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Corona virus will kill the cap
Salary Cap: Projected 84-88.2 Million Next Year
- Thread starter DarkKnight
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Canada4Gold
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- Dec 22, 2010
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If the Coronavirus and playing in empty arenas made HRR so that the cap would go down I would imagine the PA would then use the inflator to make it at least stay the same or a small increase to 83 or 84 with the knowledge that actual HRR next year would likely return to normal. Thus making it the same gradual climb say 81.5 to 84 to 88 in 21/22 rather than 81.5 to 80 to 88. Escrow this year would be more of an issue which they can't help at this point than it would be next. This is all assuming Coronavirus isn't an issue by the time next season starts. Would be about the only situation I expect the PA to use the inflator.
Loosie
The Eternal Optimist
The cap did not go down last year. It just didn't get as high as was projected.
Edit: Just read the following posts you cleared up that this is what you meant.
I think it could happen if owners agree to reduce the player holdback escrow from 14% this year to say like 12% next year and agree that after true up it can't go above 8%. Then the players probably would agree. But if players are asked to deal with an increased escrow holdback back to 15% then it will be a complete waste of time even bringing it up. The players could care less about the teams CAP it is all about making sure they get what's owed them on their contracts.
ULF_55
Moderator
Mess
Global Moderator
A look at how the coronavirus could impact the NHL’s bottom line
What is the lost revenue’s effect on the salary cap?
There are two things to consider with the impact of lost revenue: the short term (this season) and the long term (next season and beyond).
This season’s salary cap is a projection of the players’ share of the 50-50 split of hockey-related revenue with owners. Total NHL revenue is estimated to be in excess of $5 billion (US). If there is a significant loss in revenue this season, NHL players will be responsible for a rebate to ensure a 50-50 split because the amount they have collected in paycheques will represent more than what the owners receive.
To date, the NHL has not asked the NHL Players’ Association to increase escrow withholding for the final three paycheques of the season, to be paid on March 15, March 30 and April 15.
One reason for that is that there is already what amounts to a small margin for error in place. More money is withheld in escrow than is typically required. Last season's return has not yet been calculated. But two seasons ago, the players received a small portion of their money held in escrow back once final end-of-season financial calculations were done. NHL players have set aside 14 per cent of this season’s salary in escrow to ensure that 50-50 split.
“I think that there is enough of a buffer right now that there isn’t that much cause for concern yet, but the situation is still very fluid,” said Stew Gavin, founder of the Gavin Group, which manages and invests money for current and former NHL players. “I don’t think anyone really knows what the numbers would look like if the league would be shut down for a period of time.”
Gavin, a former NHLer himself, said he has not asked his clients to prepare or conduct business in any way out of the ordinary. But they are monitoring the situation closely.
“This is part of what we do, part of the education. We’re very conservative, we teach players to put money away, to plan and save,” Gavin said. “There is a lot of noise out there; you see a lot of red reading the market on the TV screen. The headlines say one thing, but the reality is different. We were probably due for a market correction or pullback, and I think this [coronavirus impact on the economy] just accelerated it.”
Continued : A look at how the coronavirus could impact the NHL’s bottom line - TSN.ca
What is the lost revenue’s effect on the salary cap?
There are two things to consider with the impact of lost revenue: the short term (this season) and the long term (next season and beyond).
This season’s salary cap is a projection of the players’ share of the 50-50 split of hockey-related revenue with owners. Total NHL revenue is estimated to be in excess of $5 billion (US). If there is a significant loss in revenue this season, NHL players will be responsible for a rebate to ensure a 50-50 split because the amount they have collected in paycheques will represent more than what the owners receive.
To date, the NHL has not asked the NHL Players’ Association to increase escrow withholding for the final three paycheques of the season, to be paid on March 15, March 30 and April 15.
One reason for that is that there is already what amounts to a small margin for error in place. More money is withheld in escrow than is typically required. Last season's return has not yet been calculated. But two seasons ago, the players received a small portion of their money held in escrow back once final end-of-season financial calculations were done. NHL players have set aside 14 per cent of this season’s salary in escrow to ensure that 50-50 split.
“I think that there is enough of a buffer right now that there isn’t that much cause for concern yet, but the situation is still very fluid,” said Stew Gavin, founder of the Gavin Group, which manages and invests money for current and former NHL players. “I don’t think anyone really knows what the numbers would look like if the league would be shut down for a period of time.”
Gavin, a former NHLer himself, said he has not asked his clients to prepare or conduct business in any way out of the ordinary. But they are monitoring the situation closely.
“This is part of what we do, part of the education. We’re very conservative, we teach players to put money away, to plan and save,” Gavin said. “There is a lot of noise out there; you see a lot of red reading the market on the TV screen. The headlines say one thing, but the reality is different. We were probably due for a market correction or pullback, and I think this [coronavirus impact on the economy] just accelerated it.”
Continued : A look at how the coronavirus could impact the NHL’s bottom line - TSN.ca
Maple Leaf
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HoweHullOrr
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$84 m could end up being the high end number given circumstances.
Book it! Leafs win cup and save the NHL revenue in 2020 single handedly!!!
HoweHullOrr
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- Oct 3, 2013
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It could possibly. I mean, they decide the next years cap based on estimates and projections anyhow. If the league is forced to cancel the season/games, HRR is negatively impacted. Understandably, they might have to make adjustments to align with the new revenue picture.
Stephen
Moderator
- Feb 28, 2002
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Hard to envision how the league won't be thrown into utter chaos if the cap situation goes into free fall and there isn't a rollback negotiated. Teams will have to dismantle entire rosters but most teams will be dumping. There aren't enough buyouts that could make that happen. And for a lot of franchises I doubt they'd have the cash to really stomach it. Could be a real crack in the salary cap system.
Canada4Gold
Registered User
- Dec 22, 2010
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Imagine the Nashville Shea Weber Cap Recapture 1 year disaster possibility, and then do it to every team and almost nobody has space to acquire money from other teams and this is what you get. Basically forced buyouts of good contracts because there's literally nobody who can take them for free, and Pietrangelo signing for league minimum.
If they anticipate that this won't be an issue that impacts next season there's 0 chance they won't agree to a cap based on estimates of HRR rather than this seasons affected numbers. Whether that's by a separate negotiation, or the max inflatior. You can't just leave a situation where the cap drops by 10 million and there's more contracts already signed than the entire league combined can afford let alone free agents. If they think next year might be impacted too then all bets are off. Perhaps a 1 year scaling back of salaries would have to be in order to make it work. I guess that's essentially the same as a normal cap with issues which would result in tonnes of escrow but it's done in advance.
If they anticipate that this won't be an issue that impacts next season there's 0 chance they won't agree to a cap based on estimates of HRR rather than this seasons affected numbers. Whether that's by a separate negotiation, or the max inflatior. You can't just leave a situation where the cap drops by 10 million and there's more contracts already signed than the entire league combined can afford let alone free agents. If they think next year might be impacted too then all bets are off. Perhaps a 1 year scaling back of salaries would have to be in order to make it work. I guess that's essentially the same as a normal cap with issues which would result in tonnes of escrow but it's done in advance.
Let's hope insurance covers the last 3 Raptors and Leafs employee paychecks. No guidance yet from anyone. My understanding is insurance payments are not included in CAP and are revenue neutral to the owners ie they don't get split 50/50 and their are no owners profits included either. So this will affect the owners more than the players. Where it will likely have an affect on both is the TV money back to Comcast and Rogers for cancelled games. and gate receipts returned to season ticket holders for cancelled games. and food merch etc. Who knows where that ends up. But my guess is no true up $$$ after this year.
Even without cancellations next season, I would guess that the appetite for sitting in an arena with 18,ooo people may be dramatically reduced for some time. Perhaps not in Toronto or some other Canadian cities, but certainly in a number of markets.
If there is a regression in cap number I wonder if the league holds it artificially high or provides relief to existing contracts somehow.
When the league comes back up. Then my bet is they make some sort of World Cup/olympics tournament to make up some losses before the start of the Next season
It should be $100M with the option of a $20M luxury tax as well.
Menzinger
Kessel4LadyByng
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Stephen
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- Feb 28, 2002
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The only thing that can be done is a temporarily inflated cap that allows teams to carry on business as usual. But that also requires the owners to essentially fork over extra cash to float the players side which will then be taking more of the hockey related revenue. Which might be difficult for some franchises since they're already losing tons of revenue.
Maple Leaf
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Golden_Jet
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- Sep 21, 2005
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An agent was speculating, cap could stay the same or slightly less next year if season cancelled. Said this years losses could be made up next year in escrow, as mentioned in article 50 (I think) of CBA.
The player's should squeeze them now for the best CBA they can get. Noway they lockout after this LOL
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