Luxury tax failure

Discussion in 'Fugu's Business of Hockey Forum' started by CarlRacki, Dec 20, 2004.

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  1. CarlRacki

    CarlRacki Registered User

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    Anybody see the wonders a luxury tax is having in MLB, and particularly the Oakland A's, this season? Despite the tax that was supposed to save baseball, payroll issues have forced the A's to trade away this month their two best pitchers (Tim Hudson and Mark Mulder) for prospects. That's on top of their inability in recent years to sign two league MVPs (Tejada and Giambi) and several more top players.
    Is this what the PA has in mind when they say a luxury tax will help the smaller market clubs?
     
  2. John Flyers Fan

    John Flyers Fan Registered User

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    Just because a luxury tax doesn't make everything in MLB perfect doesn't mean that a luxury tax is inherently a flawed idea.

    Problem is that the luxury tax thresholds in MLB are incredibly high. Only the Yankees pay the luxury tax.


    It's just like a hard salary cap wouldn't automatically work. If you set the hard cap at $80 million, it wouldn't work either.
     
  3. Russian Fan

    Russian Fan Registered User

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    Maybe you just take 1 way of the story here. I don't pretend the luxury tax system in the MLB is good (which is far from it) but

    A) The A's budget even with a stiffer luxury tax would not have helped them to make offer to Hudson & Mulder.

    B) The A's GM did those move to stuck up their future & be a contender for 10 years. Sure it looks like a step back when you see you're #2-3 pitcher (or #1-3 ou #1-2 if you have preference over Zito) is gone but if 1 year of rebuilding save you 5 years of rebuilding & you have a shot at the pennant for the next 5-6 years. Don't you think it's worth it ? for me it is !

    He receive tremendous elite young players in both trades & he did it before he would receive nothing because of free agency at age 28 !!!

    If you ask me UFA @ 28 is killing more the A's than the weak luxury tax !
     
  4. GKJ

    GKJ Global Moderator

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    The A's didn't trade Mulder and Hudson because of salary reasons they did it because they have younger, supposedly better pitchers coming up who they want to make room for and they're willing to drop off for 2-4 years to do it
     
  5. Yet you use a similar argument to discount the NFL style salary cap. I think we won't know how either system would work until the agents have a chance to pour over the CBA and expose the weaknesses of the system and the General Managers desperate to win and save their jobs.
     
  6. Chili

    Chili Registered User

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    That may well be true but the players proposal would have seen a team with a payroll of $50 million paying a $1 million luxury tax. Which to me is virtually no deterrent whatsoever.

    Not to say that I know what %'s at what salary level would be fair. Who or what should determine these numbers? I believe they need to be tied to revenues to be truly fair.
     
  7. John Flyers Fan

    John Flyers Fan Registered User

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    Agreed, there proposal needs to be ramped up a bit as well.

    My proposal was

    $40 million - 50%
    $45 million - 75%
    $50 million - 100%
    $55 million - 150%
    $60 million - 200%

    So a $50 million payroll would pay $6.25 million in tax.

    The money generated from the tax would be funnelled to the bottom 10 market size teams as long as they meet the following conditions;

    #1. Spend $30 million on payroll.
    #2. Draw an average of 15,000 fans per game.
     
  8. fan mao rong

    fan mao rong Registered User

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    What you propose is a defacto cap. If I think so, I would think Goodenough and the boys would think so quicker. It probably would start grinding down around 50 million, let alone having those higher numbers kick in. I figure it would take an extra 27 1/2 million just to get to 60 million. I think people who propose something such as this should consider they really favor management in this dispute.
     
  9. Russian Fan

    Russian Fan Registered User

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    You need to see it as part of the process. The perception I have & that I think the NHLPA has is that they know for the fans the agreement will have to come from an NHL owner last proposal so that the fans feel they've won the battle. The door is open for a stiff luxury tax that a 50M$ millions payroll , the team will have to pay between 5 to 10M$ in luxury tax.

    That's the way I see as already been part of a negotiations employee - employers.

    The last proposal that will reach an agreement will come from the NHL owners or from Gary if you prefer. This CBA negotiations is 50% about money & 50% about perception that the fans need to feel that it will fix the game. Will it fix the game ? it remains to be seen.
     
  10. John Flyers Fan

    John Flyers Fan Registered User

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    While it would act as a defacto cap at the higher levels, it would allow teams to at least spend payrolls in the high 40's/low 50's.

    It would also take the luxury tax money and give it to teams and force them to spend.

    Also if the CBA signed was a 10 year CBA, I would make adjustments for years 6-10 to allow for inflation

    $40 million - 40%
    $45 million - 60%
    $50 million - 80%
    $55 million - 120%
    $60 million - 160%
    $65 million - 200%


    Also I don't consider myself to be on either side. Just looking to get hockey started up again ASAP.
     
  11. Chili

    Chili Registered User

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    For me, it's totally irrelevant who makes what move.

    The bottom line is getting an agreement which will level the playing field and make the league and it's teams solvent. The rest is up to the beancounters, I have no preference on cap, tax or other, just fix it.
     
  12. Russian Fan

    Russian Fan Registered User

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    For you it isn't but for the NHL executives point of view, it need to be perceive as a clear victory (even if it's not the case) as there are hope for every NHL city that this CBA will fix hockey (even if it's only to make the owner profitable again)
     
  13. Chili

    Chili Registered User

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    Huh? I think you're reading far too much into things. The issue is not who will be able to beat their chest the hardest. That is totally unimportant...whether the new agreement, once instituted is good or not will play out over the course of it's lifetime. Hockey needs a fair system for everyone, period.
     
  14. Son of Steinbrenner

    Son of Steinbrenner Registered User

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    this would work
     
  15. Russian Fan

    Russian Fan Registered User

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    I'm sorry to tell you this but you are very naive. Owners want to maximize profit but they need to do this as if it's to fix the game. It's totally relevant that the perception once an agreement is made that the fans feel the owners were doing it for the sake of 30 wealthy franchise.

    You as a fan see it as ''a fair system for every franchise'' while owners see it as ''minimize the risk, controlling the expense between each other, maximize the profit & make people believe it's for the game''

    Clearly relevant & important that once an agreement come, you continue (yes you & others) feel that it was not to make owners more money in their pockets but it make you feel that your franchise & the 29 others are now in a better field of competition.

    That why this is about money & PR to keep the fans on their sides. Bettman on this side did a hell of a job.
     
  16. Chili

    Chili Registered User

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    No one cares who wins the propaganda war, except apparently you.
     
  17. txomisc

    txomisc Registered User

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    this is absolutely untrue. The A's certainly traded Hudson because they did not have the capacity to resign him. Now they did acquire another potentially good starter in the trade but they only really have one they have high hopes for in their system.
     
  18. Russian Fan

    Russian Fan Registered User

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    Do you understand what Bettman & Goodenom meant when they say , ''it's part of the process'' ?

    Why do you think the NHLPA offer something bigger than the last time in december instead of september ?

    Being part of a new CBA in another business, part of the process is to let a good perception outside the executives once it's done. In hockey it's means YOU THE FANS !
     
  19. CarlRacki

    CarlRacki Registered User

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    So they traded two of the world's 10 best pitchers because they have better guys in the minors? That's very, very unlikely. Billy Beane is smart enough to know that there's no such thing as a sure thing and kid who's blowing it up in AA can just as easily flop in the big leagues.
    But don't believe me, here's what the man himself told the San Francisco Chronicle after the Hudson trade:
    Beane wasn't happy to trade Hudson either, calling it the "most difficult phone call I've ever had with a player,'' but the move was an economic one.
     
  20. Chili

    Chili Registered User

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    Once we hear the words "GAME ON" eventually, none of the prior posturing will matter. The content of the new agreement is what is important...the pr, the rhetoric, the spins are opinions, & just like opinions expressed here they fade away pretty quickly.
     
  21. quat

    quat winsome, loathsome

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    I think this might work. I would like to see arbitration done in though... and maybe keep the UFA age high. But I think this would fall under Goodenows definition of a cap, so I doubt he'd want to sign on.
     
  22. quat

    quat winsome, loathsome

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    Yeah but Beane was just saying that to prop up the Owners of the NHL. In fact, it's little known that Beane and Bettman are extremely good friends and go waaay back. You should really learn how to read between the lines my friend.
     
  23. shveik

    shveik Registered User

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    What's worse: trading somebody because because you cannot afford it, or because you do not have room under the cap?
     
  24. quat

    quat winsome, loathsome

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    Cannot afford it. The second happens if you're poorly managed or you team is loaded with good players. heh.
     
  25. One Question for you Carl:
    Do you Seriously Believe that MLB's luxury tax is the only way to do a luxury tax?

    Thank you.
     
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