Globe and Mail -"Sides Agree to Salary Cap system" -all talk here !!!!

[Spungo*]

no there won't

why else would they be defining, and going over every teams revenue with a fine tooth comb for the past several weeks?

I think there are provisions in place so Toronto can't get away with overstating revenue and running up a 60 mil cap.

Overstating their revenue? Do you have any clue how much Toronto Maple Leafs make? 54% of their revenues is a hell of a lot more than a measly 60 million dollars.

And the reason they are going team by team is that it's the only way to define league wide revenue. How else are you supposed to do that? Just take wild guesses? There will be a league wide salary range for every team next season, regardless of what that team makes.

 

[MHA]

it also depends on how they define revenues.

 

[Greschner4]

SO you're telling me that the NHL and PA are going through the trouble of having a team by team cap to have it vary by a mere two million dollars?

I'm not sure that makes much sense.

Of course, it doesn't make sense to allow Detroit to have a $45 Million cap and Nashville to have a $28 Million cap, either.

This story doesn't add up/.

Sure it does. The PA can say they held out for the big revenue teams to be able to spend more on salaries than lower revenue teams. And this deal lets them. They'll gloss over the mere $2 million between the low-revenue cap and high-revenue cap and declare some degree of success.

As to the 54%, that's still a bit confusing but it probably means that best revenue projections they can come up with have some teams at $36, some at $34, and the rest at various points in-between. Add up all the teams' cap numbers and you get 54% of projected revenues.

The PA can also say their strategy caused the big revenue teams to share more of those revenues and they're probably right on that, too.

 

[MarkZackKarl]

Thinking from a players side, it would see as though it would make a lot mroe sense to have a team by team cap based on their revenues because it would give teams the incentive to report the most revenue possible (if the owner is honest) to have the most cap room... If its a league wide cap, it would lead to the owners wanting to report the LEAST amount of revenue they can get away with...

THats just my opinion, it would seem more likely that the PA is negotating a team by team budget than a league wide linkage... although that would be quite pathetic, that they would lose a year just to have the PA help them control their budgets... I guess the CBA protects them from collusion in the sense that the owners wont pay out more than lets say 60% of revenues to players dependent on the market, almost ensuring every team profitability, and the fans lose out as per usual.

 

[Greschner4]

Rethinking what I just wrote, the projected luxury taxes probably figure into the 54% as well.

Agreed that the 54% number does lead to some confusion. It clearly can not be that each team can spend 54% of their own revenues. OTOH, how do you guarantee that players will get 54%? If the cap numbers combined are more than 54%, more than 54% could be spent on players. If the cap numbers combined are 54%, some teams may not spend the cap and the players won't get 54%. The latter is certainly possible, but would the players go for it?

 

[A Good Flying Bird*]

Sure it does. The PA can say they held out for the big revenue teams to be able to spend more on salaries than lower revenue teams. And this deal lets them. They'll gloss over the mere $2 million between the low-revenue cap and high-revenue cap and declare some degree of success.

As to the 54%, that's still a bit confusing but it probably means that best revenue projections they can come up with have some teams at $36, some at $34, and the rest at various points in-between. Add up all the teams' cap numbers and you get 54% of projected revenues.

The PA can also say their strategy caused the big revenue teams to share more of those revenues and they're probably right on that, too.

Could be.

My guess is that Goodenow's investigators are snooping through accounts in the caymen islands to find every penny of the NHL's hidden revenues.

 

[BobMckenzie]

Bob:

I said it before, I will say it again (because Shults echoed exactly what I said before when he was on with the bobcat)

in year one of the deal:

lower revenue clubs will have a floor of 22 million, higher revenue teams a floor of 24 million.

A dollar for dollar tax kicks in at 29 million

lower revenue teams can spend up to 34 million, but that includes things like bonues (which can be up to 5 million per team) and, here is the catch, it will also include any money spent as tax.

Big revenue teams can spend up to 36 million- with the same inclusions.

The last part is the most important, because if a team spends 30 in payroll, it will be at 31 total, if it spends 31, then its total will be 33, if it spends 32, then its total with tax will be 35.

This is a very creative deal and a very, very good one for the league.

Well, that's all well and good but the story does not specify a lot of that detail. Plus, I think it is very misleading to say team by team caps will be determined by a percentage of individual club revenue when it's pretty obvious, it would appear, that the entire payroll range is based on a percentage of LEAGUE revenues. If you want to slot teams according to team revenues within the framework of a league-wide revenue pool, no problem, but don't make the blanket statement that a team's cap is directly related to revenue, because if it were there would be a much bigger spread than $2 million on the bottom or the top of the scale. I mean, if Toronto's range is 24-36 and Phoenix's range is 22-34, can you honestly say that reflects a percentage of the teams' individual revenues? If the system is as you spelled out, you're right, it's a good one for the league because not only are benefits and bonuses part of the cap, so is the tax. We'll see when it all comes out. Until then, this story seems cloudy and confusing.

 

[djhn579]

I can't help but think that this part of the article is wrong or at least misunderstood. Maybe he heard it wrong or the sources heard it wrong, I don't know...


According to a source with ties to both owners and players, and another source close to the owners, there will be a team-by-team salary floor and cap based on a percentage of each team's revenue. The actual percentage is not known, although the league had been demanding 54 per cent.



We know that one of the biggest problems for the NHLPA is that each team has a different corporate structure which they claim will make it impossible for them to come up with one formula for revenue that will apply to all teams.

We also know (or at least think we know...) that they have been spending a lot of time going over each individual teams finances.


I'm thinking that they are talking about a complex formula (basically one for each team) that is then used to determine the league wide revenues or how much of each teams revenues is applied to the league wide revenues.

Maybe some things are left to the individual owners, such as revenue from a club in the arena that does not have a direct view of the game. Maybe revenue from this source is left mostly to the team, with a small portion shared (say 30%). Other things may be shared at a higher percentage like ticket sales (say 60%).

The cap would then be the undefined percentage of that shared revenue. This is the only way I can figure that the revenues can be used to create a cap on a team by team basis.



On another note, for those that think this is a big win for the players, note that all player costs are included in that cap figure...

One source close to the owners said it is important to realize that the $36-million cap does not mean all of that money will be spent on player salaries. It includes all player compensation, which means benefits, signing and performance bonuses will be paid out of that pool of money.

This could cost, the source said, as much as $5-million, which would leave about $31-million for salaries. This was what the owners demanded as a salary cap in an offer made in October, 2003, which came in response to an NHLPA offer of a 5-per-cent pay cut for every player along with other concessions.

 

[Greschner4]

Well, that's all well and good but the story does not specify a lot of that detail. Plus, I think it is very misleading to say team by team caps will be determined by a percentage of individual club revenue when it's pretty obvious, it would appear, that the entire payroll range is based on a percentage of LEAGUE revenues. If you want to slot teams according to team revenues within the framework of a league-wide revenue pool, no problem, but don't make the blanket statement that a team's cap is directly related to revenue, because if it were there would be a much bigger spread than $2 million on the bottom or the top of the scale. I mean, if Toronto's range is 24-36 and Phoenix's range is 22-34, can you honestly say that reflects a percentage of the teams' individual revenues? If the system is as you spelled out, you're right, it's a good one for the league because not only are benefits and bonuses part of the cap, so is the tax. We'll see when it all comes out. Until then, this story seems cloudy and confusing.

Definitely confusing. IMO, what our resident hockey genius has pointed out will be part of what will be the spin of the sides, especially the PA. If the high revenue teams can spend 36 and low revenue teams 34, their caps are "related" to revenue, but (as again noted by our RHG) can in no way be said to be "directly related" to revenue. The PA will declare partial victory because they're related.

I'm still having a tough time figuring out how the 54% comes in. I still think it's projected high cap added for all teams as a proportion of total revenues, but that allows the players to get less than 54% if all teams don't spend the cap. Since the PA's going to take it on the chin, that could very well be the case, but that's taking it pretty hard on the chin.

 

[Mess]

On another note, for those that think this is a big win for the players, note that all player costs are included in that cap figure...

One source close to the owners said it is important to realize that the $36-million cap does not mean all of that money will be spent on player salaries. It includes all player compensation, which means benefits, signing and performance bonuses will be paid out of that pool of money.

This could cost, the source said, as much as $5-million, which would leave about $31-million for salaries. This was what the owners demanded as a salary cap in an offer made in October, 2003, which came in response to an NHLPA offer of a 5-per-cent pay cut for every player along with other concessions.

A few comments ..

First
That could be first year only because last year was lost and no idea what Total league revenues are ..

Second
You may see teams at least the teams that want to spend near the cap .. give out less performance bonuses and signing bonuses , which would free up more for player salaries .. That might also be an incentive for UFA to join small market teams as then would get a bigger signing bonus perhaps and money up front ..

 

[X0ssbar]

Players: Report of NHL salary cap solution is premature

"But the union called the report premature.

"The NHLPA and NHL discussions this week continue to cover a range of issues such as controls on team salaries, revenue sharing, Olympic participation, the amateur player draft and player retention rights. While the parties continue to have discussions to reach a common ground, no agreements have been reached," NHLPA spokesman Jonathan Weatherdon said.

The latest session began Tuesday and is scheduled to run through today. It was another small-group session, and neither Commissioner Gary Bettman nor NHLPA executive director Bob Goodenow was in the room Wednesday."

Link

 

[Lard_Lad]

Some very rough number-crunching, done using the Forbes' estimates of NHL team revenues in 03-04 and some probably-unjustifiable interpretations of the contradictions and vagueness in the G&M article:

I calculated the floor figures as being 35% of revenues, based on the floor 24/cap 36 number quoted in the article - if a 36 cap was 54% of revenues, that's about $67 million in revenues, and $24 million would be 35% of that. The cap is calculated as 54% of revenues.

The 'new cap' is based on the assumption that any luxury tax paid would apply towards the overall cap, so the effective cap would be halfway between a team's 54% cap level and the luxury tax level - i.e., for the Rangers, it'd be $52.3 million, because the luxury tax level would be 40.8 million, halfway between the top cap (Rangers) of 63.7 million and the lowest floor (Sabres) of 17.9 million.

	Rev	Cap	Floor	LuxTax	New Cap
NYR	118	63.7	41.3	11.5	52.3
Tor	117	63.2	41.0	11.2	52.0
Phi	106	57.2	37.1	8.2	49.0
Dal	103	55.6	36.1	7.4	48.2
Col	99	53.5	34.7	6.3	47.1
Det	97	52.4	34.0	5.8	46.6
Bos	95	51.3	33.3	5.3	46.0
Mon	90	48.6	31.5	3.9	44.7
TB	88	47.5	30.8	3.4	44.2
LA	80	43.2	28.0	1.2	42.0
SJ	74	40.0	25.9	0.0	40.0
Van	74	40.0	25.9	0.0	40.0
Chi	71	38.3	24.9	0.0	38.3
Min	71	38.3	24.9	0.0	38.3
Ott	70	37.8	24.5	0.0	37.8
Cal	70	37.8	24.5	0.0	37.8
StL	66	35.6	23.1	0.0	35.6
Col	66	35.6	23.1	0.0	35.6
NYI	64	34.6	22.4	0.0	34.6
NJ	61	32.9	21.4	0.0	32.9
Was	61	32.9	21.4	0.0	32.9
Flo	60	32.4	21.0	0.0	32.4
Atl	59	31.9	20.7	0.0	31.9
Pho	57	30.8	20.0	0.0	30.8
Nas	57	30.8	20.0	0.0	30.8
Edm	55	29.7	19.3	0.0	29.7
Ana	54	29.2	18.9	0.0	29.2
Pit	52	28.1	18.2	0.0	28.1
Car	52	28.1	18.2	0.0	28.1
Buf	51	27.5	17.9	0.0	27.5
(all numbers in millions)

Assuming everybody spent to their cap, $64.2 million in luxury tax would be paid by the ten teams that went over the soft cap level of 40.8. No idea how that would be split up, but even in the worst case for the lowest-end teams (an equal split of it between the 20 under-soft-cap teams), it'd mean an additional $3.2 million in cap room. So in the end, there'd be a high cap of $52.3 million and a low of $30.7 million, a 70% advantage for the bigger team. In 03-04, according to the numbers Forbes used, the high-low was 80-29, a 176% advantage.

So (if I've interpreted things 100% correctly, which I doubt), that would seem to make the smaller market teams a good bit more competitive, but whether or not they'd be "competitive enough" is far from clear.

 

[djhn579]

Second
You may see teams at least the teams that want to spend near the cap .. give out less performance bonuses and signing bonuses , which would free up more for player salaries .. That might also be an incentive for UFA to join small market teams as then would get a bigger signing bonus perhaps and money up front ..

Money up front would be a players choice, but in the end, since contracts a guaranteed (2/3rds buyout...) it is not as important to get money up front as it would be in the NFL (much lower buyout if any at all...), the money is still coming out of the cap.

It may be a league wide player strategy to just negotiate for straight salary and skip the bonus money so they get the most money each season regardless of how they perform. And it may be a league wide team strategy to put in as many bonus clauses as possible so that they have a chance to save a little bit of money. It will all wash out in the end.

 

[handtrick]

You may see teams at least the teams that want to spend near the cap .. give out less performance bonuses and signing bonuses , which would free up more for player salaries .. That might also be an incentive for UFA to join small market teams as then would get a bigger signing bonus perhaps and money up front ..

excellent point.....this would, over time, aid in the desired attempt at league parity. The key will be what the small market teams could expect to get from revenue distribution.....if they could anticipate this in a relatively predictable fashion, that would encourage them to funnel it back into player's bonuses or salaries. I am sure this thought has not been lost upon the NHLPA....

 

[coppernblue]

what is the penalty for going over the cap?
this has not been outlined yet?
would it be draft picks like in the NFL?
(over the propsed 36million dollar hard cap)

 

[Mess]

Money up front would be a players choice, but in the end, since contracts a guaranteed (2/3rds buyout...) it is not as important to get money up front as it would be in the NFL (much lower buyout if any at all...), the money is still coming out of the cap.

It may be a league wide player strategy to just negotiate for straight salary and skip the bonus money so they get the most money each season regardless of how they perform. And it may be a league wide team strategy to put in as many bonus clauses as possible so that they have a chance to save a little bit of money. It will all wash out in the end.

True but consider the effects of a signing bonus ..

Since the signing bonus counts against the cap ..

Then if you gave a player a $2 mil signing bonus and $9 mil over for 3 years contract..

Then the in year 1 you would have $2 mil bonus hit plus the base of $ 3 mil year 1, $3 mil year 2, and $3 mil year 3 ... That would mean the team is taking a $5 mil hit in year 1 verses the cap .. So I can see teams stretching it out over the length of the deal .. to reduce the cap hit .. You might also see front end and back end loading of contracts all depending on the cap and space and contracts expiring ..

Performance bonuses IMO would almost be obsolute opposite to what you think above .. How can a team budget for cap space if they don't know if the player will reach those performace totals .. ie say 40 goals landmark or the Norris trophy etc. That would be total chaos to manage a cap based on uncertainty.. If you have to count performance bonus up front as part of cap then again big market teams would never offer them and they would eat up cap space and be considered wasted ..

 

[Mess]

excellent point.....this would, over time, aid in the desired attempt at league parity. The key will be what the small market teams could expect to get from revenue distribution.....if they could anticipate this in a relatively predictable fashion, that would encourage them to funnel it back into player's bonuses or salaries. I am sure this thought has not been lost upon the NHLPA....

I think teams will always know because financial information would be 1 year behind spending ..

So you would have a season and playoffs .. Then do your financials , calculate all revenue sharing money .. Then once all that is known, they would set the new Hard Cap limits (54% of last years Revenues) for the next year ,and all teams would know how much money they have to spend because they would have it in hand from DAY 1 of the upcoming year.

 

[SENSible1*]

True but consider the effects of a signing bonus ..

Since the signing bonus counts against the cap ..

Then if you gave a player a $2 mil signing bonus and $9 mil over for 3 years contract..

Then the in year 1 you would have $2 mil bonus hit plus the base of $ 3 mil year 1, $3 mil year 2, and $3 mil year 3 ... That would mean the team is taking a $5 mil hit in year 1 verses the cap .. So I can see teams stretching it out over the length of the deal .. to reduce the cap hit .. You might also see front end and back end loading of contracts all depending on the cap and space and contracts expiring ..

Performance bonuses IMO would almost be obsolute opposite to what you think above .. How can a team budget for cap space if they don't know if the player will reach those performace totals .. ie say 40 goals landmark or the Norris trophy etc. That would be total chaos to manage a cap based on uncertainty.. If you have to count performance bonus up front as part of cap then again big market teams would never offer them and they would eat up cap space and be considered wasted ..

Signing bonuses are usually spread out over the length of the contract in terms of cap cost.

 

[Malo]

True but consider the effects of a signing bonus ..

Since the signing bonus counts against the cap ..

Then if you gave a player a $2 mil signing bonus and $9 mil over for 3 years contract..

Then the in year 1 you would have $2 mil bonus hit plus the base of $ 3 mil year 1, $3 mil year 2, and $3 mil year 3 ... That would mean the team is taking a $5 mil hit in year 1 verses the cap .. So I can see teams stretching it out over the length of the deal .. to reduce the cap hit .. You might also see front end and back end loading of contracts all depending on the cap and space and contracts expiring ..

Performance bonuses IMO would almost be obsolute opposite to what you think above .. How can a team budget for cap space if they don't know if the player will reach those performace totals .. ie say 40 goals landmark or the Norris trophy etc. That would be total chaos to manage a cap based on uncertainty.. If you have to count performance bonus up front as part of cap then again big market teams would never offer them and they would eat up cap space and be considered wasted ..

to add to that, a team with little cap room in 1 year, and if they think they will have more room the next year, could sign guy's to contracts 1 million in year 1 and 4 million in year 2. theres going to be alot of playing with the "new cap system"

 

[coppernblue]

True but consider the effects of a signing bonus ..

Since the signing bonus counts against the cap ..

Then if you gave a player a $2 mil signing bonus and $9 mil over for 3 years contract..

Then the in year 1 you would have $2 mil bonus hit plus the base of $ 3 mil year 1, $3 mil year 2, and $3 mil year 3 ... That would mean the team is taking a $5 mil hit in year 1 verses the cap .. So I can see teams stretching it out over the length of the deal .. to reduce the cap hit .. You might also see front end and back end loading of contracts all depending on the cap and space and contracts expiring ..

Performance bonuses IMO would almost be obsolute opposite to what you think above .. How can a team budget for cap space if they don't know if the player will reach those performace totals .. ie say 40 goals landmark or the Norris trophy etc. That would be total chaos to manage a cap based on uncertainty.. If you have to count performance bonus up front as part of cap then again big market teams would never offer them and they would eat up cap space and be considered wasted ..

this is exactly what i was thinking how could performance bonuses be factored in as if a team budgets that a player wont hit his bonuses what happens?
does the team get penalized? does a player not get his money?
there are so many different things playing in that lawyers will have to draft

 

[handtrick]

What NHL team will be first to hire a "capologist".........

 

[Vomiting Kermit*]

My opinion on this article turned 180-degrees.

 

[tantalum]

This is closer to the what the papers before today have reported of a soft cap tax within a Hard Cap floor and ceiling, but you really wouldn't need that tax at a $36 mil ceiling though, would you ??

Seems more like a badly written article that fact .. but it was rumoured that this NHLPA proposal was a floating cap per team system though ..

Well I guess we will just have to wait and see .. regardless though it brings back a hockey so everyone wins ..
.

I think that is exactly what it is...a poorly written article by a guy trying to stick together the 10 pieces of information he has into a whole 500 piece picture.

Bob MacKenzie mentions that as well. And I agree with Bob in what he sort of indicates...it may just be that lower revenue clubs will not be able to spend as high as the $36 mil cap because well they couldn't before and won't be able to now. He doesn't seem to beleive it. The folks at sportsnet don't seem to really believe it.

And in the end until the entire thing is signed numbers can be changed and tweaked.

Like Bob based on the appearance of the negotiations since day 1 in which the PA has essentially been playing catch up the entire time I don't see anything other than a linkage to League-wide revenues. The players may get a couple million space in cap room on a few teams but in the end it will be league-wide revenues that set the limits.

 

[Phil Parent]

National Post reports on it today.

In fact, it makes the front page.

Main Headline.

http://www.canada.com/national/nationalpost/news/story.html?id=0cc86a2f-2011-462f-9155-c0a69a695a07

As does the New York Daily News...

http://www.nydailynews.com/sports/story/317210p-271317c.html

And Reuters.

http://www.reuters.ca/locales/c_new...pe=sportsNews&localeKey=en_CA&storyID=8735868

They can't all be on Ekocaine, come on. There's something here. The papers didn't jump on it like that when there was that season saving rush. Back then it was an internet thing, entirely. THN posted it, a few sites picked it up, a few careless folks (Such as myself) believed it and reported it on boards and Usenet....

I think there's something here.

 

[RangerBoy]

Stars President Jim Lites confirmed the report

NHL and players union negotiators have made significant breakthroughs, and Stars president Jim Lites said Wednesday he is hopeful a deal can be worked out within 30 days to end the almost 9-month-old lockout.

The two sides have agreed on the framework for a salary cap -- the largest stumbling block in negotiations -- Lites said, confirming a report Wednesday in The Globe and Mail of Toronto.

Lites, who is not involved in the negotiations, said he didn't know all the specifics but said what he had heard seemed to match that report. Unidentified sources were quoted as saying the two sides had agreed to a salary-cap formula based on team-by-team revenues.

"I know they have broken through in a bunch of areas," he said. "I also know the ultimate goal was to not spend more than 54 percent on salaries. I think that has been accomplished. ...

"I am hopeful we will have a deal within the next 30 days."

A cap formula based on team-by-team revenues would seem to give the Stars and other high-revenue teams more money to work with when fielding a team.

"Probably," Lites said. "I mean our cap would be higher. But if you're facing a tax, if it's in the 30s [in millions of dollars], it should be accomplishable."

Discussing the latest salary-cap numbers he had heard, but not necessarily the final numbers in an agreement, Lites said: "I think the high was $35 million and the low was $22 million, with the mid-range being the place where a dollar-for-dollar tax started, and you could spend up to that, but there would be punishment if you spent more than that over a sustained period of time."

http://www.dfw.com/mld/dfw/sports/hockey/11852021.htm