CBA Proposal: New Take on Luxury Tax

Discussion in 'Fugu's Business of Hockey Forum' started by Guest, Dec 29, 2004.

Thread Status:
Not open for further replies.
View Users: View Users
  1. Guest

    Guest Registered User

    Joined:
    Feb 12, 2003
    Messages:
    5,564
    Likes Received:
    1
    Trophy Points:
    141
    OK, it might not be a new take because I am sure that someone has mentioned this before, but I'll throw it out there to get eaten up once again.

    What if you do a Luxury Tax where the threshold is based on the salaries of the players rather than the team payroll? For example, a dollar for dollar Luxury Tax for every player on payroll that is over the league average.

    Example in tax generated based on current contracts with no rollbacks accounted for:

    TOR $33,400,000.00
    PHI $30,230,791.00
    DET $28,725,000.00
    PHO $7,250,000.00
    EDM $4,500,000.00
    NAS $4,100,000.00
    CAL $3,650,000.00

    Just a sampling of some of the teams. Then you'd take all the tax generated and redistribute it across all the teams.

    I'll follow with a post later that shows where every team would stand, with some solid numbers for re-distribution.
     
    Last edited: Dec 29, 2004
  2. Guest

    Guest Registered User

    Joined:
    Feb 12, 2003
    Messages:
    5,564
    Likes Received:
    1
    Trophy Points:
    141
    OK, here are the numbers if you evenly distributed the luxury tax generated among all the teams. The column at the end on the far right is the amount of money that teams would either be getting free and clear from the tax, or the dent in the budget the teams would end up with for going over the tax threshold.

    Code:
    Team		Luxury Tax Generated	Luxury Tax Received	Paid/Received		Payroll
    TOR		$33,400,000		$13,173,000		-$20,227,000		$61,900,000 
    DAL		$30,420,000		$13,173,000		-$17,247,000		$52,943,000 
    PHI 		$30,230,000		$13,173,000		-$17,057,000		$59,855,000 
    DET 		$28,725,000		$13,173,000		-$15,552,000		$55,725,000 
    NJ		$27,647,000		$13,173,000		-$14,474,000		$60,047,000 
    COL		$24,115,000		$13,173,000		-$10,942,000		$51,540,000 
    NYR		$23,050,000		$13,173,000		-$9,877,000		$40,377,000 
    STL		$21,700,000		$13,173,000		-$8,527,000		$44,430,000 
    VAN		$16,833,000		$13,173,000		-$3,660,000		$44,824,000 
    NYI		$16,400,000		$13,173,000		-$3,227,000		$37,628,000 
    ANA		$15,925,000		$13,173,000		-$2,752,000		$37,150,000 
    OTT		$14,380,000		$13,173,000		-$1,207,000		$38,778,000 
    TB		$13,500,000		$13,173,000		-$327,000		$42,187,000 
    BOS		$13,000,000		$13,173,000		$173,000		$29,233,000 
    MTL		$12,600,000		$13,173,000		$573,000		$35,900,000 
    LA		$9,600,000		$13,173,000		$3,573,000		$31,475,000 
    BUF		$7,950,000		$13,173,000		$5,223,000		$36,490,000 
    PHO 		$7,250,000		$13,173,000		$5,923,000		$40,330,000 
    CAR		$6,900,000		$13,173,000		$6,273,000		$27,088,000 
    SJ		$6,475,000		$13,173,000		$6,698,000		$30,485,000 
    CBJ		$5,600,000		$13,173,000		$7,573,000		$27,161,000 
    WAS		$4,850,000		$13,173,000		$8,323,000		$13,789,000 
    EDM 		$4,500,000		$13,173,000		$8,673,000		$30,160,000 
    CHI		$4,200,000		$13,173,000		$8,973,000		$23,080,000 
    NAS 		$4,100,000		$13,173,000		$9,073,000		$24,475,000 
    MIN		$3,700,000		$13,173,000		$9,473,000		$27,475,000 
    CAL 		$3,650,000		$13,173,000		$9,523,000		$29,680,000 
    ATL		$2,500,000		$13,173,000		$10,673,000		$24,315,000 
    PIT		$1,200,000		$13,173,000		$11,973,000		$14,113,000 
    FLA		$800,000			$13,173,000		$12,373,000		$16,532,000 
    
     
    Last edited: Dec 30, 2004
  3. Brent Burns Beard

    Brent Burns Beard DontTouchMyDonskoi!

    Joined:
    Feb 27, 2002
    Messages:
    5,150
    Likes Received:
    81
    Trophy Points:
    146
    the owners view this as glorified revenue sharing and are not interested in it. this is why Bettman says a luxury tax will not work.

    it will not work because:

    a) for it to work the way the owners want it, it needs to be a high tax #
    BUT
    b) anything that transfers significant amounts of money from large revenue teams to small revenue teams is not something the owners will consider.

    so, when the owners say they are doing this to save EDM and CRL, you can see they are lying. If they were interested in saving CRL and EDM, they would have shared revenue with them years ago. This lockout is to increase franchise values and nothing else.

    dr
     
  4. Guest

    Guest Registered User

    Joined:
    Feb 12, 2003
    Messages:
    5,564
    Likes Received:
    1
    Trophy Points:
    141
    I definitely get your point DR, but I still think it's a system that could drag down the salaries. I guess the issue isn't trying to find a system to drag down salaries though, because there are a lot of them out there.

    How does a salary cap improve franchise values though? That is what the owners are trying for, and forgive me for not thinking about it more, but I question how it would improve franchise values across the league. Especially when you consider the owners that really want the salary cap are the poorer teams. New York, Detroit, or Toronto would gladly play with a salary cap I would think, and it would improve their franchise values the most because they generate so much money as it is. How does a salary cap increase the franchise value for Carolina, Phoenix, Anaheim, and Florida?
     
  5. Luxury taxes do not work. They do not curb spending, they increase spending and encourage escalation. Now I am sure you're going to say, how would they increase spending and encourage escalation? Simple, it exposes a revenue stream that teams have not had in the past and allows the agents to continue to exploit it. We'll work off your example.

    The Maple Leafs are spending $70 million on salaries already. They are not going to be prevented from spending that much in the future by a tax. They will just adjust their salary structure accordingly and factor the fines into that number. They will still continue to spend $70 million a season. Conversely Edmonton is struggling to hit the luxury tax level and will not approach it without help. So with the redistribution of money the Oilers then have a very public $8 million more to spend. The agents know this, the PA knows this and the fans know this. This "free" money needs to be spent and the expectation will be for all of it to be spent immediately. This will force the lower paying teams into a position where they will spend to the tax level. The big spenders will continue to spend. The small spenders will spend money that isn't theirs. All of this will take place and the average salary and the tax level will continue to climb, further allowing the big spenders to spend more and the players making more and more money, hand over fist.

    This is why the players are willing to discuss a salary cap system, something they were dead set against in 1994. What the players were afraid of a decade ago has proven to be a very good strategy in continuing escalation in sports. This why the players will publicly push for status quo with the actual target being a tax based system. Tax systems work only for the players because it is a guaranteed reveue stream that makes it impossible for the poor teams to cry poor. The money is there on the books and everyone knows it is there. It does not place controls on spending. It encourages spending.
     
  6. Guest

    Guest Registered User

    Joined:
    Feb 12, 2003
    Messages:
    5,564
    Likes Received:
    1
    Trophy Points:
    141
    Using your example, Toronto will continue to spend $70 million, only $35 million of that will be going to tax leaving $35 million to spend on payroll. It doesn't add up, so that means that Toronto would infact have to cut it's player budget, meaning that players would get paid less on Toronto as a whole, whether they be veterans or rookies. This will allow Edmonton to have that extra money to compete with as well. You end up lowering the power of Toronto and giving more power to Edmonton, and yet somehow that does "nothing". I think you are believing the line of Gary Bettman too much on the luxury tax. A luxury tax with teeth will definitely drag salaries, and is flexible enough to allow for growth.

    I don't care what you say, if a team like Florida is losing money, they are not going to take their luxury tax benefits and just put it right back into the team. Instead, they will choose to break even, and if they choose not to, then it is their own fault for going bankrupt.

    You say all of this, and can you tell me your examples are exactly what is happening in the NBA with their luxury tax? I don't follow the NBA at all, so fill me in, because I haven't heard such blatant holes in their CBA as you have pointed out. Don't tell me that the NBA and NHL are different, because that is obvious, but their differences don't matter based on the examples you've given.
     
  7. Toronto is going to get hit $35 million in tax on a supposed $35 million salary structure? I'm out. You don't even understand the math of what YOU presented. There is no use discussing something with someone who does not even understand their own numbers.

    :banghead:
     
  8. Brent Burns Beard

    Brent Burns Beard DontTouchMyDonskoi!

    Joined:
    Feb 27, 2002
    Messages:
    5,150
    Likes Received:
    81
    Trophy Points:
    146

    well, it might not for those teams. but htose teams get a salary cap to keep player costs down. TOR and NYR etc like a cap because isntead of showing a 75m profit, TOR can now post a 100m profit, which makes the team value that much higher.

    this is why all teams are onside for a cap. TOR will not support a luxury tax that transfers 20m of their current 75m profit to ANA and CRL.

    dr
     
  9. Guest

    Guest Registered User

    Joined:
    Feb 12, 2003
    Messages:
    5,564
    Likes Received:
    1
    Trophy Points:
    141
    OK, I can understand that, as I said the salary cap doesn't do anything to help the poorer teams and their franchise value. I also understand that revenue sharing is nothing the NHL owners want anything to do with, unfortunately.

    I swear DR, you are making me hate the NHL more and more every day that I have a discussion with you LOL.
     
  10. nyr7andcounting

    nyr7andcounting Registered User

    Joined:
    Feb 24, 2004
    Messages:
    1,919
    Likes Received:
    0
    Trophy Points:
    0
    Big market teams increase their values because the amount of profit they could make is off the charts. A team like the Rangers would have the profits they have now, but they wouldn't have to worry about spending most of it, because they wouldn't be able to with the cap. They wouldn't have to worry about spending money on stars in order to justify the high price of going to a Rangers game.

    Teams like Carolina, Phoenix and Anaheim would be on a level playing field with the big markets. Buyers would be attracted because when buying a small market team in a capped league you don't have to worry about how you are going to pay enough players to compete with big markets and where that money is going to come from.

    If I'm the Panthers, I know that my current revenue is now enough to compete with big market teams on the ice. Because of the ability to compete with big markets my fan support and intrest increase automatically. I wouldn't even have to do anything in order to increase revenues, but even if I did than my profit would be off the charts.

    Thus, the reason for the lockout. Big market owners go along with it because they could make ridiculous profits because they wouldn't have to spend much on their teams, only $35 or so million. And, when they go to sell their team it would definetly have more value than it did when they brought it. Small market owners go along with it because they instantly improve their team with a cap, thus instantly increasing profits. And, when they go to sell their team they would be able to sell it for sooooooo much more than they brought it for.
     
  11. Guest

    Guest Registered User

    Joined:
    Feb 12, 2003
    Messages:
    5,564
    Likes Received:
    1
    Trophy Points:
    141
    Obviously you've got the issues as I said it didn't add up, but you are trying to prove something to someone (yourself).

    Exactly my point. If Toronto has this $35 million in tax, they aren't going to pay $105 million for their payroll ($70 million for players + $35 million for tax — are you following me?). The end result is that Toronto will still spend $70 million, but they will end up with a player payroll closer to $50 million and a tax of $20 million. I guess that leads to salary escalation in your economics class.

    If you take the 100% of the pie, and you trim off a portion from one area (Toronto) and add it to another area (Edmonton), then of course Edmonton is going to spend the surplus.

    Definition of surplus: Anything that is extra, in excess, or leftover.

    So how does Toronto spending less on it's roster, Edmonton being able to spend more on their roster, and teams like Pittsburgh getting financial relief to survive hurt the league?
     
  12. nyr7andcounting

    nyr7andcounting Registered User

    Joined:
    Feb 24, 2004
    Messages:
    1,919
    Likes Received:
    0
    Trophy Points:
    0
    Point is the pie itself is too big. It doesn't matter much how 100% is split up, but if salaries are still at $1.3 billion like they are now than it won't work, no matter what system your using or what your numbers are. A luxury tax is great as far as improving revenue of small markets, but when those small markets then spend that money it doesn't do much for the league as a whole as far as % of revenue going to players.
     
  13. Lets put it to you in terms you can understand.

    You and your buddies regularly go to Valle Luna for margaritas after work. Now you don't make that much money at the place you work at, so you can't have as many margaritas as your much better paid buddies. They spend $50 a night and you spend $20. You can't even afford to buy yourself an entree and drink with the boys, so when everyone orders so you hog out on chips, salsa and refried bean dip. Every now and then your buddies buy you drinks or dinner because they know how you don't make as much as them.

    All of a sudden you get a raise. You continue going with your buddies to Valle Luna but they stop buying you drinks and food. They even start expecting you to buy every now and then. See, they know you have the money now and they expect you to pull your own weight. They expect you to start spending in the same fashion, especially when it comes to your favorite entrees. You have the cash, pay up. You no longer have that excuse of being poor, everyone knows you have the money.

    Now how does that affect the average bill? Well your buddies have always spent $50 when they go and drink. They will continue to spend this as they are used to this. But you now have more money to spend. You start kicking in more money as your spending habits increase. The average bill goes up. There is more guaranteed money out there with the expectation that those whop have been spend thrift in the past (you) start spending and behaving like the rest of your buddies. Its very simple and is evident in MLB and in the NBA.

    As a matter of fact, here's an article that states what a disaster the tax has been in MLB and how it has not controlled salaries and has only fueled the growth.

    http://sports.espn.go.com/mlb/columns/story?id=1952374
     
  14. YellHockey*

    YellHockey* Guest

    The tax has fueled the growth?

    From the article,"Why, after moderate spending the last couple winters, have teams begun to spend again?

    "Because the revenues are there,'' suggests a top agent matter-of-factly. "There's a lot of money being made in this game, from new stadium deals to media deals. It's been said before, but it's true: if they didn't have it, they wouldn't spend it.'
    '"

    Revenues go up and salaries go up. Baseball is hot again and salaries are demonstrating that.
     
  15. Guest

    Guest Registered User

    Joined:
    Feb 12, 2003
    Messages:
    5,564
    Likes Received:
    1
    Trophy Points:
    141
    I think a lot of people just don't understand that a luxury tax would slow down the spending of the teams who spend the most, and when they do spend, it would give assistance to the poorer teams. A luxury tax would put a deterrent to excessive spending. If teams decide to continue to spend, with heavier luxury tax fines, and if teams decide to spend their aid rather than prevent bankruptcy, then is there any system that can solve this problem?

    If you prevent Toronto from spending $70 million on it's roster, and you do the same of 5-10 other teams in the league, you are driving down the overall average salary. This has a trickle down effect that flows to the poorer teams who will be in more direct competition with their richer brothers because they will have the competitive marketplace as well as aid from luxury taxes.

    I'm not pro-owner or pro-player by a long shot, but to accept one side of the argument undeniably without looking at each side objectively is just plain foolish.
     
  16. Guest

    Guest Registered User

    Joined:
    Feb 12, 2003
    Messages:
    5,564
    Likes Received:
    1
    Trophy Points:
    141
    I'm not offering anything as lame as the MLB tax, and once again you dodge my question about the NBA. Tell me how it is not working in the NBA, who still don't have as tough of a tax as I am proposing.

    You can't compare my proposals to that of the NHLPA's, because they are far too weak by comparison. A 20% tax that starts at a high threshold versus a 100% tax that starts at the average salary for the players. Very different world.

    Valle Luna huh? A local who doesn't go to the local boards, or a former Phoenician?
     

  17. To me, this is the solution.
    It means real partnership.
    Owners keep talking about a partnership, yet they're forcing the players to take all the pain.
    The owners need to start acting like it's a partnership. This would do it.
    1. It would force rich teams to help out.
    2. It would act as a salary drag.

    So the players and the owners are making sacrifices for the health of the league.
     

  18. You mind backing up your statement with facts, or at least rationale?
    If the leafs $70 Million payroll now costs them $100 million, you can bet it will bring down salaries.
    It's going to bring spending up among smaller teams, perhaps, who benefit from the tax.
    But the bigger teams are going to be FAR less likely to spend big money on big name free agents if a LT makes a $6Million a year deal cost $12M.
    It's common sense, dude.
     
  19. baloney.
    The guys who used to spend aren't going to spend as much when they're paying 100 percent on the same margarita.
    You're conveniently ignoring that fact.
     
  20. Guest

    Guest Registered User

    Joined:
    Feb 12, 2003
    Messages:
    5,564
    Likes Received:
    1
    Trophy Points:
    141
    If you compare my proposal to a Luxury Tax set at $1 for $1 with a $40 million threshold, you end up with $114,158,000 generated in luxury tax. Compare that to the $395,200,000 of luxury tax generated under my proposal. Under a $40 million threshold, $1 for $1, each team in the league would receive $3.8 million is aid, or $6 million if you only aided teams who didn't exceed the threshold. Under my proposal, each team would receive $13,173,000 in aid. Under the $40 million standard luxury tax proposal, there would currently be 11 teams over the threshold, while my proposal would have 13 teams in the red due to tax.

    These stats show that my proposal is in fact more severe than a $40 million luxury tax of $1 for $1 taxing. A $40 million luxury tax threshold would be the equivalent of my proposal's threshold being all salaries $4.3 million and over, so it shows how ineffective a luxury tax is in that way. However, under my proposal, it's far different. Which cannot even be compared to the systems the NBA or MLB have in place.

    If you look at my proposal, you would also see that it's not entirely payroll discriminatory. Teams with moderate payrolls of $37-38 million like NYI, ANA, and OTT are in the red due to the tax, while teams with $36-40 million payroll like BUF & PHO are receiving aid. While Ottawa is not one of the major perpetrators of wrong doing in the league, both Anaheim and the New York Islanders have been responsible for contracts that top loaded their payroll and left less money for the average players. Ottawa's success has led their payroll to rise, and this is part of the natural cycle of winning and paying for it. Teams like Detroit or Colorado just take it a step further by paying longer than most teams are able to, and teams like Toronto & New York are just able to spend despite their success.

    Of course this does end up as a form of revenue sharing, which is a brick wall with the owners.
     
    Last edited: Dec 30, 2004
  21. Well its obvious the NBA has major problems with their tax/soft cap. All but one team are over it. Doesn't that show how it is not working? Of course they have a decent TV contract that allows for overages, something the NHL has yet to find.

    What I don't like about your proposal is that it is based on a number pulled out of the air. I don't like those as they do not address the pressing concern for the owners and that is some level of cost certainty. What happens if revenues dry up? The owners are left with an unmanagable number. That doesn't work. I strongly believe that the number needs to be tied to revenues and should be tied to a cap. There also has to be mechanisms in place to prevent the agents from exploiting loop holes in the system. I think a hard cap tied to revenues is a must for the good of the league and the health of the game. To me its a win win. As revenues increase so do salaries. I have no idea why the players do not want to get into a relationship where they are guaranteed of seeing salary increases when revenues increase?

    I am no for a luxury tax system. I think they are flawed and promote spending rather than placing restraints on it. Here's an example picked from another board that I thought makes a lot of sense and could be sellable from both points of view. It doesn't hurt the really big spenders until they get into the stratosphere of spending, insures that there is a minimum spending level and shares the funds in a fair manner.

    Luxury tax system:

    For this to work I think that salaries must be tied to revenues. I figure a fair (and generous) amount of money to go to salaries is the 60% of revenues. Based on that estimate a pool of $1.2 billion is allocated to salaries. That number is then divided by the 30 teams, giving each team a 2% base of revenues to spend on salaries before reaching a penalty. A league minimum of 1.75% ($30 million) is instated for teams to attain. Anything that goes over the 2% is assessed penalties in the following. Anything below the 1.75% mark forfeits the team's right to share in the tax pool.

    Percentage (all figures based on league revenues of $2 billion)

    2-2.125% ($40-45 million)... 50% tax
    2.125-2.25% ($45-50 million)... 75% tax
    2.25-2.375% ($50-55 million)... 100% tax
    2.375-2.5% ($55-60 million)... 150% tax
    2.5-2.625% ($60-65 million)... 200% tax
    2.625-2.75% ($65-70 million)... 300% tax
    2.75 plus ($70 million plus)... 400%

    Only those teams that fall in the $30-40 million salary range will get a share of the tax dollars. I think this provides a good sliding scale to define salaries and leaves a fair amount on the table for the players to deal with. There will be teams that will spend like drunken sailors, but that's okay as the tax will keep then under control.

    Control Mechanisms:

    Arbitration... the goal is to make holdouts the thing of the past. At any time either party may ask for binding arbitration. The arbitration panel will be made up of three representatives from the NHLPA, three representatives from the NHL clubs (GMs or owners), one representative from the NHL, one representative from the player agent pool (not the agent in question naturally), and a random representative from pool agreed to at the start of the season representing indpendent industry. Each side will present their best offer to the panel. The panel will decide on which of the two proposals is fair. All arbitration decisions are for two seasons with a player option.

    Qualification and Buyouts... a players base contract offer is dependent on his performance compared with the previous year. If a player has surpassed the previous season's performance criteria (to be determined) a players rights may be retained with a 100% qualification. If a player does not attain this criteria his rights may be retained with a 75% qualification. A player may be bought out with with an amount equaling 50% of his present year contract, plus 25% for each year remaining, not exceeding the amount of the greatest yearly value of the contract

    eg. Joe Blow has three years remaining on his contract at $2, 2.5 and $3 million. The buyout would be 50% of $2 million plus 25% of 2.5 plus 25% of $3 million, with a maximum payout being $3 million. So Joe Blow's payout would be $2.09375 million, saving the team over $5 million and allowing the player to pursue employment elsewhere as an unrestricted free agent.

    Rookie Salaries... all rookie salaries are based on a sliding scale, dependent on which band of selection you are from. Signing and performance bonuses can equal no greater than the amount of the band you are selected in. All contracts are for three years.

    1-5... $900K base
    5-10... $850K base
    11-20... $800K base
    21-30... $750K base
    31-60... $500K base
    61-90... $400K base
    91-120... $350K base
    121 and under... $300K base

    Unrestricted Free Agency... is reduced to age 30 or after 10 years of service to your NHL club (a year counting as minimum 21 games).

    Contract length... minimum contract length is two years. No maximum.

    Salary roll back... none. They earned their money, they can keep it.


    There are some things I would add as well, but they may be tougher to sell than this idea. At least it is a step in the direction of a compromise on both sides.

    Yes, I am a local, but not a Coyotes fan. I prefer to remain neutral and enjoy the game. I like to watch some teams more than others, but I have never developed a kinship with the Coyotes.
     
  22. Guest

    Guest Registered User

    Joined:
    Feb 12, 2003
    Messages:
    5,564
    Likes Received:
    1
    Trophy Points:
    141
    The number didn't come out of thin air, I said to take the league average salary and to put the tax on all salaries over the league average. That is a standardized process that even taxes the poorest of teams, however it really exposes the teams who spend the most money as a whole and singles them out directly for what the NHL is targeting. The NHL wants to create a level playing field for teams to compete for the services of players to create a more competitive league in terms of talent. It's been a big part of the reason you've seen the league sit on it's hands about obstruction with glossy actions towards it that never were meant to put an end to the clutching and grabbing. The obstruction was what was balancing the league because the poorer teams could load up on plummers to hold back the skilled players. In the process, it's slowed the game down as well. The owners want some form of competitive balance, so why not have it based on skill instead.

    Like I said, I don't know the NBA, so I don't know what's going on there. Thank you for finally addressing that in your arguement. Again, I am proposing something totally different than the NBA and MLB's luxury tax systems, and this is only one component of a larger CBA.

    Under my proposal the following teams would be in the red after paying luxury taxes: TOR, DAL, PHI, DET, NJ, COL, NYR, STL, VAN, NYI, ANA, OTT, TB. Compare that to the teams that would pay on a simple luxury tax based on a $40 million threshold, one that only generates 1/4 the taxes, these teams would be taxed: TOR, DAL, PHI, DET, NJ, COL, NYR, STL, VAN, TB, and PHO. Not a great difference in terms of the teams incriminated, but a huge difference in the tax revenue generated.

    It gives the power to the poorer teams in the league rather than the richer teams in the league. The poorer teams in the league have the opportunity to re-invest this funding into the team through their payroll or through other methods like minor league development or signings. The teams receiving aid may also choose to get out of the red financially with the aid from the league. The power for these poorer teams comes from whether or not they choose to spend the money or not, because if they do, they will likely increase the average salary, reducing the aid they receive. However, if they decide to spend the money moderately, it will create a consistent flow at the average salary. Instead of the richer teams determining the standard, the poorer teams will be.

    This is based on you wanting to keep the poorer teams in the scheme of things, because if you don't then you can go other directions with contractions, or other proposals like tierred leagues. As the league exists today, I find this a very reasonable proposal for this aspect of a CBA.
     
  23. nyr7andcounting

    nyr7andcounting Registered User

    Joined:
    Feb 24, 2004
    Messages:
    1,919
    Likes Received:
    0
    Trophy Points:
    0
    I am not saying a luxury tax couldn't work, but it could only work in certain situations. The situation you proposed I don't think it could work.

    As evident in baseball, theres really just no telling who will spend what. Even if the tax was high would Toronto still spend $70 million? It's possible. If the Rangers ever put a semblence of a team on the ice and made the playoffs, would they spend $70 million the next year? You bet. Now the problem with this is that although money is getting kicked back to smaller markets, it's so much money that those markets are spending more on salaries as well. In the case where big markets spend a lot despite the tax, a luxury tax system is the worst you could do for a league that already has salaries that are out of control, because for the little that big markets cut back on spending, small markets are now spending that much more.

    The most important thing you need to do in order to have a luxury tax system that works is put a hard cap $10-12 million after the luxury tax threshold. This will prevent the biggest markets from spending, despite the tax, and continuing to drive salaries up (there spending also gives small markets enough to drive up salaries and it becomes a cycle which inflates salaries even more). With the hard cap beyond the luxury tax, big spenders will still spend enough to put money in the pockets of small markets, but it won't be so much that the overall salary level increases. Let's say the luxury tax starts at $40 million and the cap is somewhere around $50 million, you have to figure that the big markets teams are going to spend to the cap anyway, because the luxury tax is something they are willing to pay. So, all you have to do is put the cap a certain amount beyond the luxury tax where the projected money going to small markets through the tax is not too much that it'll drive up salaries, but enough that it will get them out of the red. This is a situation where a luxury tax would be affective.
     
  24. Brent Burns Beard

    Brent Burns Beard DontTouchMyDonskoi!

    Joined:
    Feb 27, 2002
    Messages:
    5,150
    Likes Received:
    81
    Trophy Points:
    146
    no they dont... if they wanted to do this, they could acheive it with solutions that dont require negotiating with the players.

    they could significatnly share revenue, they could implemenet a more restrictive waiver draft, they could give different weight to each teams schedules (like in the NFL), they could ...

    but they dont explore any of those options because at the end of the day, they dont care about a competitive league and in fact recognize the NHL is already very competitive.

    sorry, this is all about making the Ontario Teachers Fund Merchant Bank (and the other corporate owners) a huge profit.

    DR
     
  25. Sorry, this is all about insuring that Chris Pronger and Bill Guerin continue getting paid $10 million a year and leaving the door open for them, and players like them, to get paid even more, no matter what financial shape the league is in.
     
Thread Status:
Not open for further replies.

Share This Page

monitoring_string = "358c248ada348a047a4b9bb27a146148"