Lockout I - Moderated: "I don't think there's a punch-line scheduled, is there?"

[Fugu]

TBH, I think that this concept would get a lot of traction if the PA were seriously advocating it. Their first offer, which was based along these lines in principle, was well received by the fans and media. Probably the high point of Fehr's popularity in the last 18 years. As soon as the league resisted, those principles came off the table and their subsequent offers have had nothing related to reforming the system. Which is unfortunate, given that they had an opportunity to call the league out on the floor over these issues and explain their positions over the past several months instead of the... direction... they decided to take instead.

The players won't want the floor touched as long as there's linkage. It's like a Catch22.

So you contract to what, ten teams?

Let's just be clear that this is your hypothesis, not mine. I'd say 20 for sure, maybe 24. I'd have to think about that more.

That being said, there is not 30 north American markets that can support hockey at a 50m floor. Seems like there is only one possible conclusion here.

Why is 30 set in stone? It's no more set in stone than the 50 MM floor.

 

[Disgruntled Observer*]

Exactly. It's the linkage between total revenue and the cap range that removes basic controls from teams. They wanted to reel in the spending of 5-6 teams and ended up creating a monster that forces weak teams to overspend.

It also created league parity the likes of which the league has never seen... which in turn created a dramatic increase in overall revenues.

But because the players take such a dramatically big piece of the pie, half of the owners are STILL losing money.

Revenue sharing, and very high levels of RS, are the only way to make this work-- but I'm not a fan of massive RS either unless I know the ROI (in total and amount of time for the return).

The owners already share hundreds of millions of dollars per season with the small market teams. The owners are doing their part.
The players, on the other hand, have DOUBLED their average salaries over the past 7 seasons.

It's just so painfully obvious that the players simply make too much money for the league to sustain.

Thank you. That's it in a nutshell. The fundamental problem is revenue disparity. Until and unless the league makes that their primary focus in designing any economic system, they're just going to continue creating complexity that backfires. To address revenue disparity, they have to have a very clearly defined payback that justifies the wealth redistribution.

The owners have an even easier solution.
Keep a similar system, but simply lower the salaries of the millionaire players who have DOUBLED their wages in 7 years.

 

[Disgruntled Observer*]

The players won't want the floor touched as long as there's linkage. It's like a Catch22.



Let's just be clear that this is your hypothesis, not mine. I'd say 20 for sure, maybe 24. I'd have to think about that more.




Why is 30 set in stone? It's no more set in stone than the 50 MM floor.

It appears to me that you think it's more important for the millionaire players to have even extra millions (minus jobs) than for the millionaire players to simply take what will ultimately be a minor pay cut in order to save the league as we know it.

Why do you care so much about the millionaire players having what to them would amount to extra pocket change?

I like this league quite a bit the way it is.
If millionaire players making less pocket change saves the league, that's what i support.

 

[Chris Hansen]

Thanks so much, Crease - that was really helpful. Hope that didn't take too much time for ya thanks again!

 

[Ragamuffin Gunner]

Grange pointing out the big flaw in how Bettman and Fehr approached this.

"Which is why the first question Fehr should have had for Gary Bettman in negotiations should only ever have been: How can we together grow the pie from the $3.3 billion it was in 2011-12 to $5 billion and beyond as fast as possible?

Every other issue -- including what percentage share of the pie the players should get -- should forever be secondary to that."


Fighting for a small piece of income they haven't earned yet is why we almost are in December without much progress.

Great article.

This part echos what I've been saying for a while now:

It's very possible -- even likely -- Fehr erred badly and irrecoverably in failing to negotiate off the proposal the owners put forward to players on Oct. 16 in Toronto. That was nearly four missed pay days ago for his constituents.

Remember it?

In theory it was a take-it-or-leave-it offer from the owners in order to start an 82-game season on Nov. 2.

It was the best chance the hockey industry had of capitalizing on the games' momentum and pushing revenues from 3.3 billion in 2011-12.

The league's offer was rejected because the NHLPA recognized that the first version of the 'make whole' provision -- the means to transition player salaries from the 57 per cent share last year to a 50 per cent share in 2012-13 -- meant the deferred payments to make sure contracts were paid in full would come out of players' future earnings.

But at the time Bettman signaled broadly that there was "wiggle room" on that issue.

How much room there was at the time we'll never know, as the players came back two days later with three proposals, none of which were direct responses to the owners' offer.

 

[Fugu]

It appears to me that you think it's more important for the millionaire players to have even extra millions (minus jobs) than for the millionaire players to simply take what will ultimately be a minor pay cut in order to save the league as we know it.

Why do you care so much about the millionaire players having what to them would amount to extra pocket change?

I like this league quite a bit the way it is.
If millionaire players making less pocket change saves the league, that's what i support.

That's your prerogative. I'm just saying I hate rigging markets.

 

[RedWingsNow*]

I'd like to see 32 teams -- 4 8-team divisions.

and more revenue sharing.

And the expansion fee used as a fund to help fledgling teams rather than as a payoff to current owners.

 

[The Apologist]

The players won't want the floor touched as long as there's linkage. It's like a Catch22.



Let's just be clear that this is your hypothesis, not mine. I'd say 20 for sure, maybe 24. I'd have to think about that more.




Why is 30 set in stone? It's no more set in stone than the 50 MM floor.

The 30 is not set in stone at all. However I doubt that the 200 plus players who stand to lose their jobs are willing to do so to avoid the 1m or so per season the Crosbys stand to lose.

Regarding the amount of teams, in a free market, which do you think could honestly keep pace with an unrestricted MLSE? I think you'd be hard pressed to find ten. I stand by my original numbers.

I may be in the minority here, but i believe the average NHL player is going to be coming face to face with a new reality soon. The money just isn't there, and you can bet MLSE and Molson aren't gonna pay for Tavares to play in Brooklyn.

 

[Ragamuffin Gunner]

Contraction.

Furthermore, the more you tinker with artificial restraints, the more you increase both the complexity and number of unintended consequences. The NHL didn't adopt the idea of a cap+linkage because they knew they'd lose money by going to a 54-57% range. They probably believed at that time that that was a very acceptable range ~because~ they had cost certainty.

The certainty overlooked was that it certainly would cost something, and that 'something' wasn't necessarily a good thing for everyone. (Which actually was predictable as I keep reminding you.)

Also, in attempting then to make a cap manageable from a roster building perspective, they had to throw in things like variance and buyout formulas, the salary averaging, bonus considerations and lack of bonuses as an option, and so on.

Each step you take in one direction potentially makes it difficult to do something unintended in another direction that may be beneficial or mitigating of your risks. This all speaks to why letting markets function as efficiently as possible because you then can react to actual conditions, not be shackled into something that removes your ability to maneuver.

That's really one beef I have with salary caps. The GMs' toolbox is quickly being depleted of options that actually help them control costs and any ingenuity they can bring to the table.

I dislike that player movement is stymied because I believe that's actually good for teams and fans, and maybe even players. Instead of having this based on 'hockey' decisions, they're cap decisions now.

And yes, free market and such. The leagues try to create an artificial market on player salaries because they want to ignore the real market they cannot control--- the economics of the real world in which the franchises must operate. When fans don't show up in buildings, and no one pays for a TV contract, or there's a lack of sponsorship, etc., this is the real market speaking to them. It has made a choice, and the choice is --- we're not going to go to your games at all, or certainly not going to pay $60. (Refer to the footprint argument below as well.)

Their answer is to try to lower what all players earn to make the team that can garner $25/ticket viable. Please consider what you pay for a college football ticket to gauge how low that actually is, and if you think the owner who has that team is in the right business (pro sports).

Of course, you will come back with the national footprint argument and the massive TV contract, and I will remind you that it's set for the next 10+ years and the current batch of owners will have cashed out by then.

There isn't an example anywhere in the world that shows market manipulation and restraints can escape real market conditions. It's not a hypothesis or choice (that market principles exist), it's a demonstrable fact by simply starting with supply and demand for anything that's for sale anywhere in the world.

How can you be pro-NHLPA and want contraction?

Contraction is, honestly, a horrible answer Fugu and is not worth discussing. It is not the solution to this CBA negotiation and neither side wants it.

Why try to fix the system so the league can have 30 teams and over 700 people can make an ave of over 2M when you can just fold teams and have hundreds of players lose their jobs?

Seems like a good idea.

 

[The Apologist]

I'd like to see 32 teams -- 4 8-team divisions.

and more revenue sharing.

And the expansion fee used as a fund to help fledgling teams rather than as a payoff to current owners.

Id love to see 32 teams. And we may very well see that soon. I don't we will see much more revenue sharing. The owners are just as stubborn as the players when it comes to actually growing the game. They all talk a big game, but nobody wants to suit up and actually make the big play.

 

[htpwn]

Great article.

This part echos what I've been saying for a while now:

But at the time Bettman signaled broadly that there was "wiggle room" on that issue.

Yeah, if the PA accepted everything else in the offer, including draconian rollbacks of contract rights.

 

[Ragamuffin Gunner]

Yeah, if the PA accepted everything else in the offer, including draconian rollbacks of contract rights.

Way to cut out the next line:

"How much room there was at the time we'll never know, as the players came back two days later with three proposals, none of which were direct responses to the owners' offer."

No one knows what the league would have conceded had Fehr negotiated off that deal. And TBH the NHLPA would have been better suited to take that offer with the "draconian rollbacks of contract rights" than what they'll get now.

 

[DyerMaker66*]

How can you be pro-NHLPA and want contraction?

Contraction is, honestly, a horrible answer Fugu and is not worth discussing. It is not the solution to this CBA negotiation and neither side wants it.

Why try to fix the system so the league can have 30 teams and over 700 people can make an ave of over 2M when you can just fold teams and have hundreds of players lose their jobs?

Seems like a good idea.

How is a 28 team league with only healthy franchises who are making money worse for the PA? Will there be less jobs? Without a doubt. Is it more likely that every team is healthy and won't be forced to renege on contracts that were signed 15 days prior? Is it more likely that these players will earn more money since the quality of the league enhances and more people will want to view it? Is it less likely that they get locked out because teams aren't whining about losing money in a system they put in place or bending their own rules on contracts?

 

[Fugu]

I generally agree with your premises, but wish to put forth the other side.

You always make excellent observations, and deliver your opinions in a very professional manner. It's a pleasure to read your posts here.

I don't agree on contraction because of the national footprint issue. My issue is with the argument about ROI within a reasonable term and the multitude of motivations for team ownership. There is one argument for unloading teams on a regular basis. The tax benefits of depreciating contracts is time limited, 15 years. I am sure that has something to do with the rapid turnover.

Good point. You're spot on below to suggest that the landscape has changed, but it should not be lost on us all that those who were 'sold' on the NHL weren't in it to necessarily grow the game. The ability to depreciate contracts negated some of the 'cost' that many tears are shed over.

I don't like the term "cost certainty" being applied to the last CBA. Spin from the owners. Certainty is knowing that you will produce X amount of product for Y amount of hours by Z amount of employees at whatever the average wage rate is. The wage rate in the NHL makes it uncertain as it varies with HRR. If anything, the cost of employees is far less than certain outside of each discrete one year window.

Very true. If you factor in that contracts are typically longer than that window, there isn't as much certainty per team, but at least for overall NHL spending (for whatever that's worth), it cannot exceed the fixed rate.

For others,
Another bone to pick with those who have harped on owners making out on the capital appreciation of teams. Didn't happen in St. Louis, not in Tampa, not Atlanta, won't happen in Phoenix, etc. The ones that made out like bandits were in major markets. It is erroneous to make a blanket statement about capital appreciation being the gold at the end of the rainbow in the NHL . . . And the landscape of sports ownership is changing. They were sold through the 90s on capital appreciation and that went beyond sports. After the global economic meltdown, investors are looking for a bit more substantial year-to-year results.

I think initially all franchises did see a bump upwards on the promise of the cap system implemented after the last lockout. Keep in mind that St. Louis and Tampa were sold twice in the interim. Tampa initially for $204 MM, then less than half that after the implosion. St. Louis was sold for $150 MM as the lockout was ending (inclusive or exclusive of Laurie debt... can't recall); and then for a bit less. (I'm still trying to figure out why StL is less than Phx in the Forbes estimate).

 

[Timmy]

How can you be pro-NHLPA and want contraction?

Contraction is, honestly, a horrible answer Fugu and is not worth discussing. It is not the solution to this CBA negotiation and neither side wants it.

Why try to fix the system so the league can have 30 teams and over 700 people can make an ave of over 2M when you can just fold teams and have hundreds of players lose their jobs?

Seems like a good idea.

Contraction is the endgame for some fans in some markets. Being pro-player is simply a means to that end to them, even though many of these same folks have admitted that it's not a realistic scenario.

In these discussions it's important to separate the should, could, and wish elements when understanding some people's perspectives; they know they're not going to get what they want, but the impediments to their ultimate desires will continue to be hammered upon on a fairly regular basis.

 

[Orrthebest]

How is a 28 team league with only healthy franchises who are making money worse for the PA? Will there be less jobs? Without a doubt. Is it more likely that every team is healthy and won't be forced to renege on contracts that were signed 15 days prior? Is it more likely that these players will earn more money since the quality of the league enhances and more people will want to view it? Is it less likely that they get locked out because teams aren't whining about losing money in a system they put in place or bending their own rules on contracts?

How did you come up with 28 teams when according to the Forbes numbers there was 6 teams that lost money every year during the expired CBA.

 

[SJeasy]

I think initially all franchises did see a bump upwards on the promise of the cap system implemented after the last lockout. Keep in mind that St. Louis and Tampa were sold twice in the interim. Tampa initially for $204 MM, then less than half that after the implosion. St. Louis was sold for $150 MM as the lockout was ending (inclusive or exclusive of Laurie debt... can't recall); and then for a bit less. (I'm still trying to figure out why StL is less than Phx in the Forbes estimate).

Not for you per se, but a bone to pick with those who trumpet capital appreciation.

We always have to include cash calls along with the purchase price to find out if there was true capital appreciation. Getting the cash call info is like trying to get blood from a stone unless it shows up in loans through public entities. As much as some may say a team appreciated, frequently they aren't deducting the calls.

 

[Ernie]

Great article.

This part echos what I've been saying for a while now:

yawn. yeah, the players would have been better off accepting the NHL's initial offer too. Oh yeah, and the "best offer you're going to get" tabled right before the lockout started.

puhleeze. never mind that they would have still been stuck at the biggest remaining issue - contract rights. I'm sure a month ago the NHL would have just let that drop. Uh huh.

 

[Dangles McGavin]

It's basically a holding pattern at this point until the mediators have a few days with both sides. The end result of that, and what happens at the BOG meeting next week will be telling.

Thanks!

 

[Fugu]

How can you be pro-NHLPA and want contraction?

Because you believe I'm pro-NHLPA. I've stated a few times now that overall, I'm anti-Bettman (for lack of a better way to identify the 30 team, capped strategy).

You should know that based on my comments that I don't believe protection player jobs overall is important to me, nor is protecting guaranteed contracts. I'm not sure I like RS either, which is generally a pro-PA stance, but I recognize that given there IS a 30 team league, it's probably necessary.

Contraction is, honestly, a horrible answer Fugu and is not worth discussing. It is not the solution to this CBA negotiation and neither side wants it.

Read Timmy's statement. It may become a necessary solution at some point in your lifetime. That the probability of it happening any time soon is virtually zero doesn't mean there's no validity to the argument.

Why try to fix the system so the league can have 30 teams and over 700 people can make an ave of over 2M when you can just fold teams and have hundreds of players lose their jobs?

Because the economic fundamentals would support that option over the wealth transfer to losing operations.

 

[RedWingsNow*]

Contraction is the endgame for some fans in some markets. Being pro-player is simply a means to that end to them, even though many of these same folks have admitted that it's not a realistic scenario.

In these discussions it's important to separate the should, could, and wish elements when understanding some people's perspectives; they know they're not going to get what they want, but the impediments to their ultimate desires will continue to be hammered upon on a fairly regular basis.

I literally have no idea what you're talking about.

 

[RedWingsNow*]

Because you believe I'm pro-NHLPA. I've stated a few times now that overall, I'm anti-Bettman (for lack of a better way to identify the 30 team, capped strategy).

You should know that based on my comments that I don't believe protection player jobs overall is important to me, nor is protecting guaranteed contracts. I'm not sure I like RS either, which is generally a pro-PA stance, but I recognize that given there IS a 30 team league, it's probably necessary.




Read Timmy's statement. It may become a necessary solution at some point in your lifetime. That the probability of it happening any time soon is virtually zero doesn't mean there's no validity to the argument.



Because the economic fundamentals would support that option over the wealth transfer to losing operations.

A league is a league. You invest in your new markets and it's going to take time.
It's not a wealth transfer.

Was it a wealth transfer when the rich owners took the expansion fee? Why yes, it was.

The NHL needs to be responsive.to market conditions.
Phoenix isn't working? Fine. Move them NOW. Stop being an asshat about it.

Really, Phx, Carolina, Nashville and one of the Floridas and maybe Columbus.

Those are the teams that are going to struggle for 10-15 years. I thought CBus had potential, but a decade of mismanagement has hurt the team.
Nashville is run fairly well, but they are still on the bubble anyway, even with large city subsidies.

Carolina has a cup to their name. Tampa has a cup. Florida went to the finals. Yet all three teams are playing in indifferent markets.

If the NHL needs those teams for growth, then that's a strategic decision the BOG needs to make.

And then the owners need to bankroll their investment. Just like any other business would.

What's troublesome to me are these floundering franchises like Dallas, Colorado, St. Louis and the Islanders. These teams have all had success. Dallas Colorado and St. Louis were western conference powers in the age BEFORE the cap, paying big money out. Now the Blues are worth $130m?

 

[Morgoth Bauglir]

Because the economic fundamentals would support that option over the wealth transfer to losing operations.

That's news to the NFL. They've effectively removed market forces from having a negative effect on weak franchises. Do you know what would happen in an uncapped no revenue sharing NFL? Several franchises would immediately cease to exist, starting with the Packers, Cardinals, and Jaguars.

 

[BoHorvatFan]

People actually want 32 teams? Hurray for more awful hockey. The Wild version 2.0, bunch of plugs that can only trap and bore everyone out of their minds. With 32 teams your odds of seeing a star player of a good game go down even lower than they already are.

 

[Killion]

I literally have no idea what you're talking about.

Timmys' posts not that hard to understand Cap'n. Here, I'll break it down for you;

1) "Contraction is the end-game for some fans in some markets", ie;

Fans in large wealthy markets like Toronto or New York who are frustrated that their franchise is bridled with a Cap system that prohibits them from buying a Cup in either a completely free & open market or one with perhaps a soft luxury cap.

2) "Its important to separate the should, could and wish elements when understanding some peoples perspectives; they know their not going to get what they want, but the impediments will continue to be hammered upon on a fairly regular basis", ie;

Simply demonstrate some empathy. Try to understand the frustrations of those who are fans of big market teams perspectives, who advocate for a smaller, leaner & far more exclusive as opposed to all inclusive one size fits all NHL. Understand their perspective is not malicious nor vengeful, that they appreciate its at this stage quite likely a Utopian ideal, yet repeatedly & consistently they are "hammered" by those who feel a set caste system of Caps & Revenue Sharing with a broad footprint is superior (to grow the game, broadcast elements etc etc etc) while accusing those who espouse such ideals as being elitist. Savvy?