Salary Cap Announcement

Discussion in 'HFNHL Talk' started by HFNHL Commish, Apr 9, 2007.

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  1. HFNHL Commish

    HFNHL Commish Registered User

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    Gentlemen,

    Since I'm up to my eyeballs in work, I'll make this quick...

    After some debate, the league admin has decided to move forward with a $44.0M salary cap for the 2007-08 season. For those of you that weren't even aware that this was an issue, my apologies. ;)

    For those of you who might be concerned that the HFNHL's revenue structure doesn't support a higher cap number, the league admin has addressed those concerns by instituting a "TV revenue" add-on for the 2007-08 season. This add-on will be 10% of the cap, or $4.4M, spread evenly across all 30 teams. No change will be made to the existing endorsement deal structure. The thinking here is that average regular season revenue is about $28M per team. TV revenue will be responsible for closing a portion of the gap between game revenue and the cap. The remaining gap is where individual GMs will succeed or fail financially.

    Any questions?

    Matt Gledhill
    HFNHL Commissioner
     
    Last edited: Jul 4, 2008
  2. MatthewFlames

    MatthewFlames Registered User

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    As one of the most vocal proponents of change, I should be quick to voice my wholehearted support of the changes and the new 'TV Revenue' add-on. Thanks for all the hard work...
     
  3. Ohio Jones

    Ohio Jones Game on...

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    Thanks for this, Matt!

    Just for clarity's sake, I believe the $4.4M in added revenue is per team. The way the above is phrased makes it sound as though it's $4.4M for the league, with each team receiving roughly $146,000.

    This was an incredibly thorny issue to decide, and I give credit to everyone on the admin team for sorting through all the credible arguments for and against to come up with this plan. As with any of our rules, we'll have to observe it in action to determine whether it has the desired results; the objective is to give teams enough of a stable revenue base to help keep up with the escalating salary demands of the NHL world we mirror, while still requiring them to be conscious of the limited revenue available from the sim.

    What we hope to see is each team able to ice a competitive roster while having a shot at breaking even financially. The particularly successful teams will still be those who manage to build a successful record while maintaining a salary base well below the cap; teams whose salary commitments approach the cap should still find it a challenge to break even without playoff revenues.

    It's a fine balancing act, and unfortunately the best tool we have to manage it - the sim's own revenue generation factor - is too blunt to allow us to do that fine tuning - rather like the proverbial use of an elephant gun to swat mosquitoes. Hopefully this solution will prove to be a little more precise.

    We appreciate everyone's patience, and especially their diligence managing their own team's financial affairs. Like Gary Bettman, we want a league full of competitive, financially sustainable teams!
     
  4. Also FYI when Douglas says the debate was a bit thorny he was grossly understating how divided folks were on the many options discussed.
    The majority of votes were like 5-4 or and some other options defeated by a 4-5 vote.
    Never has the admin team been so divided on a subject and I'm sure the rest of the GM's in the league are probably equally divided in their opinion of this decision.
     
  5. TorontoGM

    TorontoGM Registered User

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    Is the 4.4M a one-time endorsement or is it renewed every season?
     
  6. Ohio Jones

    Ohio Jones Game on...

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    There is expected to be TV revenue each season (assuming this year's experiment goes well). The current expectation is to make it 10% of the cap, but that is subject to discussion.

    Sorry we can't be more definitive, but it's just like real business: you try and project your revenues, but they're always just your best guess, and quickly get outstripped (for good or ill) by reality. In other words, it pays to be a little conservative on the expenses front, because you never can tell for certain how much money you'll have coming in!
     
    Last edited: Apr 10, 2007
  7. Hossa

    Hossa Registered User

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    Out of curiosity, how did the number come to be 10% of the cap? I don't know what portion of revenues for real NHL teams comes from broadcasting revenue, but I have a feeling it is higher than 10%. Obviously in some leagues like the NFL, it's far, far higher.
     
  8. HFNHL Commish

    HFNHL Commish Registered User

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    There's no direct correlation between NHL and HFNHL broadcasting revenue. We just called the 10% "TV revenue" to give it a proper name.

    I suppose the easy answer to your question would be that the 10% figure just happens to offset the increase in the cap...thus providing roughly the same margin for financial success/failure as the 2006-07 season.
     
  9. Ohio Jones

    Ohio Jones Game on...

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    ... which is the best argument for teams to exercise fiscal discipline, as most teams are currently struggling to break even, and many are losing significant amounts of money this year. No reason to suppose next year will be better unless teams make better decisions.
     
  10. Wildman

    Wildman Registered User

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    You are absolutely right Doug. But sometimes it is difficult to let go of a player to UFA because some team will grab them by offering a maximum. I am sure many teams are facing the heat of whether to offer the max to their star player or to let them walk for nothing.
     
  11. Ohio Jones

    Ohio Jones Game on...

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    Ain't that the truth! If being a GM was easy, they wouldn't give the job to guys like JFJ. Um... bad example.

    It comes down to this: GMs need to know what a given player is worth to them to keep, and hold themselves to that number. If they're hearing counters from Reggie that are significantly higher than that number, than they have to be prepared to move the player, or accept that they'll walk at the end of the season.

    Perfect case in point: the tough call Kevin Lowe had to make for Edmonton with Ryan Smyth this year. The Oilers had a set amount they werne't prepared to exceed. Smyth wanted more. Lowe knew his team was a long shot for the postseason, so he bit the bullet and moved the player for (what we're told is) the best package he could get.

    It's a tough call indeed, but the teams that act as though they have a Board of Directors to whom they have to justify every expenditure will have a far more sustainable team in the end than those who treat it all like Monopoly money. As Buffalo showed last year, you don't need to spend a ton to win it all!
     
  12. spintheblackcircle

    spintheblackcircle ...so that happened.

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    Cough-Garth Snow-cough
     
  13. MatthewFlames

    MatthewFlames Registered User

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    Isn't this the same Garth 'my team is in the play-offs' Snow?
     
  14. SPG

    SPG Registered User

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    heh... I was going to say something similar, but couldn't bring myself to do it as a Rangers fan :)
     
  15. HFNHL Commish

    HFNHL Commish Registered User

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    And as a Rangers fan, I'm sure you'd be willing to admit that anyone was better for the Islanders job than Neil Smith. :)
     
  16. spintheblackcircle

    spintheblackcircle ...so that happened.

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    That was my point.
     
  17. SPG

    SPG Registered User

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    Actually Neil Smith brought the Rangers a Stanley Cup, so I have no problem with him :)

    His track record as Rangers GM is much better than Sathers... the Rangers have yet to win a single playoff game with Sather in the organization.... but hopefully that changes this week! ;)
     
    Last edited: Apr 10, 2007
  18. Toronto_AGM_Adil

    Toronto_AGM_Adil Registered User

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    When's the $4.4M added to a teams current funds? Will it be at the start of the season, spread out over all 82 games or at some other point?
     
  19. Start of the season. That way even teams that are low on funds should have a few dollars in the bank for endorsement deals if they so choose.
     

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