both result in the exact same thing, but with small differences - in the current system the player costs more against the cap early in the contract and less against cap in the final years. In my system they cost the same % against the cap in all years. In the current system the GM needs to hope that the cap goes up as much as projected or else they have over-paid the player based on their expected value. If the cap goes up more than expected then they have under-paid the player based on expected value. In my system whether they over or under pay a player is based solely on the teams' ability to assess the player. In the current system UFAs and RFAs have their pay prospects based largely on how much the cap is raised that summer.

But where is the actual human negotiation coming out in your math? In all of your posts you seem to saying if player signs for "X" in year one under the current method, its this %. But if they sign for Y in my method, it will be this %. Why would they sign for "Y" and not "X" under your method? Simply citing, 8-year forecasting of the cap is not based in reality...the NHL holds large chunks of salary as escrow simply because of how large the forecasting error is year over year related to HRR/team spending, let alone 8 years out. I think you are massively overrating the impact that "estimating" the cap 8 years from now, has on contract values. If an agent came into a GM's office and asked for 21% over market value because the cap historically went up 21%, he would scorned, and rightfully so.

On top of that you're assuming every single player/agent/GM models out the cap the same way to arrive at this magic 9%, which would absolutely not be the case. In hindsight it so happened the AAV% was 9, given that the cap went up 21%, but that is very very far from a guarantee.

Of course a player costs more, it's the time value of money, but it almost never works out to having underpaid the player because player salaries almost always sit above the midpoint. Therefore, even with a cap increase, escrow increases and players pay back money. If you could convince teams to spend 70M instead of 80m, then you would have more of a point.

This is completely irrelevant. Under the current system GMs spend to the cap. Their contracts leaving the system are worth less than they were when they were signed because the cap has gone up. So usually a cap team might have 16% of their cap coming free based on contracts that were worth 20% of the cap at the time they were signed. They make up for that additional 20% through the cap rising over the length of those contracts. Under my system the same cap team would have the 1*% of their cap coming free based on contracts that were worth 18% of the cap at the time they were signed. There is no difference.

The issue with the bold is that you totally ignore the appreciation of the cap as incremental cost savings. The contracts coming off are smaller, but added with the inflation of the cap = larger buying power.

There is a difference, because you are inflating the value of contracts coming off the books, while also inflating contracts staying on the books - the balance of which is almost always pointed toward contracts on the books - therefore, losing net buying power.

Using 2017-2019 numbers:
Cap increase from 75M to 79.5M, assuming a team salary of 95%, with 8m/12% of contracts coming off the books. These contracts are from a 65m cap so were signed for 6.5M under your method. Gave them an extra 1.5m of actual $ value to spot you your idea they factor in future cap. This means when signed they were 12.3% of the cap (8m/65m) and are now coming off as 10.67%, which is less than the 12% under your method (which I still think is not reasonable, and assumes a lot).

Current method
71.25M (95% of cap) - 8M = 63.25M of allocated cap - 79.5M ceiling for next season = 16.25M of room going into next season.

Your method
71.25M - 12% = 62.7M allocated cap value. However the cap is 79.5, and we have 83% of our contracts remaining, so the allocated value = 79.5*0.83% (95%-12%) = 65.985M allocated cap - 79.5M ceiling for next season = 13.515M of room.

So your method accrues a loss of 2.735M of cap room over the current method, as it is taken up by the appreciation of contracts still on the books. This should almost always be true where a team is keeping excess of 75% of it's contracts on the books year over year. Lower contract turnover means that more of the cap appreciation is eaten by contracts the team still has, and will almost always offset the real $ value difference. Unless you are working with some unrealistic/wonky contract values, where X and Y above are significantly far apart, or the team has structured itself to significant amounts of contracts all at once. However, if the team does do that, then it means the prior years they have fewer contracts coming off the books, which goes back to what I was saying about killing the UFA market. Holding 90% of your contracts for four years and then dropping 50% at once, means you have no money to sign anyone during the four years of that situation, which is about to become a TML situation.

That 4.5M of cap that appeared as HRR increased from 2017-18 to 2018-19, is a discretionary spend, it can be spent or not. In your method, whatever contracts are remaining automatically adjust back to 83% of 79.5M, which is the new cap.

Which is ironic considering you posted this earlier:

Again that short fall will be punted to future players.
Simple greed on a massive scale by multi-millionaires screwing over those who are younger.

In this case, the players eat up the cap appreciation and also screw over younger players/UFA. Since the team has less to spend on RFA's etc.

Other than the fact that you are manually adjusting signed contracts based on assumptions about how and why they are structured (which is unsubstantiated), I don't see what I'm missing here. I would side with someone like Mouser on this, who is one of the more knowledgeable cap people on the board, somewhat insulting that you tell him right off he is inventing fantasies.

 

[biotk]

the NHL holds large chunks of salary as escrow simply because of how large the forecasting error is year over year related to HRR/team spending

No this is not at all why the NHL holds large chunks of salary as escrow. The reason why the NHL holds large chunks of escrow is because the salary cap is formulated by taking the league revenue from the year before and then dividing that league revenue by the number of teams (31) and then setting that number as the middle mark between the salary cap ceiling and floor. So they take that average and add 15% to it to get the cap. Then they are supposed to, as per the CBA, add a 5% escalator. It is done that way because it is exactly the way the players wanted it. Because the teams on average spend far more than the middle mark between the cap and the floor - in fact every team this year exceeded the middle by at least 2 million it results in significant escrow. This has zero to do with a lack of forecasting, which all sides can do very well. It is the result of the formula the players wanted.

The issue with the bold is that you totally ignore the appreciation of the cap as incremental cost savings. The contracts coming off are smaller, but added with the inflation of the cap = larger buying power.

There is a difference, because you are inflating the value of contracts coming off the books, while also inflating contracts staying on the books - the balance of which is almost always pointed toward contracts on the books - therefore, losing net buying power.

Using 2017-2019 numbers:
Cap increase from 75M to 79.5M, assuming a team salary of 95%, with 8m/12% of contracts coming off the books. These contracts are from a 65m cap so were signed for 6.5M under your method. Gave them an extra 1.5m of actual $ value to spot you your idea they factor in future cap. This means when signed they were 12.3% of the cap (8m/65m) and are now coming off as 10.67%, which is less than the 12% under your method (which I still think is not reasonable, and assumes a lot).

Current method
71.25M (95% of cap) - 8M = 63.25M of allocated cap - 79.5M ceiling for next season = 16.25M of room going into next season.

Your method
71.25M - 12% = 62.7M allocated cap value. However the cap is 79.5, and we have 83% of our contracts remaining, so the allocated value = 79.5*0.83% (95%-12%) = 65.985M allocated cap - 79.5M ceiling for next season = 13.515M of room.

So your method accrues a loss of 2.735M of cap room over the current method, as it is taken up by the appreciation of contracts still on the books.

It doesn't. There is a reason why you picked the year that the cap increased by 6% - because it is high outlier - by a lot. As I already said the problem the current system is that if you become a UFA during a season when the cap increases more than usual then you get a big payout. If you become a UFA during an off-season when the cap increases less than usual you get a small payout. The cap has increased by 3.4% a year over the past 5 seasons (not counting this summer). That gets rid of almost the entire difference if the percentage increase is between 3 -4% - but it is not supposed to get rid of the entire difference, as new contracts are signed for slightly lower cap% under my method (with the exception of situations where there is no, or almost no cap growth, but under those circumstances, my method leaves slightly more room for those than the current system).

 

[North Cole]

No this is not at all why the NHL holds large chunks of salary as escrow. The reason why the NHL holds large chunks of escrow is because the salary cap is formulated by taking the league revenue from the year before and then dividing that league revenue by the number of teams (31) and then setting that number as the middle mark between the salary cap ceiling and floor. So they take that average and add 15% to it to get the cap. Then they are supposed to, as per the CBA, add a 5% escalator. It is done that way because it is exactly the way the players wanted it. Because the teams on average spend far more than the middle mark between the cap and the floor - in fact every team this year exceeded the middle by at least 2 million it results in significant escrow. This has zero to do with a lack of forecasting, which all sides can do very well. It is the result of the formula the players wanted.



It doesn't. There is a reason why you picked the year that the cap increased by 6% - because it is high outlier - by a lot. As I already said the problem the current system is that if you become a UFA during a season when the cap increases more than usual then you get a big payout. If you become a UFA during an off-season when the cap increases less than usual you get a small payout. The cap has increased by 3.4% a year over the past 5 seasons (not counting this summer). That gets rid of almost the entire difference if the percentage increase is between 3 -4% - but it is not supposed to get rid of the entire difference, as new contracts are signed for slightly lower cap% under my method (with the exception of situations where there is no, or almost no cap growth, but under those circumstances, my method leaves slightly more room for those than the current system).

What do you mean it doesn't? I just showed you it does using actual cap figures. It really doesn't matter how good you think anyone is at forecasting, anything over 24 months is basically a shot in the dark. There's tremendous forecast risk trying to prove and convince someone this is what you should be worth in 8 years.

I addressed that it was also in part due to teams being above the middle point, which your system doesn't solve, so why are complicating it more than necessary to give UFA players an extra 2-3% of income each year, assuming that you even get that much, which you haven't proven with numbers. If your system fails by 3m when I'm being generous with made up contract values coming off the books, when the cap rises 6%, I don't think you can say for certain you will get that big a payout for UFA in average years. Cost-benefit doesn't line up if you are getting max an extra 1-2M for UFA each year. Just going to get more Lucic's...

I could do it with a non-outlier year and reduce the amount of the make believe contracts we are using for the calculations. This whole system is based on the assumption that a player signing for X% on fixed contract will sing for Y% on a floating contract. Escrow already makes their contracts floating, why do they want more variance? You cannot prove that players will forgo signing a 7 million dollar 8% of cap contract for a 7% cap contract just because it's forecast to ride with the cap each year. Why take that 1% loss? Players want to maximize the PV of their money, and you have not at all explained why they wouldn't still just take an 8% contract and then let it ride with the cap - other than repeating "my method". Deferring salary in today's $ for future salary is contrary to the present value of money, which is fairly critical in finance.

You also never address the cash flow uncertainty with running your business and dealing with unknown expenses each year. It's already fairly fluid, there is no reason for the NHL and the owners to want more fluidity. There is also tax planning issues related to players that sign their contracts using personal holding companies - as there are some hefty penalties for not distributing funds to the shareholders. Funds for which we are now adding more complexity.

Majority of players want more revenue certainty, don't see how this passes the PA.

 

[biotk]

I addressed that it was also in part due to teams being above the middle point, which your system doesn't solve

In my system it is completely irrelevant if teams are above the middle point. Players get a share of their teams' cap. The 50% portion of the player's share of the HRR is divided as per the players portion of the all of the players share throughout the league. That is exactly what happens now except players pay escrow and then based on their share of the player's portion of the HRR they receive some of it back.

so why are complicating it more than necessary to give UFA players an extra 2-3% of income each year

My system does not have that. The current system absolutely should.

4 years down the road when players who were badly squeezed as UFAs and RFAs this off season and next year and the year after - when those players start wondering why, after their salaries got screwed over in UFA or RFA which has cost them a massive percentage of their potential earnings, is that they are now paying out the nose to refund the NHL/teams for the shortages that incurred in 2020/21 and 2021/22 they are going to realize that it was in order to save the players who had signed massive contracts in the couple years before covid from paying their share. They are going to be some pissed.

If your system fails by 3m when I'm being generous with made up contract values coming off the books, when the cap rises 6%

My system doesn't fail. It is basic math. You would know that if you created a proper model instead of using a couple isolated numbers that provide an outlier - an outlier that I had already specifically said would happen and was the reason why the current system is poor.

The rest of what you say is not worth responding to. Everyone knows that players who sign long contracts had been doing so with the calculation that the cap would rise. Now that we cap is not rising....guess what...they won't be able to use that argument for long contracts, and will now be wanting to sign short contracts until the cap starts rising again when they will again be arguing that their contract is based on a rising cap. Everyone knows that. If you don't, I can't help you.

 

[biotk]

Well they’re a good team, definitely would help to have more cash to fill the d out, but if they get some career years from some guys they can win.

Unlikely. The team is too unbalanced to win anything. They need a Clifford type player or they get walked all over. They need D in their lineup who can clear the front of the net and who can break the cycle. They also need D in their lineup who can help bring up-and-coming D like Sandin and Liljegren into the lineup. What's the thought right now? Rielly, Muzzin, Dermott and Holl playing in the top-4 and Lehtonen, a small puck-moving D with zero NHL games experience - playing with one of Sandin or Liljegren? Hopefully they trade Sandin before they ruin his development. The team should be looking to trade Marner during the off-season.

 

[Dache]

Unlikely. The team is too unbalanced to win anything. They need a Clifford type player or they get walked all over. They need D in their lineup who can clear the front of the net and who can break the cycle. They also need D in their lineup who can help bring up-and-coming D like Sandin and Liljegren into the lineup. What's the thought right now? Rielly, Muzzin, Dermott and Holl playing in the top-4 and Lehtonen, a small puck-moving D with zero NHL games experience - playing with one of Sandin or Liljegren? Hopefully they trade Sandin before they ruin his development. The team should be looking to trade Marner during the off-season.

Oh I won’t argue that there should be concerns, but if the forwards can all keep improving and they get another gear from some young D, maybe Rielly returns to last years form. It’s a lot of ifs, but it’s possible

 

[Deadly Dogma]

Yep. This time for sure!

weaponize that cap space by trading for Skinner lol

 

[milehigh11]

Avs are in a perfect situation. One of the youngest teams already. A top 2 prospect pool. In win now mode. And has no cap issues for the next 3 years