How does a hard cap increase team revenue?

[Tom_Benjamin]

A cap is going to nail UFA salaries hardest. When you are a club rich enough you can choose between trading prospects for a player or throwing meaningless amounts of money, you tend to throw money.

And under this CBA this always turns out to be a dumb choice. Which trade prospects for veterans was won by the rich team again?

A cap is going to make teams think twice about old UFAs, because its not just money its cap space and you can't afford to waste it.

Cap or no cap teams should think twice about old free agents. Very, very few of them turn out to help the rich team.

Tom

 

[chriss_co]

You guys are getting the wrong concept about a hard cap. Any cap will decrease costs for teams. But you ask how does that help a small market team that is already operating at a 'financial cap'? Simple, its called the trickledown effect. If you lower the salary to your top players, the players at the next lowest level are paid at a lower price as well. Just like how the agents used the 'well he got this so my client should get that also', GM's will do the same and say 'if Jagr gets this much then Elias who is a stepdown from Jagr should get less'. This helps small market teams because they can either choose to continue operating at their current budget and afford to acquire top notch free agents or they can keep their relatively competitve team at a lower more affordable cost.

If revenue sharing is implemented, that will further help small market teams to be more competitive. Now, does that mean teams can't keep their team long term? To an extent maybe.. but that is really the choice of the GM when he signs players to either shortterm contracts or longterm contracts.

It is foolhardy for the players to withhold from any form of a salary cap when other leagues have implemented one too. If they don't smarten up, they will ultimately lose their own jobs when teams start to fold if the CBA doesn't get corrected.

To add to the Oilers situation, they can't do much more. To make money they have to depend on making the playoffs. The reason ticket prices dont increase in Edmonton is because the price is already saturated. The Oilers depend more on 'fan' support rather than say Calgary relying on 'corporate' support. The two markets are different and the Oilers can't expect the same # of people in attendance with substantially higher ticket prices. That is another reason why the CBA has to change. Teams like the Oilers and the Flames have already resorted to alternative measures to generate revenue because they simply can't compete against these big American spenders. (the methods we have tried are a lottery system as well as a tax system that taxes any player that plays in one of the two Alberta cities including their own players)

 

[degroat*]

So while there might end up being more parity in the league, it will not be a parity of several very good teams. It will be a collection of mediocre teams playing mediocre hockey.

Do have anything meaningful to support this nonsense?

Two sports have a cap right now and both have them have very good teams every year.

 

[thinkwild]

Do have anything meaningful to support this nonsense?

Two sports have a cap right now and both have them have very good teams every year.

Ok, I'll start off with a couple for ya.

The Downside of NFL Parity

The other leagues are supposed to be jealous.

The NFL hails parity as a way to keep the casual fan interested because it prolongs the local team's odds of making the playoffs.
...

But to hell with parity - I miss the juggernauts. I miss watching teams dominate the regular season, creating a playoff atmosphere dripping with anticipation and the chance for eternal grid-iron glory. Those playoff games were events, match-ups of incredible teams that could give rise to that other d-word, dynasty. Dynasties, or the threat of them, make the playoffs that much more enticing.

...

Parity, on the other hand, has brought you ... well, it's brought you this year's NFL.
...

The problem, of course, is that it's symptomatic of mediocrity - everybody gets their eight wins because nobody is any good. You like statistics? No team in the AFC won 70% their games this year. That means the best teams in the AFC are about as likely to win a game as Shaq is to hit a free throw. Records are meaningless, which helps explain why the 9-7 Jets beat the 10-6 Colts 41-0 in the first round. It means there are no juggernaut match-ups, no unplug-the-phone games to anticipate and savor. No NFL that we know and love.

That doesn't mean all the playoff games will be bad. Pittsburgh's tough win over the Browns was terrific, as was the Giants win/loss at San Francisco (and I'm sorry, but any team that blows a 24-point lead shouldn't complain about the refs missing the last play). But as nice it is to see a good football game, I just wish it wasn't because the teams are equally average. I'd rather watch great games between great teams, games that people will remember and talk about years from now. Those match-ups are harder and harder to come by these days.

There's a joke going around that Paul Tagliabue can die happy when every team in the league finishes 8-8. Good luck, Paul - one conference down, one to go.

Oh, and keep your eye on those Bengals - they could be next year's champs.

Or here is another one from a couple of years ago:

Anyway NFL Slices it, Parity means mediocrity

The National Football League has broken new ground in the area of marketing. At least I've never heard of a billion-dollar corporation that sells itself with a consumer campaign of "If you want mediocrity, buy us."

Then again, give credit here for truth in advertising.

If you mouse around on geek-net these days, what you find is a familiar theme being repeated in various NFL cities.

Concessions of football mediocrity are rampant by players, coaches and media.

The basic message is:

"OK, we're not so good, but that makes us a playoff contender."

It's true too.

...

Ugly is as ugly does. Flip on a TV any Sunday. Ninety-nine percent of the games have a face a mother couldn't love.

"It's a .500 league," Campo said Tuesday at Valley Ranch. Campo actually meant that as a compliment, even for a guy who had a coaching hand in the Cowboys' dynasty days, when the games and the teams were much, much different.

It's difficult these days to disagree with the opinions that the NFL has never been worse from top to bottom.

"But instead of being negative, instead of just saying it's bad football, the fans should be positive about what they are seeing," Campo said. "Every team has a chance to go to the playoffs. It's as competitive as I've ever seen the league."

Yeah, but Dave, c'mon man.

"Like I said, I'm not going to say it's bad," Campo answered. "It's just different, that's all."

...

"It's parity, that's what it is," Campo said. What it really is, is a combo of salary cap and free agency, but why bicker? Parity is just a fancy word for mediocrity.

"A couple of elite teams, with everybody else about the same," Campo said of the NFL. "But the difference in everyone, including those at the top, is not much. The best teams all have their holes. And with us, if you look at our five games thus far, most people figured we would win the three we lost and lose the two we won.

"So, what separates a winning team from a losing team in each game is basically a couple of plays, provided you don't have a bunch of turnovers."


...

"If you are better on three or four plays each week, and you keep your poise, you can beat anybody in the league. Every game is going to be like 17-14 or 23-20. Every game in this league is exactly the same."

Not exactly appetizing, but again, Campo is telling the truth.

...


There is the legitimate argument that making the playoffs would signify nothing, particularly for a club like the Cowboys. So what if you're only going to be first-round fodder.

"In the playoffs, "anything" can happen," Campo argued, strongly.

See there - mediocrity is just another fancy word for hope. In today's NFL, hope is what they sell.

 

[Vlad The Impaler]

Cap or no cap teams should think twice about old free agents. Very, very few of them turn out to help the rich team.

This may or may not be true. It seems most rich teams have benefitted directly or indirectly from this.

But more importantly, it's about facilitating player retention for the poorer teams. It's really the same problem, only at different places.

We know for a fact many players will choose money if they have a choice, even if it means going to a loser market. Most of this happens behind the scene so we rarely know exactly what happens. We can however cite two examples that we know happened for a fact because the guys were RFAs: Fedorov and Sakic.

The former signed aan offer sheet with the Canes and the latter (who is supposedly such an example of leadership and classiness) signed one with the Rangers.

Ask yourself how many times this has happened with UFAs since, say, 1990. There are a couple of teams who could look much different right now if the field had been a little more equal.

Maybe the Bruins are a little more competitive, so maybe Bourque is never traded. Maybe LA isn't worried about signing Blake so they keep him. Maybe the Avs are ****ed with a pathetic defense too.

Maybe Buffalo holds on to Hasek. Maybe his salary is not so high under a new environment and more teams are interested.

Lots of maybes but I guess some people would like to see what would happen if some teams didn't have such an edge financially.

Sure, you can point to Washington and laugh at how pathetic they became with Jagr and others. To which I wholeheartedly agree. But then again we can also wonder what could have been in Pittsburgh the last few years if they didn't have to trade so many players, including Jagr.

And this is why I support the owners (but not a hard cap at all costs) in this CBA. It's because I know for a FACT, undeniably, that every single contract a team signs in this league not only affects this team but also the 29 others one way or another. Always.

 

[SuperUnknown]

Secondly, if there's a cap, fans will demand decreased ticket prices. If Phoenix draws an average of 14,000 now with a $50 average ticket, thats $700,000 per game, $28.7 million for a season. If they draw 16,000 under a cap with a $40 average ticket, thats $640,000 per game, $26.2 million for the season, a difference of $2.5 million. If that happens across the league, revenues go down by $75 million. I think it would actually be alot more than that, because the high revenue teams are generally selling out now, and their tickets would have to go down alot. Detroit for instance nets about $1 million per home game. If their tickets went down by an average of $10, it would be $200,000 per game, $8,200,000 for the year. If that happened league wide, revenues would decrase by $246 million. Obciously, these figures are estimates. I don't know Phoenix's average ticket price, but I think a $10 average reduction across the league is pretty conservative.

Ticket prices are based on an offer/demand model, not on the actual cost to the producer. Economic incentive for an owner to keep their business at the top is profit. The best mix is profit incentive to put an offer that matches the demand.

However, it's possible that they lower the ticket prices if they can lower the cost, because right now the current price is at a point that demand might not meet (thus it would make sense to reduce the expenses to adjust to the demand by lowering ticket prices).

 

[Winger98]

Do have anything meaningful to support this nonsense?

Two sports have a cap right now and both have them have very good teams every year.

and after you get done reading thinkwild's links, here's some more:

Dallas Star-Telegram Article

This guy doesn't seem too keen on parity either.

and another, this one from ESPN

and my last one, from the SF Examiner

The first two don't deal with the parity issue entirely, but I think the authors make their feelings fairly clear.

 

[zico]

I've read quite a few posts (and that is an understatement) that at least implicitly argue that the proposed hard cap concept will be the magical elixir that solves all of the league's problems.

But I have to ask how the hard cap will increase team's revenues. Perhaps it will increase the revenues of teams like the Rangers, Toronto, Detroit, etc. who are virtually guaranteed to bring in certain levels of revenues.

But what about team's like Edmonton, Pittsburgh, Nashville, Florida, Carolina, etc. The truth is many of the league's struggling franchises have operated for years under a self-imposed cap. It certainly won't increase the team's revenues (except for the large market teams).

I think many of the fans on this board have bought into the hard cap notion because they think it will serve to make their favorite "downtrodden" team an immediate contender due to parity. But the reality of the league's survival depends on other concepts (at least if want to see a 30 team league continue).

What is going on behind the scenes is a power struggle between the large market teams and the smaller markets over some form of revenue sharing.

I challenge anyone to present a logical argument as to how a small market team like say Nashville will be able to generate more revenues under a hard cap system. It caps expenses, but how does it increase revenue?

In the end this whole battle won't be so much a war between the owners and the NHLPA but rather one between the large market owners and the small market owners.

this is one of the best posts i have seen here in a long while. one which I happen to agree with wholeheartedly. Has the NHL come out publicly with what they want to accomplish going into next year. there are only two possible scenarios. 1) to create a 30 team league where most teams are average and have a shot at the Cup each year; or 2) to make all 30 teams profitable and stable financially.

If the NHL wants to make a level playing field then a low, hard cap is the answer. however, if they want to ensure all teams stay in the league and thrive then why havent they already hammered out a massive revenue sharing plan amongst themselves? why not have the highest grossing teams contribute 20-25 million each to the general revenue sharing pool to be divided up among the small market teams. the bottom ten teams or so revenue wise would stand to gain about 15 million apiece; more than enough to make them profitable and allow them to spend a little more to be more competitive.

A small market team that is filling their arena to near capacity stands little to gain with a hard cap. their maximum revenue capability is already nearly tapped out. The owners shouldnt even be talking about a salary cap until they fix the gross inequity of team revenues.

which is why I think the individual owners care more about their own bottom line than the league in general.

 

[zico]

That parity means that any team can win the championship in any given year. That in itself is GOOD for attracting fans.

actually it is just the opposite. when you have the top teams come into your arena their is a good chance that you will sell out that game. Take the Blues for instance. when detroit, colorado or dallas comes the games are sold out or very close to it. when an average, non rival team comes there are empty seats to be found. Why?? because people dont want to see games they perceive to be uninteresting or flat out boring.

 

[Brent Burns Beard]

we can also wonder what could have been in Pittsburgh the last few years if they didn't have to trade so many players, including Jagr.

the thing is PIT brought this on themselves. Back in the 1990's when they were the worlds most popular team, the owners didnt leverage that into a new arena. He isntead, presumably since he didnt even pay his players by deferrng contracts, put all the profit into this own pocket.

Hey, that was his right, but thats what happens when you dont reinvest in your team. He made a short term pile of money and got out. Guess what, he is now trying to buy the Ducks on the cheap, no doubt to do it again.

PIT could have built a new arena back in the 1990's like almost every other NHL city did and they would be just fine.

Shed no tears for PIT. Besides, its karma for stealing Mario.

DR

 

[me2]

I'm not sure why people think caps mean no dynasties. Its false, it can be done. Its harder and less likely because of parity amoungst the top 5 sides, but it can be done.


Anytime you have a draft you have a chance to build dynasties. A draft + a cap and you can get dynasties that are shorter. Clubs challenge for about 6 years under a cap.2 years on the way up, 2 years at the peak,and 2 years on the way down. The runs are shorter but they are more frequent.

A quick google for caps, drafts etc has revealed the Brisbane Lions AFL club (hard cap + a draft), have won 3 grand finals in a row and are one of the favourites to win a 4th and possibly a 5th next year. It can be done, draft well-trade smartly- make the most of your 6 years at the top.



Anytime you have money you have a chance to build dynasties, cap or no cap. Money talks, just look at the English soccer.

Put them together and WOW. If the Rangers ever get their act working with their drafting they would be a massive dynasty with their money.

 

[Vlad The Impaler]

the thing is PIT brought this on themselves. Back in the 1990's when they were the worlds most popular team, the owners didnt leverage that into a new arena. He isntead, presumably since he didnt even pay his players by deferrng contracts, put all the profit into this own pocket.

You can substitute the case of Pittsburgh with any other if you prefer. My point is, often when a team overspends, it is depriving the rest of the league from a pretty good asset on top of depriving the former team of its player.

I just don't buy that rich teams who overspend badly are the only victims of their ways.

 

[Tom_Benjamin]

This may or may not be true. It seems most rich teams have benefitted directly or indirectly from this.

It is a statement that may or may not be true. It is an easy hypothesis to test. It does not seem that most rich teams have benefited by this. The four biggest money losers all pursue big name players and none of them are winners. How have they benefited?

I think it is very easy to make a case against pursuing expensive free agents. It is very hard to name expensive free agents who made a real difference to the team's success. If you can do just as well without spending the $9 million on Doug Weight or Bobby Holik, why on earth would anyone spend it? The way to get better is to give young players a job.

But more importantly, it's about facilitating player retention for the poorer teams. It's really the same problem, only at different places.

Why? If the poorer team can make a great deal by not retaining the player, shouldn't they do it? They are not winning in the short run with the player. Isn't it wise to convert the player into assets worth something beyond the short run?

Explain why Buffalo would want to keep Hasek? Why would Phoenix want Tkachuk or Vancouver want Mogilny? These are assets to be used to build a better tomorrow.

And this is why I support the owners (but not a hard cap at all costs) in this CBA. It's because I know for a FACT, undeniably, that every single contract a team signs in this league not only affects this team but also the 29 others one way or another. Always.

It is not a fact. It is bunk.There are about a thousand players who play in an NHL game. About 70% of them make less than the average league salary, even when rookie bonuses are included. None of those contracts has any impact on any other team. Those with less than five years in the league - most - have a salary with ceilings imposed by the CBA. Everybody pays these guys the same.

Among the 30% of the players that make more than the league average, 3 out of four have achieved free agency. In other words, the relative handful of players good enough to still be in the league at age 31 - about 15% of players last that long - get almost $3 million a year and have a disproportionate impact on the ALS.

Those players have contracts that cannot be used in arbitration. The fact that Bobby Holik gets paid $9 million affects the New York Rangers and Bobby Holik. Nobody else. I suppose people could argue that it also affected the New Jersey Devils, but that is a hard case to make when they won the Stanley Cup the year after losing Holik. They were smart to let him go at that price.

A relative handful of player contracts set the salary bar among RFA's with arbitration rights. Theodore's was critical, setting the bar for goalies who entered the league after the entry level system was enacted. Turco and Giguere both used him as a comparable. Iginla sets the standard for skaters. Nobody can get more. Jovanovski for the young defensemen. Once Jovo signed, Redden fell right into line. The best in each age level determine what the good at each level get.

Below good at each level, the player takes what is offered - usually the 10% qualifying offer - because winning the job and the opportunity to improve to good is more important than the money.

Tom

 

[Vlad The Impaler]

I think it is very easy to make a case against pursuing expensive free agents. It is very hard to name expensive free agents who made a real difference to the team's success. If you can do just as well without spending the $9 million on Doug Weight or Bobby Holik, why on earth would anyone spend it? The way to get better is to give young players a job.

The problem is that these players, right now, GET the $9,000,000

So they become off-limit for a great number of teams, sometimes including their former teams. It is not healthy to be in a constant state of rebuilding.

Why? If the poorer team can make a great deal by not retaining the player, shouldn't they do it? They are not winning in the short run with the player. Isn't it wise to convert the player into assets worth something beyond the short run?

Explain why Buffalo would want to keep Hasek? Why would Phoenix want Tkachuk or Vancouver want Mogilny? These are assets to be used to build a better tomorrow.

You assume they are never going to win with the player. Are you sure that's true? We can't know unless we allow all teams a *relatively* equal playing field. If there is some sort of cost-control, the Sabres keep Hasek. Why would they want to keep him? Well, they've sucked a great deal since he left. What else can they do if the field is equal? Maybe they add a piece or two to the puzzle.

The point is, at the moment teams can afford all players, it becomes a game of hockey-related decisions.

It is not a fact. It is bunk.There are about a thousand players who play in an NHL game. About 70% of them make less than the average league salary, even when rookie bonuses are included. None of those contracts has any impact on any other team.

We will have to agree to *strongly* disagree. I wouldn't know what the average salary is but I know every signing affects everybody else. Not just on a comparative field, as you seem to be hinting at, but also as a player you secure and a player the 29 other teams do not secure.

It's all related in so many ways. Gaborik and Havlat look at Richards. Then they whine. Then one of them signs for much less, then mid-season the other signs as well for the same amount. Yet despite the difference between Richards and the others, they are all related.

Minnesota clashing with Gaborik also possibly affects several teams since Minnesota stunk all season. It allows one more team (maybe) to get in the playoffs at their expense.

If Minnesota had panicked, it might have affected another team differently, perhaps by acquiring Gaborik.

And actually, the 70% of players is probably a bigger problem than the others. Surprisingly, I saw a few posters break down the numbers last year and the players past the elite each a LARGE chunk of the budget. So the $400k savings here and there quickly add up.

As for the 30% making above league average, you may underestimate how important this is. You're talking about the elite. The elite are most of the players who will also play a good number of years (as opposed to the 4-5 year career guys who will disappear).

It's the bread and butter and cannot be dismissed. I also disagree with you on youth VS veterans. You often need veterans. You need stability. It's a great asset. You build your core from within but it doesn't hurt if you can:

A: Retain this core, which most teams are not able to do
B: have the ability to add the missing pieces

IThose players have contracts that cannot be used in arbitration. The fact that Bobby Holik gets paid $9 million affects the New York Rangers and Bobby Holik. Nobody else. I suppose people could argue that it also affected the New Jersey Devils, but that is a hard case to make when they won the Stanley Cup the year after losing Holik. They were smart to let him go at that price.

It affects everybody who can't afford that pukey price but might have enjoyed getting such a player. And it affects the salary scale as well to a lesser extent, although this one was so idiotic most people were stunned.

A relative handful of player contracts set the salary bar among RFA's with arbitration rights. Theodore's was critical, setting the bar for goalies who entered the league after the entry level system was enacted. Turco and Giguere both used him as a comparable. Iginla sets the standard for skaters. Nobody can get more. Jovanovski for the young defensemen. Once Jovo signed, Redden fell right into line. The best in each age level determine what the good at each level get.

Yeah, but there's always a loser having a career year and throwing the scale out of whack again. And it's a pile of problems we should be without. Frankly, I could do without all the whining and the letdowns that financial concerns create. I do acknowledge that finances must play a part to some extent, but this has become ridiculous.

The bar you've seen set will be shattered again soon enough, at increases that have nothing to do with the inflation. It's an out of control mess that needs to be fixed, IMO.

I'm not even going to get into the distraction for the players when they clash with management or go to arbitration. Ugh...

 

[me2]

Explain why Buffalo would want to keep Hasek?

Because its good for the fans. Trading franchise players and stars damages relations with the fans.

It is not a fact. It is bunk.There are about a thousand players who play in an NHL game. About 70% of them make less than the average league salary, even when rookie bonuses are included. None of those contracts has any impact on any other team. Those with less than five years in the league - most - have a salary with ceilings imposed by the CBA. Everybody pays these guys the same.

If none of those contracts effect other teams then surely the price wouldn't be "the same" between clubs. So which is it "Everybody pays these guys the same" or "none of those contracts has any impact on any other team".

 

[Tom_Benjamin]

Because its good for the fans. Trading franchise players and stars damages relations with the fans.

Only because the fans are ignorant. And this does not last long if he team makes good choices. The Sabres were not going to win in Hasek's last year. Giving the ice time to Biron was a good thing for the organization. If the fans can't see that, they don't understand the game.

If none of those contracts effect other teams then surely the price wouldn't be "the same" between clubs. So which is it "Everybody pays these guys the same" or "none of those contracts has any impact on any other team".

Neither. Everybody pays these players the same because the CBA sets out the pay scale.

Tom

 

[Ar-too]

Re: NFL parity

Why in the world would hockey not want to be like the NFL? The most popular sport in America why? Because every team has a shot every year. There's a reason why football is now America's pastime and baseball isn't. There are only a handful of teams that have a chance each year in baseball. In football, you can only count out a handful of the teams at the start of the year.

Parity may breed mediocrity, but it also breeds a broad, loyal fan base - you tell me which you think the owners think is more important.

 

[Motown Beatdown]

Re: NFL parity

Why in the world would hockey not want to be like the NFL? The most popular sport in America why? Because every team has a shot every year. There's a reason why football is now America's pastime and baseball isn't. There are only a handful of teams that have a chance each year in baseball. In football, you can only count out a handful of the teams at the start of the year.

Parity may breed mediocrity, but it also breeds a broad, loyal fan base - you tell me which you think the owners think is more important.

Comparing the NHL to the NFL is comparing apples to oranges. It has nothing to do with Parity. The NHL doesn't not have the fan base in America and TV revenue. It's as simple as that.

And in the NFL you still have alot of the bad franchises still being bad franchises because of poor management.

Also, NFL owners dont need to spilt money, Pretty much the whole payroll is paid by the TV contracts.

 

[Ar-too]

Comparing the NHL to the NFL is comparing apples to oranges. It has nothing to do with Parity. The NHL doesn't not have the fan base in America and TV revenue. It's as simple as that.

And in the NFL you still have alot of the bad franchises still being bad franchises because of poor management.

Also, NFL owners dont need to spilt money, Pretty much the whole payroll is paid by the TV contracts.

I understand that. My point is that the benefits of the NFL's system far outweigh it's drawbacks. Hockey fans in most NHL cities have the same issue that baseball fans have: they know their team isn't going to win.

 

[Taranis_24]

It won't increase revenues for anybody. To increase revenues, the NHL has to sell more tickets at higher prices or entice more television viewers.



Unless there is a team with $6 million in cap room. Or $8 million. The salaries for the best players won't go down with a salary cap. It will very probably go up. The salaries for the older players will go down and the salries of role players will go down, but Iginla will probably get more. Right now only Calgary can bid for him.



It would artificially keep salaries down. That's the whole point.



Crap. If all the Edmonton revenues goes to salaries, they sure don't generate much in the way of revenues because their payroll is only $30 odd million. On the other hand, if they do generate a good amount of revenue, they are making money because their payroll is so low.

Even if we accept the NHL definition of revenue, the average team turns about $70
million US in revenues. If Edmonton was generating the average amount of revenues they would be laughing.

Tom

Tom,

It's not just about payroll. Teams pay per diem to the players for their road games, how much that is I'm not sure. But let's just say it's $50, it's probably higher. That's $41,000 a season, not much but it counts. The teams pay for their hotel rooms, two players per room and say a room is a $100. So that's another $2000 per game so $82,000. Teams pay for the flights to and from the games. There's other expenses travel from the hotel to the game. It all adds up. In the Edmonton example you have above payroll is $30M, revenues at $70M that's a about a 43%-45% ratio. The NHL is claiming it's closer to 75% league wide. The other leagues are in the 58%-63% range and that what the NHL is looking for. At 75% you really don't have much left to pay the rent on the building in which cases some teams have to do, or to pay your coaches and trainers, or to pay the concession staffs to work the games. I believe the NHL mgt group would consider a luxury tax but it would have to have some bite to it to make it work to make all the teams competitive. Say a 12-15% rollback on wages, a $1 for $1 tax on on teams with a payroll > $42-$45M range. Some work on entry - level contracts and reduce the FA age to 29. Teams can exceed the salary range of $42M-$45M but they know they would have to pay to do so. Maybe put in words that teams can exceed the cap without penalty to resign players already in their organization. If revenues increase the payroll range can always go up and is flexible from year to year.

 

[Tom_Benjamin]

It's not just about payroll. Teams pay per diem to the players for their road games, how much that is I'm not sure. But let's just say it's $50, it's probably higher. That's $41,000 a season, not much but it counts. The teams pay for their hotel rooms, two players per room and say a room is a $100. So that's another $2000 per game so $82,000. Teams pay for the flights to and from the games. There's other expenses travel from the hotel to the game. It all adds up.

Sure, it all adds up. But these costs are all fixed. Bad teams pay them and good teams pay them. High revenue teams pay them and low revenue teams pay them. They do not vary with revenue.

In the Edmonton example you have above payroll is $30M, revenues at $70M that's a about a 43%-45% ratio. The NHL is claiming it's closer to 75% league wide.

This is exactly the point. Even if you add other costs like the per diem and travel to the players - a ridiculous proposition - you can't get Edmonton up to 75% of revenues. At the other end, the Rangers are probably running a payroll at 85-90% of revenues. The lower the revenue, the smaller the player share because the other fixed costs have to be covered first. That's the way it should be. When revenues boom the player share as a percentasge should rise. When revenues are flat or falling, the player share will fall too.

Even if we accept the 75% number it does not apply to all teams. Edmonton is not a big money loser. They usually make money. When they don't they don't lose much because they control costs. When revenues go up, they will increase payroll and the player share will go up.

It is very easy to see why the players will not tie revenues to payrolls. Suppose we all agree that the player share should be 60% at current revenue levels. Suppose we all agree that the other fixed costs amount to 30% on $2 billion in revenue, and suppose we all agree a 10% annual profit is a good deal for the owners. (The amounts aren't important. They just illustrate the point.) The owners get $200 million, the players get $1.2 billion and all of the fixed costs amount to $600 million.

What happens if next year revenues go up to $2.2 billion? Fixed costs stay about the same. The owners get 40% of the incremental revenues instead of 10%. In a free market the players would get the vast majority of that extra $200 million and the owner still gets his fair return and still covers his other costs. In a market that artificially restricts what the players can get, the return gets fatter and fatter for the owners with every increase in revenues.

The players are fine with a luxury tax. It won't change the percentage paid out to the players because tax money is redistributed. It is revenue sharing and the owners won't revenue share. Not significanty.

The issue is not competitive balance. If Tampa and Ottawa can be winners anyone can. The owners have conflated revenue and payroll imbalances into competitive imbalance. The league is fair. It won't be made fairer with a salary cap. It will not be made fairer if salaries are tied to revenues. The owners would accept exactly this CBA if the players agreed to a salary holdback with moneys over the threshold kicked back to the owners. It would have zero impact on the league as we know it today, but Bettman would be happy. Brian Burke suggested this one.

The owners don't care about anything except getting a bigger share of that incremental income. This has nothing to do with allowing lower revenue teams to keep their players or inspiring more hope or anything else except money and a guarantee of profits league wide.

Can you imagine a dispute where the players were insisting on a profit cap?

Tom

 

[PecaFan]

It's not just about payroll. Teams pay per diem to the players for their road games, how much that is I'm not sure. But let's just say it's $50, it's probably higher. That's $41,000 a season, not much but it counts. The teams pay for their hotel rooms, two players per room and say a room is a $100. So that's another $2000 per game so $82,000. Teams pay for the flights to and from the games. There's other expenses travel from the hotel to the game. It all adds up.

A lot of this info is readily available, nhlcbanews.com is your friend.
Per diem last year was $85 a day. So, assuming that half the season is spent on the road, that's somewhere just over three months. Let's say 100 days. So, each player makes around $8500, times 22 players or so = roughly $187,000 per year.

As for hotels, sorry, but I'm laughing my ass off. $100? Where do you think these guys stay, Super 8? These guys stay at class hotels, Four Seasons etc. Room costs, even with discounts for booking multiple rooms would be way higher than that.

 

[Vlad The Impaler]

Only because the fans are ignorant. And this does not last long if he team makes good choices. The Sabres were not going to win in Hasek's last year. Giving the ice time to Biron was a good thing for the organization. If the fans can't see that, they don't understand the game.

Preferences often have little to do with ignorance.

If you grew up admiring a player, if he's your favorite player, you're obviously not going to like hockey as much when he's traded.

I would say right now (and this is an issue that goes well beyond the CBA) there is way too little stability in franchises.

Elite players making big salaries are often veterans with great recognition. They've been there for a long while and casual fans have a much easier time relating to them. They can raise the level of interest in hockey, sell more merchandise and basically be the face of the franchise.

Even if we accepted that fans are ignorant (I think that's unfair), it still wouldn't change the problem: owners would still benefit from those players "because their fans are ignorant".

One way or another, having to dump continually your good established stars is a losing proposition for many teams, IMO.

 

[Tom_Benjamin]

I would say right now (and this is an issue that goes well beyond the CBA) there is way too little stability in franchises.

I'd wager there is less turnover on a hockey team than in any other sport. Any cap system will lead to less stability, not more.

Elite players making big salaries are often veterans with great recognition. They've been there for a long while and casual fans have a much easier time relating to them. They can raise the level of interest in hockey, sell more merchandise and basically be the face of the franchise.

Like when the Canucks traded Linden? It hurt and lots of fans were upset. It was not hard to convince fans that the team did the right thing in dealing him, in dealing Bure and in dealing Mogilny, all fan favourites.

Emotionally I hated the Linden deal. As a fan who figured the team had to do something drastic to get better, I applauded.

Even if we accepted that fans are ignorant (I think that's unfair), it still wouldn't change the problem: owners would still benefit from those players "because their fans are ignorant".

One way or another, having to dump continually your good established stars is a losing proposition for many teams, IMO.

So how come these teams aren't leading the parade of money losers? The teams that head the list are the ones who had not dumped the established stars.

Tom

 

[Buffaloed]

The players are fine with a luxury tax. It won't change the percentage paid out to the players because tax money is redistributed. It is revenue sharing and the owners won't revenue share. Not significanty.

I think the owners will share revenue, and already have a revenue sharing plan in place that's acceptable to small market teams, should they succeed in getting a hard cap. Otherwise I can't see why teams losing $13 million with a $35 million payroll voting for a $31 million cap. It's obvious the small market teams support such a cap because it was proposed by the NHL. What the owners don't want is for the players to have any say in how revenue is shared. The NHL currently has exclusive power over revenue sharing. They can share revenues any way they choose without any regard to the NHLPA. If the owners give in to a luxury tax, or make some other revenue sharing scheme part of the new CBA, it's an issue that must be forever more collectively bargained.