How much will the cap increase in two years?

895

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Jun 15, 2007
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I've seen it stated repeatedly on here that the cap will rise a lot in two years due to a new TV deal. But just how much is it expected to go up?

Up to 85m? 90m? Beyond?

I know all the answers will be guesses and that's okay. I just want a sense of the magnitude.

Because I've read a lot fans justifying their terrible contracts this UFA period (Hayes 7x7.14) with the hope that the new TV deal will make it all okay. I'm very doubtful of this.
 

LadyStanley

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Sep 22, 2004
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Will depend on how much new TV deal is.

Let's say US deal goes from $200m to $400m/year.

50% of $200m increase divided by 32 teams = $3.125m per team increase.
 
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mouser

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Jul 13, 2006
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Will depend on how much new TV deal is.

Let's say US deal goes from $200m to $400m/year.

50% of $200m increase divided by 32 teams = $3.125m per team increase.

But let’s say the TV deal does go from $200m/year to $400m per year that doesn’t mean it will double year to year when the new contract goes into effect. Usually the payments increase over the lifetime of the contract, so the NHL is probably getting something like $250m now, and a new $400m/year deal would likely start somewhere in the $350m range. So only a $100m year to year bump.

These are hypothetical numbers of course, but I’m sure you see my point.
 

mouser

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In two years there will be a new CBA (or lockout) so things may change quite a bit.

Could happen, but there doesn’t seem to be much noise about trying to change the 50/50 HRR split by either party.

If anything might be a risk in the future of lower then historical cap growth to finish bringing escrow back closer to 0% by defining the cap formula lower.
 

StreetHawk

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Sep 30, 2017
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Could happen, but there doesn’t seem to be much noise about trying to change the 50/50 HRR split by either party.

If anything might be a risk in the future of lower then historical cap growth to finish bringing escrow back closer to 0% by defining the cap formula lower.
I think so as well.

Agree on HRR and the split.
Figure out how to set the cap so that escrow is as close to zero as possible.
Everything else about the cba is operational. Have to give to get. Lower ufa comes at a price. Shorter term contract comes at a price.

As for the tv rights who knows. How well are the packages for the NHL working for nbc and how is the NBA package Working for ESPN?
 

LeHab

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Aug 31, 2005
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Could happen, but there doesn’t seem to be much noise about trying to change the 50/50 HRR split by either party.

If anything might be a risk in the future of lower then historical cap growth to finish bringing escrow back closer to 0% by defining the cap formula lower.

Not expecting 50-50 split to be changed either but the cap calculations may be slightly tweaked to address escrow.
 

Ted Hoffman

The other Rick Zombo
Dec 15, 2002
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[snark] Ask us in 2 years. [/snark]

Unless I missed something, the contract with NBC Sports doesn't expire until after 2020-21. So, for '20-21 I would only expect a small bump - say, to $81 million.

After that? Take a guess on what you think the new TV contract will be (on average per year), decide how the 1st year's payout will look, divide that by 64 [32 teams x 50%], and add about $2 million to that for "normal" growth, the probably add about $1.5 million for the impact of bringing in Seattle, then add all of that to $81 million.

If you think the midpoint will be moved lower to help adjust for escrow, multiply that total above by roughly 50/X where X is the percentage of HRR that you think the midpoint will be based off of in the next CBA.
 
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LadyStanley

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Mud, this coming season's cap is $81.5m, so you're actually expecting a negative increase for next season?

Many think there might be a $2m or so increase for 2020-2021.
 

Ted Hoffman

The other Rick Zombo
Dec 15, 2002
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Mud, this coming season's cap is $81.5m, so you're actually expecting a negative increase for next season?

Many think there might be a $2m or so increase for 2020-2021.
Sorry, I had $79.5 million in my mind when I was jumping off. Take the $81 million in my post, make it $83 million. Probably a few hundred thousand more, but I'll take a slightly conservative approach. [Something NHL teams apparently don't know how to do.]
 

Ted Hoffman

The other Rick Zombo
Dec 15, 2002
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Bump:


Does this mean it’ll be 3 x 30 (teams) = 90 million total cap for example?
Well, there will be 32 teams, so ... go read the rest of the thread, then come back and ask your question using the information provided above.
 

powerstuck

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The only example, while not 100% true, can be the last Canadian TV deal.

The deal which began in 2014-15 is almost a double of the previous Canadian TV deal (was around 200-250M/year and is now 443M/year).

The cap went from 64.3M in 13-14 to 69M in 14-15.

While you cannot attribute 100% of the cap increase to the TV deal, you can at least give it a good half of it.
 
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IceManCat

#TheFloridaPanthers
Jul 13, 2006
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Well, there will be 32 teams, so ... go read the rest of the thread, then come back and ask your question using the information provided above.

Well I’ve actually read the entire thread as I went deliberately looking for it. Clearly I still don’t have an answer. Why don’t you provide a more clear answer Captain Obvious. Your answer of a cap increase being only two million is completely unrealistic especially considering the giant contracts being handed out. “conservative” .... right
 
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MNNumbers

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To confirm what Mud said....

Cap calculation right now is a little bit of guesswork, because we don't really know what is going to happen with addressing the escrow problem.

Let's think of it this way:
If the cap is 81.5M, and the players lose 10% (close estimate), then the cap is really only 73.5M or so. The factors you have to guess at to figure our where the cap will be in 3 years are:

1- Affect of Seattle
2- How much escrow loss the PA will actually be happy with
3- New TV deal
4- Normal growth
5- Connected with (2) is whether there will be a phase-in period.

My best guesses:
1- Seattle would have to have revenues 62M above the league average to raise the cap by 1M. I think that is highly doubtful. Maybe 1/2 of that will happen. So, Seattle coming in raises the cap by 500K
2- I think the players would be happy with 4% escrow losses. That lifts the nominal cap by about 3.5M
3- New TV. Big question. If more than 200M a year is added, I'll be surprised (and it will tell me that TV execs are in panic mode). That's 3M a year, as has been stated.
4- Normal growth of 2%/yr is 6% in 3 years, so that's a little more than 4M

When you add all that together, you get something like 11M more than the base level of 73.5M that we started with. That makes 84.5M. Since that's above the figure that was in use for next year, then that's my best guess, and I don't think a phase in to a new cap definition for the sake of escrow will be affecting the cap at that point.
 

MNNumbers

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I think it'll go up by 3-5 million per team, depends largely on the TV deal.

Bump:


Does this mean it’ll be 3 x 30 (teams) = 90 million total cap for example?

IceMan Cat..

What Tony D means is that the cap will be 3-5M MORE THAN CURRENT. That would be 86.5M or so.
And, he is saying that the increase will be largely because of TV.

In other words, his numbers are already "per team".

I hope that helps.
 

Ted Hoffman

The other Rick Zombo
Dec 15, 2002
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Well I’ve actually read the entire thread as I went deliberately looking for it. Clearly I still don’t have an answer. Why don’t you provide a more clear answer Captain Obvious. Your answer of a cap increase being only two million is completely unrealistic especially considering the giant contracts being handed out. “conservative” .... right
You do realize that where the cap is set has everything to do with revenues generated and nothing to do with the value of contracts being signed ... right?

And since no one has any idea what revenues will actually be in 2 years, ... well, I provided an answer up above.
 

IceManCat

#TheFloridaPanthers
Jul 13, 2006
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IceMan Cat..

What Tony D means is that the cap will be 3-5M MORE THAN CURRENT. That would be 86.5M or so.
And, he is saying that the increase will be largely because of TV.

In other words, his numbers are already "per team".

I hope that helps.

Thanks, okay that’s what I was looking for I thought perhaps he came up with some other algorithm for calculating it seems then to be in the same general ballpark as what everyone else is saying.

I still don’t understand why we are seeing such large contracts and presumably will continue to see even higher contracts in the next few years if the cap is “only” projected to go up by a few million. It seems to me that NHL GM’s are betting on a big cap increase as are player agents.
 

IceManCat

#TheFloridaPanthers
Jul 13, 2006
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You do realize that where the cap is set has everything to do with revenues generated and nothing to do with the value of contracts being signed ... right?

And since no one has any idea what revenues will actually be in 2 years, ... well, I provided an answer up above.

Well to answer your first point I may be misunderstanding here but if the “revenue” is projected to stay the same then the cap shall be the “same”. Correct?

So if the “value” of the player contract is higher which they have been on an upward slope, it should imply that the revenues (cap space) is expected to also be higher because of a traditional correlation between the two.

To summarize, larger contracts taking up a larger amount of cap space should imply that the overall team cap is going to go up. Technically speaking they are not relevant to each other but they have in years past been correlated. The correlation being the higher players have been signing for the higher the expected cap is to increase.

These last few years we have seen contracts go up in value *seemingly* higher than usual. This leads me to *guess* that the cap is going up *higher* than it usually does.
 

Ted Hoffman

The other Rick Zombo
Dec 15, 2002
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Well to answer your first point I may be misunderstanding here but if the “revenue” is projected to stay the same then the cap shall be the “same”. Correct?
All other things also being equal, correct.

So if the “value” of the player contract is higher which they have been on an upward slope, it should imply that the revenues (cap space) is expected to also be higher because of a traditional correlation between the two.
Incorrect. Player contract values because (a) actual revenues have gone up [well, it's not quite that simple; see my comments down below], and (b) there's an expectation that revenues will continue to go up. Historically, the expected growth in (b) has exceeded actual growth from (a) which is why you see teams getting more and more cap-crunched even absent how fewer players are taking up larger portions of the cap.

To summarize, larger contracts taking up a larger amount of cap space should imply that the overall team cap is going to go up. Technically speaking they are not relevant to each other but they have in years past been correlated. The correlation being the higher players have been signing for the higher the expected cap is to increase.
Larger contracts taking up a larger amount of cap space simply means that teams are paying more dollars to fewer [more valuable to the team, more highly skilled, etc.] players, not that it's being done because revenues are increasing. As I repeatedly point out, correlation is not causation.

These last few years we have seen contracts go up in value *seemingly* higher than usual. This leads me to *guess* that the cap is going up *higher* than it usually does.
That's been the expectation for years. See my comment about expected growth vs. actual growth.

I think there's a few things driving contract values up. In no particular order:
-- Even when players could have potentially earned in excess of $10 million per (e.g., once the cap got over $50 million), no one was getting those contracts. Once that barrier was broken, it was easier for players to go argue for and get $11 million, $12 million, $13 million per. [Side-point to this: I think previously the top-tier players were more willing to take less for the good of the team, but I'll concede that the evidence to support that is weak.]
-- Players are trying to get larger yearly salaries (especially signing bonuses) to make up for the portion they inevitably lose to escrow ... which only aggravates the problem with escrow for all the players as a whole and impacts how much they actually take home. The give-take cycle spins upward from there.
-- Permissible contract lengths have been artificially shortened [unnecessarily, IMO], so you end up with players unable to gain the security of additional term by taking lower salaries in later years. That means players demand higher compensation for the shorter period of time they're going to be under contract, since the future is not as certain; that means cap hits necessarily have to go up as a result, which makes it easier for a handful of contracts to take up a larger percentage of cap space than before.

None of that has anything to do with whether revenues are growing, other than that revenues dictate the cap which dictates the max allowable salary.
 
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Internettoughguy314

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Oct 20, 2017
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I think some of you are undervaluing what the next TV deal is going to bring. The WWE new tv deal increased revenue 3.6 times over their old deal. With the competition brewing for the TV rights I could easily see an increase greater than what most of you are speculating. With cable cutting becoming more and more popular TV rights are only going to increase in value in the next two years too.
 

HugoSimon

Registered User
Jan 25, 2013
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Will depend on how much new TV deal is.

Let's say US deal goes from $200m to $400m/year.

50% of $200m increase divided by 32 teams = $3.125m per team increase.

Your math is funky, you have to skim at least 80 mill off of that figure for Seattles expansion.
 

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