Bill Daly said:
Under the models prepared for and provided to the Union, the team that wins the Stanley Cup under the "P-4" System would have a final season payroll which would be 50% higher than the payrolls of teams that do not qualify for the playoffs.
Under the "P-4" System, and unlike a traditional salary cap-based system, there would be disparate payrolls among teams, depending on each team's competitive success; players would be compensated fairly and would be financially rewarded further for contributing to their team's competitive success; player contracts could continue to be "guaranteed;" player agents would continue to perform their current function and role; and any concern about salary stratification between high-salaried star players and lower-salaried role players could be addressed by the League and the Union in collective bargaining.
The latter paragraph was one he repeated several times. There is several interesting things I note in what he is saying.
For one, he notes that the winning teams would have a 50% higher payroll than teams that dont make the playoffs. Which would be natural as they would have made the extra playoff money and could afford it. Seems obvious, but I think it warrants repeating. His cost certainty isnt meant to get rid of payroll disparity, and in fact he is worried we think he is trying to eliminate it.
Along with this he acknowledges that the system will allow for payroll disparity. I think it is interesting to note that he is stating that feature as if its a concession, that he is selling it to the players and fans, by suggesting that the system will indeed
allow for Payroll disparity.
And he reassures us, that this idea will still allow for guaranteed contracts, and agents to keep their functions. He recognizes players had those as valid concerns,
As well he says concerns about salary stratification between high and low salaried players can be negotiated. Stratification will happen.
Mr. Levitt concluded that the results reported are accurate and fairly reflect the financial results of the League. Needless to say, we are fully confident that the numbers published in the Levitt Report, and as recently updated and reported by the League, completely and accurately reflect the state of the our business.
Regarding Levitt, I think its worth noting how he describes it. Levitt states his numbers fairly reflect the results of the league, Accurately reflect the state of the business. Reflect. Forbes shows that there are other ways of "reflecting" the business.
jericholic19 said:
a more approrpriate offer would include a 1:1 dollar tax
Regarding 1:1 luxury tax, philisophically speaking, my only recourse when we dont have economic modelling data, Im not convinced this is necessarily a better solution for fans or even teams than a lower tax rate. A one for one luxury tax would seem to cement the advantage of the ultra large markets, as they could easily double the threshold payroll while paying the taxes while few other teams could. It would also likely raise less money. The purpose of the luxury tax is to alleviate revenue disparity. To share with teams losing money. Not for them to necessarily use for buying players but to cover their legitimate losses. The assumption is that only by getting closer to a 100% tax is it properly acting as a cap, but it doesnt properly act as a cap, it only furthers the disparity and raises less money for redistributiuon.
The 100% tax I dont think is necessarily the way that best achieve the objectives the luxury tax/revenue sharing is best designed to accomplish. A 100% luxury tax is nowhere close to the same as a strict cap at that level. It does not come closer to acting as a cap. It could further exacerbate the disparity problem in fact.