It says here Players talking of $60 million luxury tax threshold

[NYI]

One of the biggest misconceptions around hockey today is that the Rangers are this big market team that make money and has revenue to share and sellout games, it's just not true. Writers in other markets do not follow what happens, meanwhile the Rangers play in obscurity in the New York sports market today, their high priced team of name players are invisible in the media here because baseball drives the market and the other teams take the rest of the attention span year round. There is only one fan demographic that goes to hockey games here. Hockey is not a major sport in this area.

i don't have quotes or anything but here is how the Rangers make money. Dolan owns %100 of MSG, Dolan owns 100% of the MSG network and Dolan owns the Rangers. He is triple dipping into the team. While some teams might be lucky to get 50% of the gates at any hockey game, dolan gets 100% of the gates as well as food revenue(because he owns the arena and the team). If Dolan only owned the Rangers, sure it would be a losing proposition, but you figure he cleans in roughly 2 million+ a game when all is said in done with him owning both the team and arena(80 million over a season).

When he is doing his financial records, he probably only claims a small amount(let's say way less then the average team) of the gates at MSG and can write the team as a loss.

The same can be said about his local TV coverage. Dolan gets 100% of that money as well(every cent that advertisers pay go into dolan's pocket as well as every penny that cable companies pay him to have his service which show the Rangers), while most other teams can only claim a percentage.

Doing very rough estiments, Dolan makes roughly $80 in ticket revnues, 40 million for showing Ranegr games on MSG network and 10 million from the league contracts. That's a total of 130 million in revenue. The price he pays for his team is 70 million in contracts, 30 million in operating expenses. So when all is said and done the Rangers make him a decent profit(when you look at the 3 businesses he owns). If Dolan didn't own MSG or the MSG network, the Rangers would be big money losers.

 

[NYIsles1*]

i don't have quotes or anything but here is how the Rangers make money. Dolan owns %100 of MSG, Dolan owns 100% of the MSG network and Dolan owns the Rangers. He is triple dipping into the team. While some teams might be lucky to get 50% of the gates at any hockey game, dolan gets 100% of the gates as well as food revenue(because he owns the arena and the team). If Dolan only owned the Rangers, sure it would be a losing proposition, but you figure he cleans in roughly 2 million+ a game when all is said in done with him owning both the team and arena(80 million over a season).

I can only objectively work with numbers I know, I can take some fair guesses but that's what they are. But I will try here.

I'm guessing you mean the Knicks when you speak of triple dipping. Heck they can dip into Cablevision also and a half dozen other things and so can a bunch of owners. Like all teams they contract out for the things like concessions so they take a percentage or a flat fee, by contrast we have no idea if the managing company of the building takes anything like Smg takes from the Islanders.

You have to think some company takes something for services.

When he is doing his financial records, he probably only claims a small amount(let's say way less then the average team) of the gates at MSG and can write the team as a loss.

As Charles Wang has done with his 23 million dollar loss in 2003 as he reported to the Times when Forbes looked at the books.

The same can be said about his local TV coverage. Dolan gets 100% of that money as well(every cent that advertisers pay go into dolan's pocket as well as every penny that cable companies pay him to have his service which show the Rangers), while most other teams can only claim a percentage.

Doing very rough estiments, Dolan makes roughly $80 in ticket revnues, 40 million for showing Ranegr games on MSG network and 10 million from the league contracts.

Were also really not sure what deals have been agreed to regarding the Fox/Msg merger that turned them into one sports entity several years ago. Rupert Murdoch get's a large percentage of revenue in this, this is not a James Dolan's 100 percent profit as you indicate.

Here are the television figures going into last season, what each team get's from the outside contracts.

http://www.andrewsstarspage.com/8-10cba.htm

Annual total revenue per team from national TV rights: about $6 million, not including local TV money.

The New York Rangers are estimated to pull in $25 million per year from local rights. So do the Boston Bruins. Toronto gets $23 million. Montreal gets $16 million. The Dallas Stars get big bucks in local TV revenue thanks to owner Tom Hicks' 15-year, $550 million deal with Fox Sports to broadcast both the Stars and Texas Rangers baseball games on a local and regional level. But not every NHL team pulls in big dollars from local TV. Some of the smaller market teams in the U.S. pull in less a $1 million per year from local broadcast rights.

Let's put the Rangers at 31 million, the Islanders at 20 million, Msg has to pay the Islanders 13 million for their television rights until 2030, and they have to pay the Devils.

I think the two million figure per game is very generous on your part because that is the estimated figure for Knicks playoff games and they seat more than hockey.

Charles Wang charges more than Dolan for tickets and during the blizzard game it was estimated he would lose a half a million dollars for playing a game in front of 3,000 fans in a blizzard as opposed to a regular Saturday attendance which was usually near capacity.

I guess your talking about 10 mil per team for merchandising from the NHL. No idea.

That's a total of 130 million in revenue. The price he pays for his team is 70 million in contracts, 30 million in operating expenses. So when all is said and done the Rangers make him a decent profit(when you look at the 3 businesses he owns). If Dolan didn't own MSG or the MSG network, the Rangers would be big money losers.

I came up with 60 million for tickets, 31 for television, 10 million from the NHL and I will go all out and ignore the reports in the previous posting and add another 20 million for anything else. Let's not even talk rent or propery taxes on the building.

121 million.

Rangers reported payroll with buyouts, insurance for percentages of contracts for injured players approached a high payroll of 94 million dollars. The Islanders get at least 13 million from Msg, they have to pay the Devils for local broadcasts rights. You can bet Murdoch get's 10-15 million for the merger fees. And let's throw in ten million for other costs.

Industry reports are Msg Network is taking big losses. I cannot put a figure on that plus other basic costs to running a team, travel, staff, team facilities but I'm not including that here at all.

Hard to see a tangible profit in this. If they borrow from other places to sustain their payroll advantage it is not in the best interest of the league but they have the right to do so.

 

[me2]

i don't have quotes or anything but here is how the Rangers make money. Dolan owns %100 of MSG, Dolan owns 100% of the MSG network and Dolan owns the Rangers. He is triple dipping into the team. While some teams might be lucky to get 50% of the gates at any hockey game, dolan gets 100% of the gates as well as food revenue(because he owns the arena and the team). If Dolan only owned the Rangers, sure it would be a losing proposition, but you figure he cleans in roughly 2 million+ a game when all is said in done with him owning both the team and arena(80 million over a season).

When he is doing his financial records, he probably only claims a small amount(let's say way less then the average team) of the gates at MSG and can write the team as a loss.

The same can be said about his local TV coverage. Dolan gets 100% of that money as well(every cent that advertisers pay go into dolan's pocket as well as every penny that cable companies pay him to have his service which show the Rangers), while most other teams can only claim a percentage.

The profits from the ownership of the TV coverage and the rink should not count towards the Rangers profits. He is entitled to make money on both as seperate entities from the Rangers. Without knowing the exact amounts the TV coverage pays the Rangers or what equivalent rent the Rangers should pay its impossible to get an accurate read on the true standing of the Rangers.

The Rangers probably play 50 games a year at the MSG. 18,000 fans * avg ticket of $66 * 50 games gives us a potential income of about $60 million. Take away from that, equivalent rink rent, running costs, labour costs.

I could see them losing quite a bit of money if they don't make the playoff (which they aren't). They wouldn't be a worse team under a $45m cap and they would make every bit as much revenue. Hard to say no to saving $30m.

 

[Scheme]

HYPOTHETICALLY: Under a $30 million cap, lets say the average salary for a superstar is $4 million. Calgary has two superstars on their team, both of whom they drafted and developed. They both become free agents the same year. Because Calgary has been well run, they also have lots of other good players signed. But because they have alot of good players, they only have $5 million in cap room, even though they have the revenue to sign both. They only have enough room to sign one of the superstars, unless they both agree to take alot less than the league average. So they sign superstar "A" for $3 million, who takes less becuase he wants to stay. But, now they only have $2 million to sign supestar "B". At the same time, Detroit has been terribly run for some time, is devoid of superstars and only has a few marginally good players. They've drafted terribly, but they have $4 million in cap room, and offer Calgary's superstar "B" the $4 million he deserves, based on league average. Superstar "B" now has to decide between loyalty and a $2 million difference. I think its safe to assume most professional atheletes would take the extra $2 million, so lets assume superstar "B" does in this case. Now I ask you, if you were a Calgary fan would you be upset over this? Would you feel this is fair? Your team did the drafting and developing, had the revenue to sign both, but were unable to while, a poorly run team his been rewarded.

Now lets say there's a luxury tax at around $40 million. Salaries will come down under this system as well. Lets take the two superstars from my example above, and say a luxury tax has lowered the average superstar salary to $5 million. Calgary has the revenue to pay each $4 million, but they both want $5. Calgary then takes the extra money they received from the teams paying a luxury tax and is able to give both what they want. Calgary has not been punished for drafing well, and they're not paying any more of their money for those players than they would have under a cap.

So, if you were a Calgary fan, which situation would you prefer? The cap, which took one of your superstars away? Or the luxury tax which allowed you to keep both without spending anything more than you would have under a cap?

Again, this analogy doesn't work because you're assuming a terribly run team will have a lot of cap space. Badly run teams are more likely to have less cap space because they're likely to overpay players who aren't worth it.

This is essentially a strawman argument, because you're saying a cap would prevent Calgary from keeping both superstars. But in today's system, those two superstars would be worth $8-10 mil each in the current system with no cap! Calgary couldn't afford to keep both because they are a small market team! I think this is really what the whole discussion boils down to. With no cap, you have teams out there like Detroit, New York, etc. capable of throwing $8-10 mil for one of these superstars, and this prices them out of reach for the small market team.

Given the above example, it's certainly not as bad as the way things are now. I'm sure Calgary would prefer to find a way to get rid of a couple million dollars of salary to make room to keep both stars under the new system instead of trying to shed $16-20 mil of salary (impossible really) to keep both superstars under the current system.

I think the problem with the luxury tax is that the big market teams will still have an advantage. With a cap, there is no market advantage.

 

[Brent Burns Beard]

in today's system, those two superstars would be worth $8-10 mil each in the current system .

thats not entirely true. as RFA, they are worth what you are willing to pay them, since in the NHL no other team makes RFA offers.

secondly, Todd Bertuzzi, by all accounts one of the top players in the league, just signed a deal for less than 7m per season. Alfredsson signed for less than 6m. Keith Primeau, another franchise type player, signed for less than 5m per season.

for a team like CGY, if they actually had 2 players worth 8m each (and they dont even have one at this time), there decision making process comes down to this:

1) are they in a position to be a contender ? if so, then sign them both.
2) if they are not, then why would you even want to pay16m for 2 players, even if you could afford it ?

even in todays system, "rich" teams trade players because they dont want to make the investment in them.

dr

 

[Guest]

A lot of this talk just reminds me back to the homegrown cap idea I had before. I won't go into it again, but I think it's best to give the advantage to the teams who develop their players the best, not penalize them. As the above examples with OTT and CHI, a homegrown cap would allow OTT to keep those players, and it would make a team like CHI struggle to ice a team that is competitive if they rely too much on signing players. At the same time, it limits CHI from altering the market and inflating the salaries of the players they might have to overspend for.

It's my belief that the teams who develop their players and are able to make wise moves should be rewarded, and the teams who have to sign players to remain competitive should not be rewarded. Simple as that. And if you think about the teams that would rather sign players like the Rangers of the past, they have enough money they could invest in a state of the art scouting and minor league system, but do they? They are getting better I would suggest, but it's lazy team management overall in the past that makes these mistakes.

The Coyotes are a good current example of this, they had neglected the farm for so long and when the new management came in they saw it as a weakness. They have slowly started to acquire younger players, although the quality is not there, that is why they are still signing free agents to supply the NHL team. In the future they will be a better team than before if they continue to develop players and work through the draft.

 

[hockeytown9321]

Again, this analogy doesn't work because you're assuming a terribly run team will have a lot of cap space. Badly run teams are more likely to have less cap space because they're likely to overpay players who aren't worth it.

This is essentially a strawman argument, because you're saying a cap would prevent Calgary from keeping both superstars. But in today's system, those two superstars would be worth $8-10 mil each in the current system with no cap! Calgary couldn't afford to keep both because they are a small market team! I think this is really what the whole discussion boils down to. With no cap, you have teams out there like Detroit, New York, etc. capable of throwing $8-10 mil for one of these superstars, and this prices them out of reach for the small market team.

Given the above example, it's certainly not as bad as the way things are now. I'm sure Calgary would prefer to find a way to get rid of a couple million dollars of salary to make room to keep both stars under the new system instead of trying to shed $16-20 mil of salary (impossible really) to keep both superstars under the current system.

I think the problem with the luxury tax is that the big market teams will still have an advantage. With a cap, there is no market advantage.

Fine, not a terribly run team. Since salaries will be less under a cap, there's going to be alot more teams in the hunt for big name free agents. Any team with $4 million in cap room in that situation. And just for the record, there are plenty of badly run teams with low payrolls.

Again, my point is not that the current system is OK, for argumetns sake, I'll concede its not.. All I want is someone to tell me how my example above is fair to Calgary. If anybody does, I'll shut up. And arguments that its more unfair now, or its fair because its unfair for everyone don't hold water.

 

[loveshack2]

A lot of this talk just reminds me back to the homegrown cap idea I had before. I won't go into it again, but I think it's best to give the advantage to the teams who develop their players the best, not penalize them. As the above examples with OTT and CHI, a homegrown cap would allow OTT to keep those players, and it would make a team like CHI struggle to ice a team that is competitive if they rely too much on signing players. At the same time, it limits CHI from altering the market and inflating the salaries of the players they might have to overspend for.

It's my belief that the teams who develop their players and are able to make wise moves should be rewarded, and the teams who have to sign players to remain competitive should not be rewarded. Simple as that. And if you think about the teams that would rather sign players like the Rangers of the past, they have enough money they could invest in a state of the art scouting and minor league system, but do they? They are getting better I would suggest, but it's lazy team management overall in the past that makes these mistakes.

I agree to a certain extent but I dont see how signing free agents is considered to be so wrong by people. And no it's not just because Im a Leaf's fan. You have lots of avenues to improve your team available to you, and in my opinion any team that focuses too much on only one aspect is not doing a good job. I dont care if you're the best drafting team in the league, if you dont make good trades or good free agent signings you aren't going anywhere. Likewise if you focus too much on free agents.

And I dont care what anybody says, if you think having a hard salary cap will allow a team to keep all it's drafted players then you are living in a dream world. Just look at all the player movement in the NFL, that's what happens when you bring in a hard cap.

Given the above example, it's certainly not as bad as the way things are now. I'm sure Calgary would prefer to find a way to get rid of a couple million dollars of salary to make room to keep both stars under the new system instead of trying to shed $16-20 mil of salary (impossible really) to keep both superstars under the current system.

But the problem is that all it takes is one team, with more salary cap space than Calgary has, to say "I want that player" and then it's too bad so sad for Calgary. Even if Calgary offers the guy $8 million, if one team in the league has space to add $8 million + $1 and they are focused on getting that guy, then the Flames lose him.

 

[hockeytown9321]

And I dont care what anybody says, if you think having a hard salary cap will allow a team to keep all it's drafted players then you are living in a dream world. Just look at all the player movement in the NFL, that's what happens when you bring in a hard cap.


But the problem is that all it takes is one team, with more salary cap space than Calgary has, to say "I want that player" and then it's too bad so sad for Calgary. Even if Calgary offers the guy $8 million, if one team in the league has space to add $8 million + $1 and they are focused on getting that guy, then the Flames lose him.

Which is why the argument that a cap is equally unfair for everyone is crap. You can't equalize the abilty to scout or develop players.

 

[Scheme]

Which is why the argument that a cap is equally unfair for everyone is crap. You can't equalize the abilty to scout or develop players.

Yes, that's the point - you can't equalize that ability, and how would that be possible anyway? You want team quality to be based more on scouting/development/management than the ability to shell out more money for players than other teams. It isn't perfect, but it makes it much more fair than the current system. And it would definitely reduce player salaries, which is the other goal we want.

Let me simplify this a bit so you'll understand. Imagine each team's budget represented as a glass. The way it is now, some glasses (New York, Detroit, Colorado, Toronto) are way bigger than others, so they're able to hold more liquid (salary). That isn't fair.

In a cap system, every team's "glass" would be exactly the same size, which is fair (or I should say more fair than it is now). Because even if the team offered the $8 mil + 1 to the player, they'd be filling their own cap and would be most likely out of the running for other expensive players. Not like now where you can have teams like New York and Colarado go on basically "shopping sprees" and pick up multiple FAs for $6 mil here, $8 mil there, etc...

 

[codswallop]

Yes, that's the point - you can't equalize that ability, and how would that be possible anyway? You want team quality to be based more on scouting/development/management than the ability to shell out more money for players than other teams. It isn't perfect, but it makes it much more fair than the current system. And it would definitely reduce player salaries, which is the other goal we want.

I have to agree with this.

No system is going to be perfectly fair, it simply can't happen. Too many variables go into the mix, no agreement can account for them all. Much less to see the future of the economic market (not just in terms of the NHL either). Some team or teams along the line will be put in a bad spot because of the agreement, whatever that eventually will be. The best that can be hoped for is an agreement that makes it as fair as possible for all teams. Incorporate a fair trade-off for as many variables as you have the ability to control and with the rest, just hope it doesn't go too far astray. That sounds kinda weak, I know. But unless there's a crystal ball out there, we are a bit constrained as to knowing what will and what won't work in the future.

The concept of it being perfectly fair or perfectly equal is an illusion, but the goal should be to try and get as close to that as possible. That's part of the problem we have on these types of threads, the concept of "fair" varies pretty widely. Personally, I don't see the logic for some of those concepts and I've said as much many times before. But everyone has an opinion, and most stick to it no matter what. Nature of the beast on here.

In a cap system, every team's "glass" would be exactly the same size, which is fair (or I should say more fair than it is now). Because even if the team offered the $8 mil + 1 to the player, they'd be filling their own cap and would be most likely out of the running for other expensive players. Not like now where you can have teams like New York and Colarado go on basically "shopping sprees" and pick up multiple FAs for $6 mil here, $8 mil there, etc...

I'm not actually for or against a cap. All I'm for is what I stated above, an agreement that is as fair to all teams as much as that is possible. If that means a cap, so be it. If that means no cap but an alternate solution to what we have now, so be it. Without enough info to give an accurate assessment of what's really going on, I can't really speculate on what would work best. In a world where the best answer you can give is "It depends.", there's almost always another way around a problem such as this. The people working on this are quite intelligent, even though they aren't protrayed that way at times. With the info at their fingertips, they could create a solution close to or at that level of fairness I mentioned. Of that I have little doubt. The only question is do they even want to try.

The last week before the deadline is when 90% of the work is done in labor battles. Let's just hope this one doesn't break form.

 

[Brent Burns Beard]

You want team quality to be based more on scouting/development/management than the ability to shell out more money for players than other teams. .

ahh ... you mean like todays system where the small market teams consistently out perform the big spending teams ?

good point.

dr

 

[Brent Burns Beard]

Colarado go on basically "shopping sprees" and pick up multiple FAs for $6 mil here, $8 mil there, etc...

when has COL ever gone on a shopping spree ? the only significant free agents they every signed were Kariya and Sellane and those two combined made less than 7m.

your point ?

dr

 

[hockeytown9321]

The concept of it being perfectly fair or perfectly equal is an illusion, but the goal should be to try and get as close to that as possible. That's part of the problem we have on these types of threads, the concept of "fair" varies pretty widely. Personally, I don't see the logic for some of those concepts and I've said as much many times before. But everyone has an opinion, and most stick to it no matter what. Nature of the beast on here.

Except the only argument people are giving me is that a cap is equally fair(or unfair) for everyone.

 

[hockeytown9321]

Yes, that's the point - you can't equalize that ability, and how would that be possible anyway? You want team quality to be based more on scouting/development/management than the ability to shell out more money for players than other teams. It isn't perfect, but it makes it much more fair than the current system. And it would definitely reduce player salaries, which is the other goal we want.

Let me simplify this a bit so you'll understand. Imagine each team's budget represented as a glass. The way it is now, some glasses (New York, Detroit, Colorado, Toronto) are way bigger than others, so they're able to hold more liquid (salary). That isn't fair.

In a cap system, every team's "glass" would be exactly the same size, which is fair (or I should say more fair than it is now). Because even if the team offered the $8 mil + 1 to the player, they'd be filling their own cap and would be most likely out of the running for other expensive players. Not like now where you can have teams like New York and Colarado go on basically "shopping sprees" and pick up multiple FAs for $6 mil here, $8 mil there, etc...

Thanks for letting a simpleton like me understand.

So lets say everyone has the same size glass. One of your tream's best players is very thirsty, so he asks you for a drink. You have a faucet right next to you, but alas, your glass is full and you have promised the water in it to other players on your team first. Now your superstar has to go next door to Mr. I's house, who has plenty of room in his glass to give your player a drink.

your owner had a facuet with lots of water in it, and really wanted to give your player a drink, but couldn't. Would you be upset if this happened to your team?

 

[thinkwild]

It's my belief that the teams who develop their players and are able to make wise moves should be rewarded

Like OTtawa and Tampa. They are rewarded they win, regardless of how much other teams spent on free agents.

The Coyotes are a good current example of this, they had neglected the farm for so long and when the new management came in they saw it as a weakness. They have slowly started to acquire younger players, although the quality is not there, that is why they are still signing free agents to supply the NHL team. In the future they will be a better team than before if they continue to develop players and work through the draft.

Exactly. Which means developing their young players, not buying old expensive players. They arent disadvantaged because they are spending less than other teams, they havent developed enough to have success yet. They need to continue. THey should be allowed to develop cheaply.

 

[garry1221]

Thanks for letting a simpleton like me understand.

So lets say everyone has the same size glass. One of your tream's best players is very thirsty, so he asks you for a drink. You have a faucet right next to you, but alas, your glass is full and you have promised the water in it to other players on your team first. Now your superstar has to go next door to Mr. I's house, who has plenty of room in his glass to give your player a drink.

your owner had a facuet with lots of water in it, and really wanted to give your player a drink, but couldn't. Would you be upset if this happened to your team?

you would have to look at the glass and see how much water you could feasably pour out or how much water would be poured out after the season (players retiring, players you don't intend on signing anyway etc)

if there was only so much water per team to be held, you'd see alot more players being offered less than they would if they had an entire lake, which is what the nhlpa would love to see, but would you rather see a glass full of water or see a drought happen, which is essentially what it's coming down to

 

[hockeytown9321]

you would have to look at the glass and see how much water you could feasably pour out or how much water would be poured out after the season (players retiring, players you don't intend on signing anyway etc)

if there was only so much water per team to be held, you'd see alot more players being offered less than they would if they had an entire lake, which is what the nhlpa would love to see, but would you rather see a glass full of water or see a drought happen, which is essentially what it's coming down to

It wouldn't matter how much cap room you'd have in a year or two. A player is not going to sit for a year and wait. If another team has the cap room to sign him, he's gone.

 

[Brent Burns Beard]

your owner had a facuet with lots of water in it, and really wanted to give your player a drink, but couldn't. Would you be upset if this happened to your team?

AND ... dont forget the kicker. the water in the faucet was supplied by the fans of that water faucet. aint it grand that money from those fans either go into the pockets of the faucet owner or to another faucet owner who can use the money to steal YOUR water away from you.

ahhh ... a salary cap utopia ! be careful what you wish for.

dr

 

[codswallop]

Except the only argument people are giving me is that a cap is equally fair(or unfair) for everyone.

Then they are misguided. For whatever reasons and by whatever logic. There are simply too many variables to account for; ranging from broad economical markers to very specific team operations. No agreement can eliminate each variable and make the playing field perfectly level. Too many that cross over and contradict one another, others that happen outside the range of the agreement but still affect it, and still others that even the best economic models can't predict for the future.

Even if the two sides were negotiating in good faith, they very likely couldn't come up with an agreement that is equally fair to every team. The best they could hope for is something close. The media blows the animosity between the two out of proportion (which unfortunately is their job). But still, there is at least some animosity between the two sides. And that makes it even more difficult for a "fair" agreement (or anything close to that) to be reached.

Too many people are looking at this in absolute terms, which is a terrible viewpoint to try and make your points from in this case. Simply put, it isn't that easy and those that believe it is are quite mistaken. But some are so set in their views and convinced that they're right, even proof won't change it.

Take my reply for what it's worth.

 

[J-D]

At the end of the day a hard cap does not address the critical problem facing NHL teams, and that is the disparity between revenue streams. With no appreciable revenue coming from a national TV contract (in contrast to the NBA and NFL), teams are essentially on their own to develop revenue streams.

Some teams have been particularly adept at the development of revenue, either due to sheer market size or in some cases astute business decisions (e.g. Colorado). But other teams simply do not have the rabid hockey population base to compete at that same level. The New York Rangers for instance have nearly $25 million a year coming in from television contracts, whereas Nashville has a little over $2 million.

How is a hard cap going to increase revenues for the small market teams? Will it increase competitiveness and level the playing field? Well, it may increase parity, but for anyone that has watched the NFL recently knows, parity doesn't offer much in the way of financial security. A team may make the playoffs one year and not the next, that is the reality of a parity based system. There is little hope under a hard cap system of sustained excellence. It won't help the small market teams if their revenue is going to fluctuate widly under a parity-based hard cap system. How do you have any ability to plan financially for your organization whe you cannot predict your playoff appearances from one year to the next? That is the reality of what a hard cap will bring, a competitive balance that likely will breed greater financial insecurity.

When you are looking at the situation honestly, how will a hard cap increase the revenues for small market teams that have essentially operated under a self-imposed hard cap for years? Where will their much needed additional revenue come from?

Peter Karmanos, owner of the Hurricanes, alluded to the non-solution that a hard cap offers when he noted in a Carolina paper earlier this year that a hard cap doesn't solve his teams revenue stream problems.

This basic reality is why the NHLPA has seemingly taken an intractable stance with respect to the issue of a hard cap. The NHLPA knows that this is a desparate attempt for the NHL owners to solve a problem that they don't want to deal with directly. That problem is the revenue-stream financial disparity between NHL organizations. That is why the comparisons between the NBA and NFL are so ill-founded, both the NBA and NFL have an egalitarian system of revenue sharing, and both leagues have large pools of revenue to share. The NHLPA is banking on the internal unwillingness of the so-called large revenue cities to ultimately cause a rift in the owner's apparent solidarity. The NHL owner's have spun a brilliant media picture of this labor situation as being impoversihed NHL owners vs. the greedy NHLPA. But the NHLPA knows that the revenue sharing issue is simmering under the surface of this situation, and it knows that ultimately this isn't the NHL owners vs. NHLPA as it is large market owners vs. small market owners.

If you start looking at the financial realities of the situation, a luxury tax system may provide a means to revenue share that a hard cap system simply does not offer.

That is why you will see the resolution of this situation being a luxury tax that is phased in over a period of 2-3 years to allow the large market teams to adjust their salary structures.

That was a very thoughtful post, and I think you really did a good job to pinpoint the real problem: the NHL is not part of the so-called "big 4" because it doesn't gather revenues as much as the NFL, NBA or MLB. How come their salaries are almost the same? That doesn't make sense.

To solve that, I think that organized hockey at the pro-level should be completely changed, although it is clear this idea won't be popular. But what the heck, how can owners go on and lose that much money, when you witness some teams losing less money when they are not operating?

The solution in my mind is the creation of an entire new system based on european leagues (premier, second division, etc.), with big markets playing in the 1st, middle-ones in the 2nd and small ones in the 3rd, or something to that effect. Obviously, in the second tier, players would have smaller contracts and the level wouldn't be as good as in the premier league. It's a kind of contraction, but with all cities keeping their teams. However,we could witness even more expansion under this system.

That should fix the business of pro hockey in North America for good.

 

[Scheme]

ahh ... you mean like todays system where the small market teams consistently out perform the big spending teams ?

good point.

dr

Are you serious? I'm starting to think your name really suits you.

Let's look at the Cup champions for the past 10 years:
2004 Tampa Bay Lightning
2003 New Jersey Devils
2002 Detroit Red Wings
2001 Colorado Avalanche
2000 New Jersey Devils
1999 Dallas Stars
1998 Detroit Red Wings
1997 Detroit Red Wings
1996 Colorado Avalanche
1995 New Jersey Devils
1994 New York Rangers

Besides Tampa, which of these are small market teams?

What's really unhealthy is for the last 10 years it's basically been the same 4 teams out of 30 which have won the cup or were finalists. These are all big budget, American dollar teams.

I think the point here is that everyone knows that a big budget doesn't equal success - just look at Toronto and New York. But everyone also knows that all other things being equal, a big budget gives you a big advantage.

 

[Scheme]

when has COL ever gone on a shopping spree ? the only significant free agents they every signed were Kariya and Sellane and those two combined made less than 7m.

your point ?

dr

Yeah, but Kariya and Selanne are worth more than 7 mil combined. That's an unhealthy side effect of our flawed system we have now. Teams with huge budgets can afford stacked teams, essentially created a system of "have" and "have not" teams. Players will obviously want to flock to the "have" teams for a better chance of winning a Cup, even to the point of reducing their value for these teams. Kariya didn't want to sign with Anaheim for millions but he offered to sign with a stacked team for peanuts. That's not right.

 

[Scheme]

Thanks for letting a simpleton like me understand.

So lets say everyone has the same size glass. One of your tream's best players is very thirsty, so he asks you for a drink. You have a faucet right next to you, but alas, your glass is full and you have promised the water in it to other players on your team first. Now your superstar has to go next door to Mr. I's house, who has plenty of room in his glass to give your player a drink.

your owner had a facuet with lots of water in it, and really wanted to give your player a drink, but couldn't. Would you be upset if this happened to your team?

That's exactly it though - it shouldn't matter how rich your owner is, or how rich your city is. None of that should matter. Look at Real Madrid in the soccer world. Imagine if the world's richest man owned an NHL team, and bought every all-star and put them on one team. Would you be upset if this happened to your league? One team dominating the other 29? Winning cup after cup for 10 straight years?

 

[garry1221]

It wouldn't matter how much cap room you'd have in a year or two. A player is not going to sit for a year and wait. If another team has the cap room to sign him, he's gone.

if your player really wanted to stick around, then he'd stick around, if he was only out for money, then why should you worry about him, let him bleed another franchise dry... hell, for all anyone knows said player could go into a slump (ie lapointe), then you'd be happy you didn't sign him to such a lucrative deal, bottom line, if a player wants to remain with your team he'll work around the glass so as not to spill any water, if he is all about the water then toss him in the pacific ocean and let him drown when he goes into a slump, if said player was 100 % worth the amount he wants then an owner wouldn't mind letting the glas overflow a little to retain said player