Proposal: Soft cap + Luxury Tax + Revenue Sharing

Discussion in 'Fugu's Business of Hockey Forum' started by degroat*, Sep 27, 2004.

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  1. degroat*

    degroat* Guest

    NOTE: This is a similar proposal to what I mentioned in GoCoyote's thread, but it is quite different...

    Part 1: Soft Cap set at 55% of Revenue

    Using $2B in revenue (which is obviously an estimate), the cap would be $36,666,667.

    The exemption to the cap would be that a player's cap hit decreases as his tenure with a team increases.

    1st & 2nd year - 100% cap hit
    3rd year - 98%
    4th year - 95%
    5th year - 90%
    6th year - 85%
    7th year - 80%
    8+ years - 75%

    A player’s first year with an organization would be determined by the first regular season game played by the organization after said player becomes part of the organization.

    So, for players drafted by the team, his first year with the organization would be the year following his draft.

    Part 2: 100% Luxury Tax set at 65% of Revenue

    Using $2B in revenue, the threshold would be $43,333,333. Full player salaries are used for this, not the cap hits that were listed in Part 1.

    What this means is that even though the soft cap allows them to go over the cap, they will have to pay luxury tax for having player salaries over the threshold.

    Teams must match, dollar for dollar, any money paid to players over the threshold and that money goes into the "Sharing Pool".

    Part 3: Revenue Sharing
    The following items will be paid into the "Sharing Pool"

    50% of local TV revenue
    25% of gate revenue

    The sharing pool will then be divided evenly among all 30 teams, even those that paid a luxury tax.
     
  2. Taranis_24

    Taranis_24 Registered User

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    Stich,

    Where are the player concessions in this proposal? Effectively what you are saying is soft cap, but any monies from luxury tax are from owner to owner, same with the revenue sharing. Is there player rollback in salaries contained in your proposal? With some work could work but even as the NHLPA said it would not approve a luxury tax system that is to confiscatory to the players. So not only do they not want a cap they really don't want a very disciplined luxury tax system.
     
  3. degroat*

    degroat* Guest

    The concession is that it's not a hard cap.

    Are you actually suggesting that revenue should be shared with the players? :lol

    No.

    Too damn bad.
     
  4. aj

    aj Registered User

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    If you tie salaries to revenue, won't that just cause ticket prices to increase even further?
     
  5. Brent Burns Beard

    Brent Burns Beard DontTouchMyDonskoi!

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    how is that a "players" concession ? thats the owners giving in a bit.

    i think the poster is on your side of the debate, no need to " :lol " at him.

    dr
     
  6. degroat*

    degroat* Guest

    Ah... I misunderstood what he asked... I thought he was asking where's the concessions for the players.
     
  7. degroat*

    degroat* Guest

    Prices will only go up if the demand warrants it.
     
  8. aj

    aj Registered User

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    Or if the Rangers want to sign another $10 million player. :shakehead
     
  9. degroat*

    degroat* Guest

    For the Rangers to increase ticket prices enough to increase each team's cap by $10M, they'd have to increase each ticket by roughly $332.59.
     
  10. aj

    aj Registered User

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    OK, I was kidding about the Rangers thing, but obviously in certain markets the demand is there, so what's to stop them from inflating prices to even more insane levels?

    I want to see a solution that means I can actually afford to go to games without having to not eat for a week or two.

    Explain to me how your solution benefits a fan like me, and I might be more supportive.
     
  11. degroat*

    degroat* Guest

    There is nothing to stop them from inflating the prices, nor should there be. If a team is fortunate enough to be able to fill the seats with an average ticket price of $200 then good for them.
     
  12. Taranis_24

    Taranis_24 Registered User

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    Well since you are a canadien exiled in England how often do you get to a game anyhow? I don't thinking ticket prices will drop though I do know of three teams that have reduced their overall season ticket prices by over 11% already (Dallas, Pittsburgh and Washington) but for sure the ticket prices for most organizations will not rise unless the demand is there. If thats the case then good for them but it shouldn't give them the advantage of buying stars from the teams that can't compete revenue wise.
     
  13. Taranis_24

    Taranis_24 Registered User

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    Stich,

    Either I didn't write clearly enough or you didn't read my post closely. Your proposal doesn't offer any concessions from the players at all. Luxury tax and Revenue-sharing systems are owner-to-owner where money is trasferred in one way or another from one owner to another owner. The players in this proposal give up nearly nothing in your systems.
     
  14. oilers_guy_eddie

    oilers_guy_eddie Playoffs? PLAYOFFS!?

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    The concession the players make in this proposal is that teams will be punished for raising their payrolls above the luxury tax threshold. It might prevent teams from offering contracts, which reduces the dollars available for players. It's something the NHLPA opposes bigtime. The difference between Stich's proposal and the NHLPA's proposal is that the NHLPA is suggesting luxury tax rates that are so low they don't offer any disincentive for teams to spend. Stich's proposal would deter overspending with a luxury tax rate of 100%. Needless to say, the NHLPA isn't going to like any proposal that deters overspending.
     
  15. Vlad The Impaler

    Vlad The Impaler Registered User

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    Stich, I find the proposition interesting, except part 3: Revenue sharing.

    I am against any form of revenue sharing. The NHL needs to find a system that works for every team, without the need for charity in any way, shape or form.
     
  16. degroat*

    degroat* Guest

    I understand your stance, but it's not very rational in today's world of sports (which is why the prosposals from the owners to the players have included revenue sharing). Even with the huge amount of TV money the NFL gets, they still share gate revenue.

    The difference in size between the biggest market and the 30th market is simply too big for a league to not have some of the money generated by the largest market teams being funnelled in some way to the smaller markets (and the difference would still be too big if the league dropped to 24 teams).

    What I'm against is a system that takes directly from the rich and gives directly the X teams that generate the smallest amount of money. Such a system would give those teams no reason to make an effort to increase their revenue. That's why the system that I suggested has money going into a pool and divided evenly among all the teams. That way, every team benefits from a team getting more money out of a team's local TV deal, but that team itself benefits the most.

    The only system the league could put in place that would work without revenue sharing would be one where the team with the lowest revenue generation can still reach the cap. Getting a number that low simply isn't going to happen.
     
  17. Motown Beatdown

    Motown Beatdown Need a slump buster

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    I think some form of revenue sharing is in order. I just hope it doesn't become like MLB where owners take the money and just pocket it instead of re-investing it into their teams. IMO if the owners are gonna share revenue, there has to be a salary floor put in the CBA. If teams want to stay under that floor number thats fine, but they dont receive any revenue sharing money.
     
  18. me2

    me2 Calling out the crap

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    I'm not adverse to revenue sharing. It takes two teams to put on a game. If teams pool a percentage of gate (40-50%) and split it equally the wealthy will still be wealthier, but the gap closes.

    We have revenue sharing now. Not all TV markets are equal but the NHL doesn't hand out more to Toronto than Florida based on # of viewers.
     
  19. me2

    me2 Calling out the crap

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    A fine suggestion.
     
  20. BM67

    BM67 Registered User

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    So what happens between 55% and 65%?

    Burke proposed $200 mil revenue sharing, and said it was the largest amount proposed by anybody yet. Your deal dwarfs that, and so probably would have no chance.
     
  21. ehc73

    ehc73 Registered User

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    Unfortunately, the owners want something that guarantees that they'll make money, even though they can be really bad businessmen. They like the NFL system, where you have to be the biggest schmuck (and then some) to lose money in that system. Burke said the owners want an idiot-proof system, and revenue sharing helps you get the money even if you are an idiot.
     
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