Rumored Current CBA vs. February Offer

[Lanny MacDonald*]

The best NHL offer wasn't the one made at the end of the process, but the linked deal with profit sharing (a couple weeks earlier). I have heard NOTHING about profit sharing being in this deal, and if it is not in the deal, then the PA most definately turned down the best deal they were going to get.

You hit the nail right on the head. The NHLPA cut off their own nose to spite their face. With profit sharing the NHLPA had the opportunity to share control over franchises as they would be equal partners in profits over a certain level ($115M). They could have brought in efficiency experts to make each franchise run a little cleaner and a lot leaner, shedding millions of wasted revenues, and easily creating an enviornment where they could make boatloads of money. As well, if they had assisted in the expansion of the interest level in the game, and got a big TV contract in any form, they would have set themselevs up for 50% of that number. They were exceptionally myopic in their approach and it has come back to bite them in the ass. Their leadership let them down.

 

[nyr7andcounting]

I still don't understand how the projected revenues have anything to do with it.

Let's say they negociate 54% of revenues. Then they project $1.7B. True revenues are $1.6B. The next year, the cap will be set so players receive $864M. Let's say they project $2.0B. True revenues are $1.6B. Next year, cap is set so players receive $864M. In other words the cap should be the same in both situations regardless of the base year.

So what's the difference???

Let's say they negotiate that the floor is 51% and the cap is 57%, which it seems they are doing. This would result in leaguewide spending of, most of the time, 54%. But unfortunately the only info we have is that the cap for next year is $36M and the floor is $22M, or whatever the report is.

If that $24M-$36M is 51%-57% of a projected revenue, like $1.4M, than as revenues rise so will the $24M and the $36M. Meaning that when the league gets back to normal revenues that 57% cap will be be at least $40M or more. In other words, if the current range is based on a projection like $1.4-$1.6M, than it will definetly go up.

But if that $24M-$36M is based on normal revenues, let's $2B, than it's not going to move much over the CBA. Or if anything, it might even go down.

They key is that they are probably not negotiating a % to go to players, but instead what % the floor will be and what % the cap will be. In that case it's important to know what the reported range is based on.

 

[Egil]

I believe their will be an escrow acount setup to ensure the linked number is hit (as is done in the NBA).

 

[Mess]

in the thriving hotbed of Kelowna might not have made the cut.

Hey this little thriving hockey hotbed is just that ..

They held the 2003-04 Memorial Cup here with the host team winning.

The 2005 WJC will be here along with Vancouver as the other host city for the best World Junior players

and low and behold Team Canada will hold their Olympic camp here in preparation "

Naming names for the upcoming Games

Mario Lemieux's name will be on this list and Steve Yzerman will also get an invite to the orientation camp scheduled August 17-20 in Kelowna, B.C.

Not such a sleepy little town as you make it out to be ..

 

[SuperUnknown]

Let's say they negotiate that the floor is 51% and the cap is 57%, which it seems they are doing. This would result in leaguewide spending of, most of the time, 54%. But unfortunately the only info we have is that the cap for next year is $36M and the floor is $22M, or whatever the report is.

If that $24M-$36M is 51%-57% of a projected revenue, like $1.4M, than as revenues rise so will the $24M and the $36M. Meaning that when the league gets back to normal revenues that 57% cap will be be at least $40M or more. In other words, if the current range is based on a projection like $1.4-$1.6M, than it will definetly go up.

But if that $24M-$36M is based on normal revenues, let's $2B, than it's not going to move much over the CBA. Or if anything, it might even go down.

They key is that they are probably not negotiating a % to go to players, but instead what % the floor will be and what % the cap will be. In that case it's important to know what the reported range is based on.

We're talking about set percentages (whether straight revenues going to players or high/low limits) so the "figure" they're based on doesn't matter, it will only make the starting caps different numbers, but will evolve the same way.

Exhibit A: Low cap 51%, High cap 57%, 1st year projection $1.5B, real revenues $1.8B.
1st year: low cap = $25.5M high cap = $28.5M
2nd year: low cap = $30.6M high cap = $34.2M

Exhibit B: Low cap 51%, High cap 57%, 1st year projection $2B, real revenues $1.8B.
1st year: low cap = $34M high cap = $38M
2nd year: low cap = $30.6M high cap = $34.2M

As you can see, year #2 is the same regardless of the "base". Same could be done with one set % of revenues.

 

[GSC2k2*]

Hey this little thriving hockey hotbed is just that ..

They held the 2003-04 Memorial Cup here with the host team winning.

The 2005 WJC will be here along with Vancouver as the other host city for the best World Junior players

and low and behold Team Canada will hold their Olympic camp here in preparation "


Not such a sleepy little town as you make it out to be ..

Words fail me. I make my living with words, but they fail me at this moment, for perhaps the first time ever.

There are not enough laughing icons in the world to express the mirth that I am feeling. Thank you, Massager. I thank you from the bottom of my heart.

 

[nyr7andcounting]

We're talking about set percentages (whether straight revenues going to players or high/low limits) so the "figure" they're based on doesn't matter, it will only make the starting caps different numbers, but will evolve the same way.

Exhibit A: Low cap 51%, High cap 57%, 1st year projection $1.5B, real revenues $1.8B.
1st year: low cap = $25.5M high cap = $28.5M
2nd year: low cap = $30.6M high cap = $34.2M

Exhibit B: Low cap 51%, High cap 57%, 1st year projection $2B, real revenues $1.8B.
1st year: low cap = $34M high cap = $38M
2nd year: low cap = $30.6M high cap = $34.2M

As you can see, year #2 is the same regardless of the "base". Same could be done with one set % of revenues.

No, the second year is not the same because in the first example the cap has gone up $6M...in the second example the cap goes down $4M.

The reported cap for this year, $36-$38M, is obviously linked. Unless we know what it is linked to, than we don't know where the cap will go after the first season. Will the players end up with a sub $40M cap until year 6 year of the CBA, or will the cap be $42M after a year or two? Depends on how much and which direction future revenues differ from the projection for the base year.

It will evolve the same way, but in order to predict how it will evolve we need to know what revenue the cap is going to start at.

 

[SuperUnknown]

No, the second year is not the same because in the first example the cap has gone up $6M...in the second example the cap goes down $4M.

The reported cap for this year, $36-$38M, is obviously linked. Unless we know what it is linked to, than we don't know where the cap will go after the first season. Will the players end up with a sub $40M cap until year 6 year of the CBA, or will the cap be $42M after a year or two? Depends on how much and which direction future revenues differ from the projection for the base year.

It will evolve the same way, but in order to predict how it will evolve we need to know what revenue the cap is going to start at.

Regardless of going up or down, the cap amount remains the same on the second year. The "base" year doesn't have any impact on year 2 and forward. It only affects year one.

 

[sveiglar]

I believe their will be an escrow acount setup to ensure the linked number is hit (as is done in the NBA).

I haven't followed the exact details of reports closely since February, but is this the type of system that has been agreed upon, or is a floor and ceiling linked to revenue which doesn't really guarantee the players a certain percentage of revenue (re gc2005's post)? Or has that not been made clear in recent reports?

 

[kdb209]

I haven't followed the exact details of reports closely since February, but is this the type of system that has been agreed upon, or is a floor and ceiling linked to revenue which doesn't really guarantee the players a certain percentage of revenue (re gc2005's post)? Or has that not been made clear in recent reports?

No one knows for sure.

The earlier reports once progress started to be made seemed to imply that escrow was off the table and that instead any over or under estimation of revenues would not affect the current years payments (like the leagues older escrow proposals), but instead would just translate to adjusted caps the following year. In effect, there would be a one year lag between revenues and the cap. However the wording of some recent reports have made me feel that it is likely that escrow (or similar mechanism) is back on the table.

The players do not like the idea of having salary held in escrow. Neither do the NBA players - they reduced their escrow %-age in the new CBA. But in fact, escrow may actually be to the players benefit. If there is, as expected, a significant one time drop off and then increasing year by year revenues over the life of the CBA, having those increases reflected immediately rather than with a year lag may actually be in the players benefit.

 

[CGG]

You are correct that the two sides could not agree on anything so the NHL gave in (their only display of weakness) and said they would go with the players' framework with a $42.5M cap PLUS expenses. Again, Goodenow, having his bluff called, decided the framework put forward by the NHLPA was not really something he would sign off on and turned tail. Then he had the balls to try and blame it on the league for the cancellation. The league gave in and went for middle ground (players terms, owners number) and Goodenow wanted more. He wanted a total victory and complete compitulation on the league's part. It's all there in his press conference after the fact. He dodges question after question because he knows he screwed up and has to deflect the blame.

Hey, if it lets you sleep at night go a head and believe that the players are getting a better deal now than they would have been in February. In February they would have been working off their framework, their conditions, with last year's contracts being honored and with a higher cap number. Now they are working under the NHL's framework, with a cap, with linkage, with a rollback, and without last year's contracts being honored. You may wish to believe that its a better deal, but you would be dead wrong. The players say it themselves. How hard is it to admit that the best deal was left on the table months ago? But hey, if you're looking for that good night's sleep, do what you have to do there big fella. I won't lose any sleep over it.

I don't know why anyone bothers to use common sense or actual facts when you're just going to re-invent history to "prove" that the owners are god and the players are evil. They most definitely were not on the same page in February. Gretz, Mario, everyone says so. They were way too far apart on the other issues (i.e. QO's, arbitration, revenue sharing, etc.) to even discuss a salary cap number. If the owners had given in to everything in the players framework, that wouldn't be the case. And it only would have been a cap number that prevented a deal from happening.

But, what the hell, since you're going to recreate history to satisfy your needs, go right ahead.

When all is said and done, who knows, you might actually be right about the Feb deal being better. Despite the cap never going up. But to say it's the same deal now as in Feb with a lower cap is absolutely asinine.

 

[nyr7andcounting]

Regardless of going up or down, the cap amount remains the same on the second year. The "base" year doesn't have any impact on year 2 and forward. It only affects year one.

Yes, but look at the title of the thread. I was obviously comparing the two deals...and one of the major parts is the cap level. $42.5M is set, and wouldn't have moved. If you want to compare that cap to the cap in the current deal, you need to know the base revenue in order to get a good idea of where the cap will move from $36-$38M after the first year. Like I said, depending on what next years range is based on could make a difference in that $36-$38M cap going up or down....completely opposite directions.