Luxury tax offer okay with NHL

Discussion in 'Fugu's Business of Hockey Forum' started by swflyers8*, Nov 29, 2004.

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  1. swflyers8*

    swflyers8* Guest

    Hockey News

    This is good news. Meetings are set to happen this week between players and owners. Who knows, maybe we will have some sort of season. :dunno:
     
  2. Digger12

    Digger12 Gold Fever

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    Where did you get that from?
     
  3. nomorekids

    nomorekids The original, baby

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    i think he's referencing the sources stating that the NHLPA is about to offer a new proposal centered around a 40 mil luxury tax.
     
  4. Taranis_24

    Taranis_24 Registered User

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    I think the question was referring to the meeting between owners and players? I don't think any meetings have been scheduled between the owners and players. A Thursday meeting is scheduled for Bettman and GM's.
     
  5. Cawz

    Cawz Registered User

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    And in other news, Bill daly says "We have said repeatedly that a proposal centered around a luxury tax will not work for us. A tax-based system is too unpredictable and the league's problems too severe for us to take chances on the future of the game."

    Doesn't sound like the NHL is OK with a luxury tax.

    http://www.tsn.ca/nhl/news_story.asp?ID=106361&hubName=nhl
     
  6. GKJ

    GKJ Global Moderator

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    How would Bill Daly know if a luxury tax won't work in the NHL if it's never been used before to begin with?
     
  7. littleHossa

    littleHossa Registered User

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    They have economists to predict the impact of such things as luxury taxes and increased salaries don't they?
     
    Last edited: Nov 30, 2004
  8. hockeytown9321

    hockeytown9321 Registered User

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    Maybe they should get an economist to tell them how bad things are gonna be after this, no matter what they come up with.
     
  9. Tom_Benjamin

    Tom_Benjamin Registered User

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    "An economist is a fellow who can tell you what is going to happen under certain circumstances, and I figure his guess is as good as anyone else's."

    Will Rogers
     
  10. Toonces

    Toonces The beer kitty

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    What the hell?

    I'm getting very angry now. Lock the damn doors and get a deal done already....
     
  11. GKJ

    GKJ Global Moderator

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    I'm sure economists are able to predict attendance numbers in Florida and Carolina not to mention all the other various streams of revenue the owners claim they don't get :shakehead
     
  12. hockeytown9321

    hockeytown9321 Registered User

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    I think the economist that told them Carolina was a good idea went to Hollywood Upstairs Economist School
     
  13. StevenintheATL

    StevenintheATL Registered User

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    A luxury tax will still not stop teams from spending money that in all honesty they can't afford. MLB has one, and look at the players teams like the Yankees sign. On the other hand, look at the players Baltimore has signed and they still suck (Kinda like what the NY Rangers have done.) Perhaps a mix of a salary cap and a luxury tax could work. Like say you have a salary cap, and if a team wants to go over their cap limit, the amount they go over gets tax at a certain rate. Or maybe a variation of the NBA's "Larry Bird Rule" in regards to salary cap and then tax teams that wish to go over the max even after their cap exception. If a team cannot afford the tax, then they can't sign the player(s) that would put them over the cap.
     
  14. littleHossa

    littleHossa Registered User

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    Well for all the positive economist replies that we got in here all I can say is that it's their job, they create models and you'd be surprised how accurate they can be. They had a economics professor talking about the lockout and the MLB's salaries on HNIC about 8 months ago, he had some good stuff. It's also their job, if they don't do it right no one pays them or they're fired, in today's world you don't build an airplane before testing it on the computers first and don't change an industry before having economists say their word.
     
  15. thinkwild

    thinkwild Veni Vidi Toga

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    Regardless of what economists may think, and contrary to the thread title, Bettman rejects luxury tax. No soft cap unless it provides cost certainty.
     
  16. MrMackey

    MrMackey Registered User

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    A soft cap and luxury tax are two different things. Although they are similar a soft cap is more restrictive on spending behaviour.

    A soft cap sets a limit on spending but allows for certain exceptions (franchise players, etc), some of which may come with a penalty.

    A luxury tax places no limits on spending but collect a 'tax' once a certain threshold is passed.

    With a soft cap, a team would likely not be able to sign a player if it set them over their limit and did not meet the exception. With a luxury tax, they can sign away but would have to pay more money to the league.
     
  17. thinkwild

    thinkwild Veni Vidi Toga

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    So what then, a soft cap allows Calgary to keep Iginla under a star player exemption. They can pay him $12mil and not have to worry about a cap. A luxury tax would make them pay $7mil for Iginla, and tax money if their total budget was too high? So Calgary wouldnt have to pay extra tax, but Detroit or Colorado would. It only makes him more expensive for the big teams with the money? Sounds right to me?
     
  18. thinkwild

    thinkwild Veni Vidi Toga

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    Basketball must have dozens of exceptions from Larry Bird, through to days ending with a Y.

    How many eceptions would you allow a hockey team. How many players could they sign and spend as much as they want on and not be punished because they fell under an exception? 1? 4? Would Florida get any of them?
     
  19. MrMackey

    MrMackey Registered User

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    It depends how the cap is set up. A simple one that can be used for illustration is that the team has an overall cap of $32M and no player within that can be signed for more than $4M. The exception is that any team can carry two players at any salary who won't be included in the cap, as long as he is eligible for UFA. Entry salaries are capped at $800k with no bonuses, and teams must spend a minimum of $28M.

    So Iginla could not make more than $4M until he was 30... at which point he could make $100M per year if a team wanted to pay it.

    Only 60 players could be signed for more than $4M (there are 67 signed for $4M or more next season, which doesn't include Kariya, Palffy, etc).

    What would this do? It would allow teams like the Lightning to keep their big guns at least until they're UFAs. They could sign Richards, Lecavalier, St. Louis and Prospal to $4M/year deals each and still have $16M for the rest of the team. Plus none of those players could demand any more money until they're a UFA anyways, so demanding a trade or holding out for monetary gain would be pointless.

    A team like Detroit could still have a $70M payroll, but that would mean they'd be spending $38M on two players (lets say Joseph and Lidstrom...their two highest paid players). This would obviously be ridiculous and a complete waste of money, and they might end up losing money because of it. However, since they have to sign 18 other guys within the $32M they would have to make decisions that would make them either less competitive, or bring down individual salaries. Right now their committed payroll for next year is $37.725 (excluding Joseph, Lidstrom)... this means they could not sign Schneider, Chelios or Datsyuk (all unsigned), and would have to lose $5.725 in payroll. That could be Yzerman + Woolley; Hatcher + Dandenault; etc. -- or everyone could decide to take less money in order to play for a winner like Detroit.

    However there is certainly competitive balance here as the Lightning do not have to worry about losing St. Louis to a team like Detroit because he's demanding $10M/year in a hold out based on winning the Art Ross & Hart. However, St. Louis doesn't really lose because he can still earn huge $$ once a UFA, and $4M/yr up to that point. Calgary and Iginla would be in the same situation.

    Go back to last season and use this model on every team. Guys like Lidstrom and Guerin could still make their money and maybe more, but it would really come down to personal sacrifices on a case-by-case situation... not a sweeping 5% roll-back.
     
  20. tinyzombies

    tinyzombies Registered User

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    I think it should be a really expensive luxury tax.

    For instance, if the Rangers sign Glen Murray over a certain level of salary, their name should go in a hat and then they have to buy a player for a less fortunate team.

    Kind of like a Christmas gift exchange program.
     
  21. garry1221

    garry1221 Registered User

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    interesting idea. one worth looking into IMO. essentially a 2 franchise player exemption. an RFA cap at 4 mil. and a general cap at 32 mil... it would be interesting to explore if nothing else.
     
  22. Jussi

    Jussi Registered User

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    Could it be expanded to favor drafting? You know, players that have played 8-10 consecutive seasons for the team that drafted them?
     
  23. thinkwild

    thinkwild Veni Vidi Toga

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    Ok, so this is one of the caps, where its not a real cap. Overall, there is no tie between league revenues and expenses. I too think a solution like this might be able to be worked out. An RFA cap perhaps. If RFA salaries are manageable, then it really makes no difference what Holik makes. (Not that it does now either)

    Of course Lecavalier, Richards, St Louis and Prospal are already making less than $4mil a year. And none are likely to even approach $10mil under the expired system.

    Under this system, when Richards and Lecavalier reach UFA age, there is no way they could keep them because NYR will be in planning to dump their star players to sign them when they become available. The best UFA's in this soft cap, will end up on the richest teams. How could Calgary keep Iginla or Edmonton keep Weight. Only if no other team has an exemption could they keep them

    This idea, is not cost certainty though, but I agree, something along these lines may be a compromise available, if there are 2 sides looking for one.

    A homegrown cap sounds good, except it removes a players rights to true free agency, if only his team can sign him.
     
  24. MrMackey

    MrMackey Registered User

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    Its a real cap, its just a soft cap.

    Well I never got to that part. I just picked $32M as an arbitrary number. There's two ways of picking the cap... one is as a percentage of revenues, the other is an arbitrary number that grows by a certain percentage each year (say 3%).

    The owners have always said that they don't care whether its a luxury tax or a cap or whatever, but it just has to be a percentage of revenues. The PA has basically said that's what their definition of a cap is.

    They may not reach $10M, but they'd certainly be demanding more than $4M (Lecavalier already makes more than $4M). Pronger, Neidermayer, Lidstrom, Kariya, Bertuzzi, Naslund, Iginla, Thornton, Theodore, Giguere, Fedorov, Hejduk, Modano, etc are examples of players that got huge raises early in their careers (well before UFA), and some have accomplished less than guys like Richards and St. Louis have.

    The difference between 4 guys making $4M vs. $6M each is huge.

    Like I said, there'd only be 60 exemptions, and some teams wouldn't even use the exemption for star players. So if Lecavalier, Richards, and St. Louis all walk at UFA age, it shouldn't matter as much because other star players will be looking for work (maybe a guy like Weight will be willing to sign for $5M because the Blues sign Richards at 7 and have Pronger as their other exempt player). Plus if Feaster is doing his jobs, other young players will be coming through the system. You'd probably see less knee-jerk rebuilding happening along the lines of Washington, Pittsburgh, Boston and the Rangers.

    That's just it though... neither side would probably go for this. There are a million other ways to work a deal like this that I think could curb spending. I even think a simple luxury tax might be the best and simplest solution... but if the threshold isn't calculated based on the previous year's revenues then the owners won't look at it. And if it does, then the PA will call it a hard cap and turn it down.

    Any team could sign him, and he could still be granted arbitration rights... he just couldn't make more than $4M until he was a UFA. If the Oilers only wanted to sign York for $3M, and he wanted $4M as an RFA, he could still get an offer sheet from the Penguins (who would probably be in a better position to make that kind of offer).
     
  25. misterjaggers

    misterjaggers Registered User

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    After reading this thread's title, I thought this was a fantasy league thread...
     
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