did the NHL grossly miscalculate?

Discussion in 'Fugu's Business of Hockey Forum' started by canucks666, Aug 17, 2005.

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  1. canucks666

    canucks666 Registered User

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    Something a lot of people don't know is that the cap isn't 39 million dollars.

    The cap is somewhere between 30-35 million (somebody tell me the exact figure so i don't look like a tard) THis was calculated based on the figure of 54% of the "predicted" total league revenue, divided by 30 teams.

    It's just that this cap has flexibility - and teams are allowed to spend something like 4-5 million dollars above the cap (up to 39), and the same amount below it. That sets the minimum and the maximum payroll.

    But the assumption behind this CBA seemed to have been that over 30 teams the payrolls will average to the mid-point. Some teams will spend close to the maximum. Some will spend close to the minimum and it will all average out.

    But that's not how it seems to happen. As far as I see it only <5 teams are actually planning on spending close to the minimum. Every other team has decided that 39 is the cap and are spending close to it. And the salaries that the market established seem to be following the same trend. SURE a lot of teams are saying they plan to be a few milion dollars under the cap once it's all said and done but they're still all over the midpoint!

    Once you sum up the total salaries for all 30 teams it seems like it's much larger than the 54% of total league revenue - that is even IF the league meets their expectations which some say are kind of optimistic.

    Then what happens? Do the players get screwed? Do the owners? Or will they both find a way to screw us fans again...
     
  2. MojoJojo

    MojoJojo Registered User

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    The owners have only themselves to blame.
     
  3. ehc73

    ehc73 Registered User

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    That's what the escrow account is for. Players will have to give back money.
    Owners just look foolish because they figure the cap will do away with stupid contracts. You just have to look at Malik ($2.5 M per) and Malakhov ($3.6 M per) to see that stupid contracts haven't gone away.
     
  4. canucks666

    canucks666 Registered User

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    when you say "the players will have to give money back" what does this entail?

    i'm assuming some equal percentage from EVERY player in the NHL?
     
  5. Egil

    Egil Registered User

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    A % of player salaries (between 0 and 15%) will be placed into an escrow acount. The escrow % is based on a 4 times a season meeting looking at projected revenues and projected player costs. At the end of the season, actual revenue and actual player costs are calculated. The escrow acount pays back the owners until the 54% number is reached. The cap is set such that if every team spent to the cap the max escrow amount of 15% would go to the owners.

    In other words, the leage is GUARANTEED to spend no more than 54% on player costs, no matter how many stupid contracts are handed out.
     
  6. canucks666

    canucks666 Registered User

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    thank you!
     
  7. SDBondra

    SDBondra Registered User

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    The owners stand to benefit from overpaying. They'll be able to 1) recoup money from the escrow account. 2) Decrease the cap next year (and rollback salaries, too right?). 3) Use this to negotiate the next CBA so that it's even more in their favor.

    I didn't read the CBA - I don't really plan on it. But am I right on number 2? If they go over the 54% don't they lower the cap and roll back salaries next year?
     
  8. SJeasy

    SJeasy Registered User

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    No rollback. Buyouts, inability to sign RFAs, etc. will be what happens. Previous contract $ stay the same. GMs have to adjust. Revenues decrease, cap goes down (if decrease is slight, cap can go up). Next years midpoint equals .54 x (this years revenue plus 5%). Cap equals midpoint plus 8 mil.
     
  9. Crazy_Ike

    Crazy_Ike Cookin' with fire.

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    IIRC that 15% was false pre-CBA information and there is no upper limit on the escrow.
     
  10. Crazy_Ike

    Crazy_Ike Cookin' with fire.

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    This is flat out wrong.

    The 39 million cap was set on predicted revenues of this season but it won't change for THIS season if those revenues are off. Therefore it IS a cap of 39 million. The cap changes according to the revenues of the season *before* it after this.

    Teams are allowed to go 10% above the cap until the opening day of the season, at which time they have to be under the cap (again, 39 million) or forfeit games (an extremely improbable scenario).

    At the end of the year, if salaries do in fact go over 54% of *actual* revenue (not the predicted revenue being used to set the salary cap this season), then the money is returned via the escrow, which has no maximum limit (there is no 15% clause). In the event that revenues are above the predictions and player salaries are under 54%, there's a mechanism in the CBA to give the players the difference to bring it back to 54%, though this possibility doesn't seem to be being explored by the media much.

    The cap will then be moved next offseason according to the revenues of this season.
     
  11. thenextone

    thenextone Registered User

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    remember when all sorts of Pro PA writers (Strachan) and posters here laughed at Bettman's notion that the cap would act as a magnet?

    Of course when GMs see $39M cap and all sorts of free agents available they will think the best way to maximize payroll is to spend to the limit.
     
  12. GKJ

    GKJ Global Moderator

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    It will only act as a magent for the teams that can afford to spend $39M. If teams don't have the money, they're not going to spend money. Some of the teams spending money are just ones who were lying saying they could barely afford to spend into the 20's who wanted a $31M cap. They were all crying they were poor, and now they're giving the money to the players anyways, so who was right and who was wrong?


    I don't see Washington, Minnesota, Buffalo and a few other teams going balls to the wall signing UFA's.
     
  13. nyrmessier011

    nyrmessier011 Registered User

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    don't you mean, the owners are GUARANTEED a profit, something no other business guarantees it's owner(s).
     
  14. nyrmessier011

    nyrmessier011 Registered User

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    you ass, of course a 39 million cap will act as a magnet, it's so freaking low. Bettman said that about a 49 million cap, which there is no way would act as a magnet and no way all 30 teams would come close to.
     
  15. bcrt2000

    bcrt2000 Registered User

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    cap is based on revenues, not profits, so no, #2 won't happen due to overpaying
     
  16. mr gib

    mr gib Registered User

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    when the gm's screw up the player's give the money back - pretty fool proof - oh yeah - the rich team's the pay the extra ride for the dead weight - great deal -
     
  17. AM

    AM Registered User

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    no

    They will be accountable for bad contracts now.

    Because they are accountable, the expectation would be that there would be less.
     
  18. AM

    AM Registered User

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    nope

    the 54% is based on revenues.

    Not over spending.
     
  19. AM

    AM Registered User

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    there are

    more driving forces to get to a 39 cap then to approach 39 when others are approaching 80.

    Thats what a magnet means.

    Dont fight it.
     
  20. GKJ

    GKJ Global Moderator

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    fight what? You may be right but so am I. Let's face the facts. Many teams lied about exactly how badly this cap was needed. The reality is that teh $47M cap rumored back in February was very plausable.


    Where did the Oilers and Blackhawks get all this money they said they didn't have from?
     
  21. mr gib

    mr gib Registered User

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    from the money the top ten team's don't spend
     
  22. AM

    AM Registered User

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    its obvious....

    you never understood why there was a lockout and why a new CBA was needed.

    Where did they get the money? From their bankaccounts.

    Why are they spending now(not like the Oilers didnt spend but say for Chicago)? Because now someone cant just keep on bidding them up(so teams with league average revenues can actually buy some talent).

    Now lets say the cap was at 47million.... this equals a huge loss in parity.

    Also with 54% being the true capped number, the players get no extra money.

    That would be lose-lose.
     
  23. AM

    AM Registered User

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    actually

    there is a Chicago rule in the CBA which makes them inelidgeable for handouts.
     
  24. mr gib

    mr gib Registered User

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    chicago dosen't qualify for revenue sharing? - hmmm - have to look that up

    stay tooned
     
  25. Timmy

    Timmy Registered User

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    Based on the size of the market, as measured by TV households...
     
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