Oi'll say!
Read this now!
I put together a basic framework for a luxury tax based system that does and does not contain linkage. I'll get to the nuts and bolts of it in a quick sec, but the desired outcome of it is threefold:
1)teams that are built the "old school" way through normal trades and the draft could spend as much money as they wanted and never pay a cent in luxury taxes or hit a cap.
2)teams can have as many free agents as they want and never pay any taxes at all as long as they stay under a soft cap
3)teams with free agents and players acquired through salary dump type deals who go over the soft cap pay astronomical fees, which go to the clubs who lost their players and not necessarily the teams with low revenue.
It is accomplished by 3 triggers in the system which multiply, but there are some zero values which will allow legit teams to operate freely without taxation. The triggers are
i) a soft cap,
ii) a tax which targets the salaries of players acquired as free agents or through *salary dumps"* and
iii) a multiplier for each player subject to taxation in ii, above
I would say that no team should receive more than 33% of their ex-players salary and the remainder of the money could go to compensating teams who lost players to teams that didn't have to pay taxes, or to my own bank account.
Here are the tables:
The Rangers team salary is $39.0M and they have only 3 players who meet the above criteria:
- a player acquired from the Pens at age 26 who currently makes an average of $2.5M per season including signing bonuses and incentives
- a player acquired from Philadelphia at age 29 making $600,000
- a free agent signed from Tampa making $7M per season
the cap trigger from i) for a team at $39M is 50% = x
the acquired player triggers are
26 yr old 10% = y
29 yr old 36% = y
ufa 50% = y
The multipliers are:
1 26 yr old 1.02
1 29 yr old 1.15
1 ufa 1.5
Total = (1.02 * 1.15 * 1.5) = 1.6065 = z
they have to pay:
-the Pens x(50%) * y(16%) * z(1.6065) * $2.5M, or a total of 50% * 16% * 1.6065 * $2.5M = $200K per year.
-Philly 50% * 36% * 1.6065 * $600K per year or $174K per year.
-Tampa 50% * 50% * 1.6065 * $7M for the player they got as a free agent, which would be $2.8M. The max Tampa could receive is 33% of their ex player's salary, or $2.333M so the rest would go into the kitty. $.4667M
Altogether the Rangers would owe $3,174M per year in luxury taxes and it would mainly go to the teams who lost players to them. Not a whole lot, but it gets real bad real fast.
EG #2:
Toronto:
2 ufa's ($2M each),
2 players acquired at 29 years of age ($2m each)
team salary is $42M.
Multipliers 1.15 * 1.15 * 1.5 * 1.5 = 2.976, lets say 3.
Percentages are (36 * 3 = 108) twice, and (50 * 3 = 150) twice
Soft cap trigger = 150%
Taxes owed
29 yr old #1 $2M * 108% * 150% = $3.24M +
29 yr old #2 $2M * 108% * 150% = $3.24M +
ufa #1 $2M * 150% * 150% = $4.5M +
ufa #2 $2M * 150% * 150% = $4.5M +
= 15.48M
The difference in salary is $3M from the rangers but the taxes are $12M more.
Theoretically it's a soft cap but if you want to buy up a NYYankee style team you'll be paying about 65 trillion in taxes.
Since this is all done with multiplication, any zero value in the equation means no taxes at all. So if your team is home grown (the PA's legitimate beef with the nhl's last proposal was that a team like the Sens would eventually have to be dismantled to remain under the hard cap) or under the soft cap you pay nothing.
* "salary dump" type trade: could be defined by the total salary of the players involved on each team in the year b4 the trade with some consideration for their salary on their next contract and/or subject to the discretion of an independant arbiter.
What do you think?
1)teams that are built the "old school" way through normal trades and the draft could spend as much money as they wanted and never pay a cent in luxury taxes or hit a cap.
2)teams can have as many free agents as they want and never pay any taxes at all as long as they stay under a soft cap
3)teams with free agents and players acquired through salary dump type deals who go over the soft cap pay astronomical fees, which go to the clubs who lost their players and not necessarily the teams with low revenue.
It is accomplished by 3 triggers in the system which multiply, but there are some zero values which will allow legit teams to operate freely without taxation. The triggers are
i) a soft cap,
ii) a tax which targets the salaries of players acquired as free agents or through *salary dumps"* and
iii) a multiplier for each player subject to taxation in ii, above
I would say that no team should receive more than 33% of their ex-players salary and the remainder of the money could go to compensating teams who lost players to teams that didn't have to pay taxes, or to my own bank account.
Here are the tables:
EG#1:i) Soft Cap Trigger:
These are the levels where the tax will actually kick in, let's say $38M for example. It's the league's max cap.
At or below $38M in team salary 0% of the taxes applicable to players in section ii) are paid
At $38.0001M the team that's over budget pays 50% of the taxes owed on all of their players who fit the criteria in section ii) below
At $40.0001M 100%
$42.0001M 150%
$44M 200%....
this percentage is shown as x in the formula below...
ii) Acquired player trigger
A team that has a player on their roster that was acquired at the age of 26 in a salry dump trade and was 31 at the start of the season would pay a 10% tax on their salary if they went over the soft cap targets
27 yr olds - 20%
28 yr olds - 30%
29 yr olds - 36%
30 yr olds - 44%
31 yr olds - 47%
UFA's 50%
this is the value for y in the formula below...
iii) Multipliers:
For each player who meets the criteria in ii) there is a multiplier
for each 26 yr old, 1.02 times the tax amounts on all players subject
27 yr old, 1.05 times
28 yr old, 1.1
29 yr old, 1.15
30 yr old, 1.25
ufa 1.5
multiply all of the multipliers for the value of z in the formula below...
The formula for figuring out the amount of luxury tax owed on each player is:
x * y * z * salary = luxury tax on each player
The Rangers team salary is $39.0M and they have only 3 players who meet the above criteria:
- a player acquired from the Pens at age 26 who currently makes an average of $2.5M per season including signing bonuses and incentives
- a player acquired from Philadelphia at age 29 making $600,000
- a free agent signed from Tampa making $7M per season
the cap trigger from i) for a team at $39M is 50% = x
the acquired player triggers are
26 yr old 10% = y
29 yr old 36% = y
ufa 50% = y
The multipliers are:
1 26 yr old 1.02
1 29 yr old 1.15
1 ufa 1.5
Total = (1.02 * 1.15 * 1.5) = 1.6065 = z
they have to pay:
-the Pens x(50%) * y(16%) * z(1.6065) * $2.5M, or a total of 50% * 16% * 1.6065 * $2.5M = $200K per year.
-Philly 50% * 36% * 1.6065 * $600K per year or $174K per year.
-Tampa 50% * 50% * 1.6065 * $7M for the player they got as a free agent, which would be $2.8M. The max Tampa could receive is 33% of their ex player's salary, or $2.333M so the rest would go into the kitty. $.4667M
Altogether the Rangers would owe $3,174M per year in luxury taxes and it would mainly go to the teams who lost players to them. Not a whole lot, but it gets real bad real fast.
EG #2:
Toronto:
2 ufa's ($2M each),
2 players acquired at 29 years of age ($2m each)
team salary is $42M.
Multipliers 1.15 * 1.15 * 1.5 * 1.5 = 2.976, lets say 3.
Percentages are (36 * 3 = 108) twice, and (50 * 3 = 150) twice
Soft cap trigger = 150%
Taxes owed
29 yr old #1 $2M * 108% * 150% = $3.24M +
29 yr old #2 $2M * 108% * 150% = $3.24M +
ufa #1 $2M * 150% * 150% = $4.5M +
ufa #2 $2M * 150% * 150% = $4.5M +
= 15.48M
The difference in salary is $3M from the rangers but the taxes are $12M more.
Theoretically it's a soft cap but if you want to buy up a NYYankee style team you'll be paying about 65 trillion in taxes.
Since this is all done with multiplication, any zero value in the equation means no taxes at all. So if your team is home grown (the PA's legitimate beef with the nhl's last proposal was that a team like the Sens would eventually have to be dismantled to remain under the hard cap) or under the soft cap you pay nothing.
* "salary dump" type trade: could be defined by the total salary of the players involved on each team in the year b4 the trade with some consideration for their salary on their next contract and/or subject to the discretion of an independant arbiter.
What do you think?
