Holey Cap!

Discussion in 'Fugu's Business of Hockey Forum' started by jaws, Apr 24, 2005.

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  1. jaws

    jaws Registered User

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    Both the NBA and the NFL have a salary cap, while MLB and the NHL do not. Some argue that this is what sets these two leagues apart from the others. Some later add that the NFL's success is due to the fact that its cap is much, much harder compared to the NBA's. However, upon examining the actual situation in both leagues, both caps appear to have numerous holes.

    The NBA for example has a cap that is about $43 million for the 2004-05 season. Only 5 teams stayed below this number, with the Knicks having the highest salary of about $94 million. Needless to say, this off season will be very interesting for the NBA, as they look like they're headed into NHL-type territory.

    In the NFL, although having a harder cap, it is not as hard as some people may think. For the 2002-03 season, the cap was about $74 million, yet only 8 teams stayed below this amount with New Orleans having the highest payrole of about $95 million.

    The MLB, has a luxury tax system, yet its affects have not stopped the Yanks from paying their players upwards of $200 million a year, while the NHL has nothing, allowing teams to pay close to $80 million a season.

    Acknowledging these holes shows clearly how a cap will not do what the NHL says it will, if it ever resumes play. One of the most important variables that sets the NFL apart from the rest is its revenue sharing plan. In 2002, the NFL shared 63% of its revenues, while the MLB, NBA, and NHL shared 35%, 34%, and 9% respectively.

    Knowing the loop holes that are present in any cap system, and the fact that revenue sharing greatly attributes to the health of a league, why does the NHL have such a hard line for a cap, yet such a weak, if any stance on revenue sharing?

    http://www.nba.com/news/cap_040713.html
    http://www.nfl.com/teams/story/PHI/5848647
    http://www.usatoday.com/sports/salaries/index.htm
    http://www.askthecommish.com/salarycap/faq.asp
    http://members.cox.net/lmcoon/salarycap.htm#17
    Mark Edge "Red Line, Blue Line, Bottom Line"
     
  2. Crazy_Ike

    Crazy_Ike Cookin' with fire.

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    In the NFL, caps are only calculated for the current year. It is quite easy to be over the cap in future years with contracts you have already signed. When those years come around, as it did for the Saints, and you find yourself over cap, then you are completely unable to sign players, including your own if their contracts are expiring. It is quite possible to get into so much cap trouble this way that you can't even field a proper number of players in a game. There's also other punishments for failing to stay below it.

    I don't really consider that a hole, or much of a problem. You can't stay in that situation for long and you have very little control over how you construct your team while it is happening.

    Saying that that will inevitably lead to the same thing in the NHL is hogwash, of course.
     
  3. mr gib

    mr gib Registered User

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    apparently the ny knicks are in the same boat - expensive players tied up for multiple years - untradeable and no room to sign any one new -
     
  4. OlTimeHockey

    OlTimeHockey Registered User

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    And hopefully the Ranger$ will be a model of how not to spend in the cap world like their roommates, the Knicks.

    The Isles will be stuck with Yashin and have to deal with their own albatross, the Leafs will have their Senior bingo team to deal with and competition will be determined by the smarts of the upstairs office, not by the spending power of billionaire owners.

    Hey....Milbury could get fired for a bad signing/trade. GM's could be accountable in this new league, if it ever reopens!

    And owners can no longer have pi**ing contests like Karamanos and Ilitch or Jacobs with M.Lapointe. Mayb the league can get healthy?

    Or maybe the PA can win this and turn the NHL further into an MLB situation, with six or seven Yankees teams and the rest trying to hold onto prosects before the six or seven sign them away?

    Ah, the hopelessness of it all!
     
  5. jaws

    jaws Registered User

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    But in the NFL you can also cut players, gaining immediate cap room. The NHL has yet to state an end to guaranteed contracts. So if the NHL does adopt a cap, teams will be in trouble much longer than compared to those in the NFL. If teams in the sunbelt sign guys, leaving no cap room left over, and they suck, they're gonna suck for a while, leaving their status in that city up in the air.

    Also, I thought a cap was in place to prevent teams from spending above a certain amount. Having this occur in the NBA and NFL, it will likely occur in the NHL if they get a cap as well. So how does this help improve the situation? It looks like a cap is somewhat useless if everyone is over it, so why would this be so much different in the NHL?
     
  6. nyrmessier011

    nyrmessier011 Registered User

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    Linkage at 54% and let's not bother with anything else is the owners motto. I looked at the CBAs of other leagues recently, they are so complicated and technical that often it's hard to understand. This is what the NHL needs to do. The owners have to stop expecting to see this 54% number and expect everyhting to be ok. They need to tweak the deal so that both parties are happy. They need to share revenues in atleast the 30-40% range and think outside the box for once. Hopefully when the hard hat intimidator Jeremy Jacobs is taken out of the room, the NHL can finally get off of 54% and start negotiating a range greater then $12.5M and revenue sharing greater then 10%. This is getting out of hand now.
     
  7. blitzkriegs

    blitzkriegs Registered User

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    Why do you care so much? I mean, really ...

    What is at stake for you? you can't watch hockey... whoa! find something else to do for 82 days a year.

    Are you a 'fan' that actually spends money on season tix where your wallet would actually be affected?

    At the end of the day, the only interest fans should really have is game costs and availability to watch the games. Seems to me that the lockout SHOULD produce lower tix prices. However, that's not a given yet. And the lack of a national TV contract doesn't help fans either as you rely on your local programmer for games.

    Did you happen to notice that while the NFL was signing absurd billion dollar deals that increase the NFL cap = player compensation AND increase franchise values and profits for owners (ahem... both sides benefit), the NY Jets, NY Giants, NE Patriots all increased ticket prices for next season. And we both know of the 10+ year waiting list for season tix.

    Again, what's your vested interest in all this?
     
  8. Crazy_Ike

    Crazy_Ike Cookin' with fire.

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    End to guaranteed contracts would be nice but I don't think that will happen. The teams will just have to accept being in trouble that much longer, and to be careful signing players to multiyear deals that those second, third, fourth years don't leave them in major cap trouble.

    That IS why GMs make the good money, though. That's what they're *supposed* to be doing. If they can't, well obviously they deserve to have a lousy team, hmm?


    You're making some major logical jumps there. You say it "occurs" in the other two leagues, but (in the NFL at least) it doesn't inflate nearly as badly as it does without the cap (see MLB), and not to rediculous extremes. You also seem to be assuming that NHL teams would willingly destroy themselves to pay players more, since it is so damaging to end up significantly over cap; not necessarily the year it happens but almost always for years afterwards.

    Not "everyone" is over it and the cap is doing very nicely in making sure most the teams spend approximately the same amount on players, and doing an even better job of making sure a few teams with disproportionate potential budgets don't blow the league wide open. A few go over, and they are punished for it, both directly by the league and indirectly by the loss of control of contracts while the situation persists.

    I know you *want* to say that caps don't stop teams from spending, but in reality, they really do. Sorry. ;)
     
  9. nyr7andcounting

    nyr7andcounting Registered User

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    So linkage doesn't work as well as the NHL would make it seem? If the cap moves every year it is very possible for team to be over, which isn't a good thing. But the bigger problem is how do you solve that in the NHL?

    NFL teams have players on non-guaranteed contracts that can be cut at any time for cap purposes. NHL players have guaranteed contracts that some teams won't even have enough to buy out.

    NFL teams, if they release a couple of veterans, can easily bring in lower level free agents or rookies to fill those spots for two reasons. a) there are 53 spots on an NFL roster, about half of which play a decent amount of plays each game. A team can cut their backup safety and replace him with a rookie and not lose that much, there are so many players on the roster that teams have flexibilty. But in the NHL there are only 23 spots, all of which play a good amount of the game. There isn't flexibilty with NHL rosters. and b) the NFL has a draft every spring where teams can get sometimes as many as a dozen rookies who are going to play that year. It's not the same in the NHL, drafted players don't play in the NHL for usually like 3 years, if at all.

    The NFL has the right rosters to run under a hard cap because they are flexible. The NHL is not the same.
     
  10. nyr7andcounting

    nyr7andcounting Registered User

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    Ticket prices completely depend on the market for them (supply and demand). It has nothing to do with the CBA. Prices will be lower for a year or two following the lockout (because demand will be so low), but after that prices will be back to as high as they can be in each market.
     
  11. blitzkriegs

    blitzkriegs Registered User

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    Really? I never understood supply and demand before :clap:

    The point is that the lockout will force most markets to reduce ticket prices (because of lack of demand) as an incentive to lure back fans. So, fans will benefit from a softened market in most markets.

    However, another knock in most markets is the NHL is high priced entertainment. Fans are expecting a reduction in prices.
     
  12. ctfan

    ctfan Registered User

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    The NBA has a soft cap. The NHL is looking for a hard cap. In the NBA you're allowed to sign any of your own players to contracts irregardless of the cap level. It basically just limits free agent signings and trades. Even then there's the "sign and trade loophole" that team like the Knicks abuse. They'll make a trade for another team's player, agreeing to let the "other" team sign that player to a new huge contract first. Then they trade a group of plyers to that team that are on the last year of their contracts. The dollar amounts being swapped even out enough to meet the trade criteria, but the Knicks pick up a long term high contract guy and the other team picks up some guys whose contracts are expiring. That's why the Knicks have managed to pay double the "cap" amount each season. The funny thing is they're still positively awful.
     
  13. Weary

    Weary Registered User

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    So this whole past year has been a fake? This whole lockout and statements about the precarious financial state of the league have been a dog-and-pony show? I guess that's the only conclusion that can be drawn without "assuming that NHL teams would willingly destroy themselves to pay players more." Talk about your "major logical jumps."
     
  14. nyrmessier011

    nyrmessier011 Registered User

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    My vested interest?? To watch the freaking game obviously. I love the game, I love the New York Rangers. I'd be suprised if tickets went down that much but hopefully they will so instead of spending 500 on my 12 game plan i can spend 425. Those 82 nights that games were supposed to happen took a lot out of me. I enjoy those nights, they are the best part of my year. No playoffs is killing me this year. Right now its 9 oclock, It should be in the second period of a first round game 7. Maybe Ottawa-Toronto duking it out infront of 19k screaming fans. That is one of the greatest thing I watch all year. No hockey pissed me off all year becuase I love watching the game. I could care less about ticket prices because I love the game. If it's no big deal finding something else to do 100 other nights a year then you don't love hockey. I don't have any college or AHL affiliate close to where I live so i get no games on TV. My stake in it is not seeing the thing I love for an entire year and maybe longer. And thats bull****.
     
  15. Crazy_Ike

    Crazy_Ike Cookin' with fire.

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    That makes no sense whatsoever and has nothing to do with anything I said. I suggest you read it a few more times and then elaborate on whatever the heck it is you think you're saying.
     
  16. nyr7andcounting

    nyr7andcounting Registered User

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    Yea, like I said. The first year there will be a reduction. But for example, Dolan already promised NYR tickets to be but by 10%...do you think he's going to cut them again on top of that? Don't think so.

    The decreases are only temporary, when the league gets back to normal ticket prices will have nothing to do with the CBA.
     
  17. OlTimeHockey

    OlTimeHockey Registered User

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    Supply and demand:

    If fans keep going after Dolan ups the prices again and again.......it's their own fault.

    Go join the 300lb fatties that sue McDonalds for making them fat. Or the senile schmucks who sue because *HOT* coffee doesn't have a friggen WARNING!!! sign on it that says it's HOT.

    "I buy tickets and they sell out and the prices go up.....duh.....why don't they lower prices and be nice?!?!?" (I just wanna thank everyone for paying $120 a seat for some of the worst hockey this league has ever provided its fans)
     
  18. Johnnybegood13

    Johnnybegood13 Registered User

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    I used to be a HUGE MLB fan,a HUGE formula1 fan as well and if that happens in hockey they'll get the same from me as i gave them....a big FACK you.

    If i want to be bored out of my skull watching the same people win over and over i'll just listen to my wife!
     
  19. OlTimeHockey

    OlTimeHockey Registered User

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    THAT was awesome!
     
  20. mr gib

    mr gib Registered User

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    awesome - ( look behind you )
     
  21. kdb209

    kdb209 Registered User

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    Actually, the NFL cap is as hard as people think - as long as you use the right definition of payroll. Total Team Payroll != Team Cap Payroll. Signing bonuses are counted as payroll in the year they are paid, but are amortized over the life of the contract for cap purposes. Dead cap space (deferred bonus and salary to players no longer with the team) is not part of team payroll, but do count aginst the cap.

    From the $95M number for the Saints and the USA Today link, I'm assuming you took the numbers from the USA Today salary database. The Total Payroll listed for the teams includes the whole signing bonuses (not just the prorated cap portions) paid and does not include the dead cap space - so for some teams it overstates their cap salary and in others understates it.

    NFL teams do indeed have a hard cap, which they must come under by July 1 (IIRC) even if it means cutting players - remember NFL contracts are not guaranteed. There have been cases where teams have violated the salary cap and been sanctioned with loses of draft picks.

    For 2005, the NFL salary cap will be about $85.5M (estimated). All teams currently have space under the cap, from $500K (New England) to $10M (Jacksonville)

    http://www.askthecommish.com/salarycap/numbers.asp
     
  22. Weary

    Weary Registered User

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    I'm sorry that you believe that a direct quote has nothing to do with anything you said. You dismissed the idea that teams would overspend to their own detriment. But that's exactly how we got in this current mess. That's what I'm saying.
     
  23. blitzkriegs

    blitzkriegs Registered User

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    Dolan announced the 10% reduction in prices because NYR failed to make the playoffs for 7 consecutive seasons. Quite possibly going on 8. That reduction had nothing to do with the impending lockout.

    Don't be surprised to see more of a 10% reduction.
     
  24. Crazy_Ike

    Crazy_Ike Cookin' with fire.

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    Then your understanding of the situation is terrible. They're in this situation because teams that COULD spend did regardless of the many teams that couldn't keep up with it, causing salaries to be balanced for the Torontos and New Yorks and a major difference in the ability of have not teams to keep their players. Quite a difference from the situation I mentioned, where teams that overspend hurt themselves instead of everyone else.
     
  25. Egil

    Egil Registered User

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    The NBA CAP is at 48% of revenues I believe. They acount for the overages (which they know will occur) by an escrow system (which tries to put the salaries at 55% of league revenue), and an luxury tax. The NBA can try to spend 60.5% of revenue before they will spend more than 55% of league revenue on player salaries. So the NBA put the "cap" at a much lower amount, and then put a bunch of holes in it.
     
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