How would the NHL receive a NHLPA proposal that..

[CarlRacki]

Saying UFA in the NFL is 24 is a little misleading because, in fact, very few if any 24-year-old NFL players ever get unrestricted free agency. Under NFL rules, a player cannot become an unrestricted free agent until he's played four years in the league. Most NFL players are 22 years old or older when they sign their first pro contract. For example, last year's top pick, Eli Manning, was 23 when he signed. The second pick, Robert Gallery, was 24. The third pick, Larry Fitzgerald (who came out as a sophomore) was 21.
On top of that, most of the good ones (i.e. first thru third-round picks) sign contracts four to seven years in length. Manning signed a six-year deal. So did Fitzgerald. Gallery's was for seven years. So, in reality, most good players aren't unrestricted free agents in the NFL until they're 27 or older. In some cases (i.e. Manning and Gallery) they'll be 29 and 30 years old, respectively. And that's assuming their team doesn't place a franchise or transition tag on them. Theoretically, some players might never receive UFA under the NFL system.

 

[Shawnski]

While the ceiling of the seller must come down, I don't think the floor should come up. It should stay at $25m (or whatever it was originally set to). The seller would than have $25m-$32.5, which should be enough range to keep things even.

I do not believe an asset should be sold without subsequent replenishment into the pool (this is the concept of voluntary revenue sharing/payroll expenditures). I.e. From an NHLPA perspective, they would want the funds to be spent. As part of the NHL side to reach out to the NHLPA for agreement, move cap only happens if you move floor.

The main problem is working out who gets to sell space. If 5 buyers and 6 sellers, is it fair that 1 seller misses out? If there are 7 buyers and 4 sellers, is it fair 3 buyers miss out. I wouldn't mind seeing the sold cap space pooled and then distributed from there. That way all the buyers get a chunk and all the sellers get a bit back.

Free market. Those that can trade... do. If four out of six "sellers" find markets... so be it.

 

[me2]

I do not believe an asset should be sold without subsequent replenishment into the pool (this is the concept of voluntary revenue sharing/payroll expenditures). I.e. From an NHLPA perspective, they would want the funds to be spent. As part of the NHL side to reach out to the NHLPA for agreement, move cap only happens if you move floor.

But the funds are spent.

1. If Toronto buy $7.5m in cap space they will use it. At worst the Penguins spend $7.5m less, but in reality they likely spend the same as they would have before they sold the cap space. If the Pengs are down $7.5m and the Leafs are up $7.5m that is equalibrium.

2. In reality its just the Leafs spending $7.5m and the Pengs pocketing the cash. NHLPA is up $7.5m.

3. If you force the Pengs to spend $7.5m more and Toronto spends $7.5m then the NHLPA is up $15m.

1 & 2 are better solutions than 3. If Pengs want to put that $11m in Marios pocket or stockpile it for a future year they should be allowed.

Free market. Those that can trade... do. If four out of six "sellers" find markets... so be it.

If the price is regulated its not a free market. Why not make the price float up and down with demand?

 

[Shawnski]

3. If you force the Pengs to spend $7.5m more and Toronto spends $7.5m then the NHLPA is up $15m.

And that is the olive branch to send to the PA to solve the impasse... (the "save face" aspect, if you like)

If the price is regulated its not a free market. Why not make the price float up and down with demand?

Nothing stops them from trading their cap in conjunction with players/picks in order to give the seller optimal benefit. Prices will thereby "float" year over year with demand.

Good feedback. Keep it coming.

 

[shakes]

Free market. Those that can trade... do. If four out of six "sellers" find markets... so be it.

Are the teams limited to just purchasing cap space? I mean, let's say there is only one team willing to part with cap space and there are two bidders. Are teams able to throw in picks and/or prospects to outbid for the cap space?

 

[Guest]

This whole proposals from SHAWNSKI is basically just an advanced luxury tax system. It allows teams to exceed the cap by $7.5 million, but then in turn raises the payroll floor for those teams who don't meet the cap. I too started to wonder about teams not being able to secure the proper funds to make the max cap of $47.5 million and think it might just be better all around to treat it differently.

Soft cap of $40 million, Salary Floor of $25 million, Hard cap at $47.5 million.

If Toronto decides to take their payroll to $47.5 million, they must pay a $1 for $1 ratio for the $7.5 million over the soft cap as luxury tax. This luxury tax is then equally distributed to all teams who are under the soft cap limit of $40 million, but also increases the salary floor by the amount each team receives in luxury tax revenue.

For example, you have 10 teams over the soft cap at $47.5 million, generating $75 million in luxury tax. You would then divide the $75 million in luxury taxes into the 20 teams under the cap, with each team getting $3.75 million. You would also then add that $3.75 million to each teams salary floor creating a new salary floor for everyone at $28.75 million. In this situation, you would have 10 teams paying $47.5 million to the NHLPA, and 20 teams paying at least $28.75 million to the NHLPA. Then you don't have the politics of teams not being able to secure the cap room, nor do you have teams buying the cap room with other things such as draft picks or trades.

Second example, you have 20 teams over the soft cap at $47.5 million, generating $150 million in luxury tax. Divide the $150 in luxury tax by the remaining 10 teams under the cap, each team getting $15 million. Add the $15 million per team from luxury taxes to the $25 million floor, and the remaining 10 teams would have a salary floor at $40 million. You end up with 20 teams paying $47.5 million to the NHLPA, and 10 teams paying $40 million to the NHLPA -- this is the greatest scenario of max profitability for the NHLPA. Keep in mind that those 10 teams are only paying $25 million out of pocket for their $40 million rosters, because of the $15 subsidary from the luxury tax.

It's the ultimate idea to create financial parity in the league in my opinion. Every dollar that the big teams spend help the little teams spend.

 

[Phanuthier*]

Shawnski's proposal is definatly innovative and creative, but (sorry guy) I'm not sure that will fly. If we're already having troubles with a cap like the last proposal (with a luxury tax) this would be even worse for the NHLPA. Personally, I perfer the mix of luxery tax leading up to a cap better.

The extra money transfer... I'd personally like to see that better in a generalized revenue sharing.

 

[octopi]

My guess is it would unfortunatly meet the same fate as the other proposals. Darn it, no linkto the sound of a shredder...

 

[Guest]

My guess is it would unfortunatly meet the same fate as the other proposals. Darn it, no linkto the sound of a shredder...

I don't see SHAWNSKI's proposal flying because it is essentially a luxury tax offer, which the NHL has not been favorable to. I wouldn't wait for any significant revenue sharing packages from the NHL, keep in mind this is the same league with the poorest revenue sharing package historically of the major sports, and the NHL has been vague in defining any revenue sharing it may have in any of it's proposals. Obviously, revenue sharing is a non-issue to the NHL, it's off the table as far as the owners are concerned. I strongly disagree with this philosophy, but then again I haven't put up a couple million dollars of my own money to run a hockey team yet either.

 

[octopi]

I don't see SHAWNSKI's proposal flying because it is essentially a luxury tax offer, which the NHL has not been favorable to. I wouldn't wait for any significant revenue sharing packages from the NHL, keep in mind this is the same league with the poorest revenue sharing package historically of the major sports, and the NHL has been vague in defining any revenue sharing it may have in any of it's proposals. Obviously, revenue sharing is a non-issue to the NHL, it's off the table as far as the owners are concerned. I strongly disagree with this philosophy, but then again I haven't put up a couple million dollars of my own money to run a hockey team yet either.

The big thing I noticed was the floor of 30, ceiling at 40, which I highly dought the players will go for.

 

[thinkwild]

Trading cap space like Kyoto credits could be an interesting way of doing a luxury tax. Better than the rolling cap concept i think which leaves team building as a 2 or 3 year process. However they want to do it, makes no diff to me. Luxury taxes seem the most logical concept. It also allows a ceiling at a level that you strive to attain with excellence like $50mil, creating good management incentive, rather than one an average team could easily manage like $40mil which absolves them of it.

The more worrying thing to me is whether a system meshes with the way a team building cycle should work. How long should it be? Kyoto credits would work for me

 

[Guest]

This whole proposals from SHAWNSKI is basically just an advanced luxury tax system. It allows teams to exceed the cap by $7.5 million, but then in turn raises the payroll floor for those teams who don't meet the cap. I too started to wonder about teams not being able to secure the proper funds to make the max cap of $47.5 million and think it might just be better all around to treat it differently.

Soft cap of $40 million, Salary Floor of $25 million, Hard cap at $47.5 million.

If Toronto decides to take their payroll to $47.5 million, they must pay a $1 for $1 ratio for the $7.5 million over the soft cap as luxury tax. This luxury tax is then equally distributed to all teams who are under the soft cap limit of $40 million, but also increases the salary floor by the amount each team receives in luxury tax revenue.

For example, you have 10 teams over the soft cap at $47.5 million, generating $75 million in luxury tax. You would then divide the $75 million in luxury taxes into the 20 teams under the cap, with each team getting $3.75 million. You would also then add that $3.75 million to each teams salary floor creating a new salary floor for everyone at $28.75 million. In this situation, you would have 10 teams paying $47.5 million to the NHLPA, and 20 teams paying at least $28.75 million to the NHLPA. Then you don't have the politics of teams not being able to secure the cap room, nor do you have teams buying the cap room with other things such as draft picks or trades.

Second example, you have 20 teams over the soft cap at $47.5 million, generating $150 million in luxury tax. Divide the $150 in luxury tax by the remaining 10 teams under the cap, each team getting $15 million. Add the $15 million per team from luxury taxes to the $25 million floor, and the remaining 10 teams would have a salary floor at $40 million. You end up with 20 teams paying $47.5 million to the NHLPA, and 10 teams paying $40 million to the NHLPA -- this is the greatest scenario of max profitability for the NHLPA. Keep in mind that those 10 teams are only paying $25 million out of pocket for their $40 million rosters, because of the $15 subsidary from the luxury tax.

It's the ultimate idea to create financial parity in the league in my opinion. Every dollar that the big teams spend help the little teams spend.

As well, the average team salary could range between $25 million if everyone stayed at the floor, or $45 million max if the maximum of 20 teams hit the high end of the cap and the rest of the league hit the soft cap limit. The NHL is wanting to have a salary range topping out around $35 million I believe, so you'd have to see a decrease in the soft cap level and salary floor.

If you lowered the floor to $20 million, the soft cap to $30 million, and the hard cap to $35 million, you would be in a max salary range of $20 million and $33.3 million, which is more what the NHL would be in line for. Of course the NHLPA would prefer the higher numbers.

The whole arguement is that they are fighting for the larger/smaller piece of the pie, so in the end a proposal of this nature does little to change the fundamental differences.

 

[me2]

Unfortunately these schemes have a few major flaws

1. Inflationary. The top end teams are spending more, and the bottom teams are forced to pay more than they might want to. The net effect is higher base salaries as teams try and find players to throw money at to meet their rising salary floors. The total bucket size of the salary cap shouldn't increase

2. The bottom end teams might prefer to put the tax money to paying for the exisiting salaries. A team that is losing $4m a year might think that having pay $4m more (luxury tax share) for its players isn't greatly helpful to it financial stability.

3. It don't address directly address the true problems, the revenue disparity. If Toronto ($118m in revenue) is one of the 10 teams under $40m while Tampa (guess at $60m) is on $40.1m, which team needs that $15m more? Toronto is already pulling in $40m in profit before it gets given another $15m.

Or take Ottawa as an example. At some points its team fully matures and is not taking up $47.5m, Ottawa's revenue is up to $75m. Now Ottawa lost $5m+ on a $70m revenue stream, adding $5m more in revenue and then taking away $7.5m in tax leaves them in a worse state than before.

4. It doesn't affect all teams equally. A wealthy team paying $1 for $1 might not mind, a poor team might not be able to justify $0.25 for $1. Perhaps there should be a scale, relative to a teams income, something like the richest team's penalty is $1 for $1, average team's is $0.50 for $1, poorest team's is $0 for $1. The scale could run from highest revenue to lowest revenue. (of course this would require owners to trust each other to report correctly....)

--------------------------------------------------------

#3 is the key problem. We need to get money from the richest to the poorest teams. Luxury are not the best way to do it, revenue taxes are. Take a percentage (10-30%) from each team over a certain mark ($60m or $70m), this would provide plenty of revenue to prop up weaker teams.

Luxury taxes shouldn't count against a teams revenue sharing responsibilities. If a team is going into the luxury tax range it is doing so to buy itself an advantage, the on ice advantage should be enough of a trade off for the tax.

If teams want to count luxury tax as revenue sharing then they should also give up draft picks as part of the tax. This is because the tax money is no longer a payment for on ice advantage, but rather replacing revenue sharing that they would have had to pay anyway, so some addition penalty needs to be added.

 

[Shawnski]

Actually, Converse, one of the restrictive measures in my proposal is that not all teams will want to sell their cap space. Looking at last years salaries, only seven teams would want to buy the max cap space from other teams (DET, NYR, DAL, PHI, COL, TOR and STL), notwithstanding whether they would be in a rebuilding mode (NYR and TOR perhaps). With the cost of $1.5mill/$1mill cap space included, each of these teams would still have a total payroll less than what they paid last year.

Conversely, there would be six teams that would have to sell some or all of their space for sure in order to get to the floor (if you consider payrolls drop by the 24% NHLPA proposal). These would be CHI, ATL, MIN, FLO, PIT and NAS. Of those six, only two (PIT and NAS) did not have a total payroll last season that would not have hit the $25 million floor (not including the 24% rollback.) So, the other four might be able to just absorb some of the players that the top 7 teams must shed without selling space.

Of the remaining 17 teams, 5 might want to buy as much as 4-5 million (LOS, ANA, WAS, NJD and BOS) as their existing budgets would allow for that. The remaining 12 would potentially be sellers of up to and including the full $7.5 space.

That said, there would be potential purchasers for up to $75.5 mill cap space, and potential sellers of $ 141 mill cap space. Buyers market apparently. Again, these are using last years payrolls and adjusting for rollbacks to justify "buyer or seller" status.

IF the full cap space was purchased, and assuming the lowest payroll teams sold their space, league average payroll would be $39,967,930.68... just shy of $40 mill (including costs to buy space). The range would be $27.67 million to $47.5 million for player payroll.

Now, I can slice and dice it a multitude of ways, but the bottom line, the GM's would have a budget to work with, and if they don't like their budget, they might be able to increase/decrease it somewhat.

Have forwarded this proposal to another "balanced" sportscaster, whom also likes the concept and is forwarding it to others that are more in the picture. Who knows, maybe it at least gets someone in the right circles thinking outside their collective boxes.

Thanks again for your feedback.

SS

 

[Shawnski]

Unfortunately these schemes have a few major flaws

1. Inflationary. The top end teams are spending more, and the bottom teams are forced to pay more than they might want to. The net effect is higher base salaries as teams try and find players to throw money at to meet their rising salary floors. The total bucket size of the salary cap shouldn't increase.

Under what I proposed, average team league salary cannot possibly exceed $40 million... and the range from high end team to low end team can never be more than a 2:1 ratio.

2. The bottom end teams might prefer to put the tax money to paying for the exisiting salaries. A team that is losing $4m a year might think that having pay $4m more (luxury tax share) for its players isn't greatly helpful to it financial stability.

Under what I proposed, a low end team that wants to "sell" up to $7.5 million of cap space that they won't use anyway, will acquire $11.25 in hard cash to spend on payroll. In the worst case last year, Nashville had a payroll of $21.9 million, extremely low. Should they sell their $7.5 space, they would have both a floor, and a cap of $32.5 now. BUT the first $11.25 is covered, thus they are only out of pocket $21.25, which is less than their paltry payroll last year. AND they would have the cash to field a more competitive team, or keep players that are due for an increase, etc. With a better team you should expect a better level of play, thus increasing fan interest, and subsequently increase revenues (profits). That helps long term financial stability. Bottom line, it is the GM's job to make a business decision as to whether buying or selling space is right for his individual team and situation.

3. It don't address directly address the true problems, the revenue disparity. If Toronto ($118m in revenue) is one of the 10 teams under $40m while Tampa (guess at $60m) is on $40.1m, which team needs that $15m more? Toronto is already pulling in $40m in profit before it gets given another $15m.

Or take Ottawa as an example. At some points its team fully matures and is not taking up $47.5m, Ottawa's revenue is up to $75m. Now Ottawa lost $5m+ on a $70m revenue stream, adding $5m more in revenue and then taking away $7.5m in tax leaves them in a worse state than before.

As noted above, in my proposal, each team determines if it wants to sell space in order in acquire further income. Revenue sharing should not be part of the CBA in my opinion. Not only is Iconoclast right in saying some owners are corporations that cannot/would not be able to do that, but it also would lead to "lazy" organizations... an NHL welfare state.

4. It doesn't affect all teams equally. A wealthy team paying $1 for $1 might not mind, a poor team might not be able to justify $0.25 for $1. Perhaps there should be a scale, relative to a teams income, something like the richest team's penalty is $1 for $1, average team's is $0.50 for $1, poorest team's is $0 for $1. The scale could run from highest revenue to lowest revenue. (of course this would require owners to trust each other to report correctly....)

I take it this is directed to another proposal as I have not proposed anything like that.

--------------------------------------------------------

#3 is the key problem. We need to get money from the richest to the poorest teams. Luxury are not the best way to do it, revenue taxes are. Take a percentage (10-30%) from each team over a certain mark ($60m or $70m), this would provide plenty of revenue to prop up weaker teams.

Luxury taxes shouldn't count against a teams revenue sharing responsibilities. If a team is going into the luxury tax range it is doing so to buy itself an advantage, the on ice advantage should be enough of a trade off for the tax.

If teams want to count luxury tax as revenue sharing then they should also give up draft picks as part of the tax. This is because the tax money is no longer a payment for on ice advantage, but rather replacing revenue sharing that they would have had to pay anyway, so some addition penalty needs to be added.

Refer to my answer to your point #3 above. No to CBA mandated revenue sharing. Volunteer salary cap space trading (with a premium to do so) addresses your concerns here. OUTSIDE the CBA, there are some things that can happen, such as occurred with the Canadian teams (other than Toronto) to address the disparity of the American/Canadian exchange rates.

 

[me2]

Under what I proposed, average team league salary cannot possibly exceed $40 million... and the range from high end team to low end team can never be more than a 2:1 ratio.

And if you leave the floor at $25m then average team league salary cannot possibly exceed $40 million either. Nor can it exceed the 2-1 ratio.

Under what I proposed, a low end team that wants to "sell" up to $7.5 million of cap space that they won't use anyway, will acquire $11.25 in hard cash to spend on payroll. In the worst case last year, Nashville had a payroll of $21.9 million, extremely low. Should they sell their $7.5 space, they would have both a floor, and a cap of $32.5 now. BUT the first $11.25 is covered, thus they are only out of pocket $21.25, which is less than their paltry payroll last year. AND they would have the cash to field a more competitive team, or keep players that are due for an increase, etc. With a better team you should expect a better level of play, thus increasing fan interest, and subsequently increase revenues (profits). That helps long term financial stability. Bottom line, it is the GM's job to make a business decision as to whether buying or selling space is right for his individual team and situation.

But now that is inflationary. Nashville has to push their payroll to $32.5m, so now the are bidding against whoever they sold the cap to. Next year their payroll may increase 10-20% as the team matures, but they have lost their ability to sell cap space since they are now looking at $32.5m + 10-20% salary growth. It would be much easier if Nashville could just pocket the $11m+ from the cap salary and either pay off debt or stockpile it for some future date. The players make an extra $7.5m from the cap purchaser whether or not Nashville saves that money for later.

I take it this is directed to another proposal as I have not proposed anything like that.

It wasn't directed at yours.

Refer to my answer to your point #3 above. No to CBA mandated revenue sharing. Volunteer salary cap space trading (with a premium to do so) addresses your concerns here. OUTSIDE the CBA, there are some things that can happen, such as occurred with the Canadian teams (other than Toronto) to address the disparity of the American/Canadian exchange rates.

That's one position. Personally I'd like to see more revenue sharing, but I think the NHL owners feel the same was as you. I suspect the smaller owners have said "we will support the higher cap you want only if you give us the equivalent amount in revenue sharing". I presume the richer owners said "no, we go with your lower cap idea then".