Should the players give up arbitration for a luxury tax?

[hockeytown9321]

This is a thought I posted yesterday in one of the threads about Bettman. The more I think about it, the more I think it could work.

The owners want to eliminate arbitration altogether. What if the players agreed to that in exchange for a legit luxury tax? If arbitration is one of the inflationary mechanisims, then a hard cap shouldn't be needed if its not there, right? It also allows the players to save face by not accepting a cap.

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[Buffaloed]

I doubt the owners would go for it. Arbitration is a very minor part of salary inflation. The guys going to arbitration are generally citing comparable contracts that didn't result from arbitration. The luxury tax itself is what the owners consider the major source of inflation. Teams that can afford the tax will sign players to higher contracts and that will establish the market rate for those kinds of players.

Arbitration would be a major pain for GM's in hard cap enviroment. Arbitrator awards would determine personnel moves. If an award puts a team over the cap they have to make a deal or walk away from the award. Teams would be unable to make commitments with arbitration cases pending. That's the main reason the NHL proposal can't have arbitration included, rather than its inflationary aspect.

 

[hockeytown9321]

I don't think the reasn for wanting to get rid of arbitration is the possible complications. Arbitration is what sets the market.

 

[Buffaloed]

I don't think the reasn for wanting to get rid of arbitration is the possible complications.

Is there any league with a hard cap that has salary arbitration? How can you plan a roster if your costs can be dictated by an arbitrator in the middle of August? What happens if the NHLPA instructs ALL eligible players to file? Bear in mind that qualifying offers count against a salary cap until they're withdrawn. There's huge complications. It shouldn't even be considered in a hard cap enviroment unless both the team and player consent to it.

Arbitration is what sets the market.

The overwhelming majority of NHL contracts are negotiated without arbitration. The overwhelming majority of comparables cited in arbitratration are contracts that were negotiated without arbitration. Arbitration follows the market, it does not set it.

 

[John Flyers Fan]

Is there any league with a hard cap that has salary arbitration? How can you plan a roster if your costs can be dictated by an arbitrator in the middle of August? What happens if the NHLPA instructs ALL eligible players to file? Bear in mind that qualifying offers count against a salary cap until they're withdrawn. There's huge complications. It shouldn't even be considered in a hard cap enviroment unless both the team and player consent to it.

The NFL is the only league with a hard cap and they do not have arbitration. However in the NFL, players become RFA's after 3 years and UFA's after 5 seasons.

Without arbitration and with a hard cap the players should become UFA's by age 25 at the latest. (This is another reason why I'm against a Hard Cap, because I'm not a fan of lowering the UFA age).

 

[hockeytown9321]

The overwhelming majority of NHL contracts are negotiated without arbitration. The overwhelming majority of comparables cited in arbitratration are contracts that were negotiated without arbitration. Arbitration follows the market, it does not set it.

Bill Daly doesn't agree:

The qualifying offer mechanism as well as many other mechanisms under the CBA, including particularly the salary arbitration system, create a system characterized and driven by inflationary benchmarks, which make it impractical for clubs to reduce player costs....

http://www.nhl.com/fancentral/livechat/transcripts/daly080604.html

 

[PecaFan]

The overwhelming majority of NHL contracts are negotiated without arbitration. The overwhelming majority of comparables cited in arbitratration are contracts that were negotiated without arbitration. Arbitration follows the market, it does not set it.

I think you're seriously under-representing arbitration here. There were *sixty seven* arbitration filings this past year. Those players got 158.1 million in salary for this season alone, total raises of $50.2 million or 46.6%.

One player took a $50K cut, one took the same salary, every one else got big raises, ranging from a low of 3.3% to 268%. (that's tossing out a couple of guys who went from unspecified minor league salaries to 400, 450K) The average raise was $750,000 or 58.1%, the median $600,000 or 41.8%. The largest *raise* was 3 million.

Those are serious, serious numbers. This is not just "following the market". Tom freakin' Poti got 3 million a season in arbitration.

 

[thinkwild]

Many arbitration cases are players coming off their entry contract which was capped at an artificially low level. So of course these players are going to get a big raise. But the whole point of arbitration is how much of a raise should they get as they get closer to free agency. which player that got a raise do they compare too. By definition it cant set the market, since there has to be a comparable.

Showing that players in line for a raise, got a raise, isnt proving its inflationary. Players salaries are supposed to start low and inflate.

 

[PecaFan]

Many arbitration cases are players coming off their entry contract which was capped at an artificially low level.

No, that's not the case. Because to qualify for arbitration, you need more years of play than was in your initial contract. If you signed your 3 year entry deal as an 18-20 year old, you need five years of play before you can ask for arbitration, etc.

Which means that pretty much every single one of those deals was made coming off a "normal" contract.

Here's the list, point out the entry contracts:
Ruslan Salei
Ronald Petrovicky
Marc Savard
Hal Gill
Sergei Gonchar
Joe Thornton
Mika Noronen
Brian Campbell
Jochen Hecht
Rory Fitzpatrick
Jean-Pierre Dumont
Martin Biron
Brad Brown
Daniel Briere
Miikka Kiprusoff
Denis Gauthier
Jesse Boulerice
Erik Cole
Kevyn Adams
Bryan Berard
Stephane Robidas
Milan Hejduk
Alex Tanguay
Eric Brewer
Mike Van Ryn
Eric Belanger
Willie Mitchell
Andrew Brunette
Richard Park
Richard Zednik
Cristobal Huet
Steve Sullivan
Wyatt Smith
Vladimir Orszagh
Scott Gomez
Brian Rafalski
Scott Niedermayer
Oleg Kvasha
Janne Niinimaa
Jason Blake
Adrian Aucoin
Dave Scatchard
Karel Rachunek
Chris Phillips
Peter Schaefer
Zdeno Chara
Kim Johnsson
Michal Handzus
Ladislav Nagy
Daymond Langkow
Nils Ekman
Vesa Toskala
Scott Parker
Scott Hannan
Evgeni Nabokov
Pavel Kubina
Ruslan Fedotenko
Cory Sarich
Fredrik Modin
Cory Stillman
Tomas Kaberle
Bryan McCabe
Nikolai Antropov
Clarke Wilm
Dan Cloutier
Brendan Morrison
Brendan Witt

 

[BLONG7]

This is a thought I posted yesterday in one of the threads about Bettman. The more I think about it, the more I think it could work.

The owners want to eliminate arbitration altogether. What if the players agreed to that in exchange for a legit luxury tax? If arbitration is one of the inflationary mechanisims, then a hard cap shouldn't be needed if its not there, right? It also allows the players to save face by not accepting a cap.

I like your thinking here, and this is exactly what Knob and Gary should be discussing in a closed door meeting...There are so many ways to make this stuff happen but these two jerks are busy grandstanding at press conferences, taking shots at one another it has become a big joke!

 

[me2]

You see so few arbitration cases compared to general contracts because most of arbitration's effect isn't in arbitration cases.

If a team knows the arbitrator is likely to award an offer of $3m/y then most of the time they won't bother going to arbitration. So the possibility of arbitration has earned that player a $3m/y contract without there ever being an arbitration case.

Its also very hard to drop the arbitration rates for salary when arbitration is the baseline and any team that pays more than the baseline team through a bad deal has just lifted the arbitration rate for the next team. Arbitration payscales to go up far, far easier than they can come down.

ie
Canucks want to pay Morrison $2m/y
Going arbitration rate is $3m/y
Morrison wants $4m/y

At worst Morrison is going to get $3m/y at arbitration. If his agents fights hard he might convince the GM to give $3.15-3.3m/y for 2 year deal. The GM knows he can't beat the $3m/y anyway and 2nd year is useful so he signs. Bingo! Morrison has pushed the arbitration up to $3.15m/y for the next guy coming through.

All of this without having to go to arbitration.

 

[thinkwild]

Going arbitration rate is $3m/y
Morrison wants $4m/y

At worst Morrison is going to get $3m/y at arbitration. If his agents fights hard he might convince the GM to give $3.15-3.3m/y for 2 year deal. The GM knows he can't beat the $3m/y anyway and 2nd year is useful so he signs. Bingo! Morrison has pushed the arbitration up to $3.15m/y for the next guy coming through.

All of this without having to go to arbitration.

Yes the threat of arbitration is to get a deal, because you know the going rate. If teams dont want to pay the going rate, the slam the player in arbitration and say he isnt as good as the player he is comparing himself too.

But the arbitrators are pretty good with comparables. And if he gets that rate its because he's worth it. He's not resetting anything.

If all RFAs, including ones used as comparable took a 20% paycut, surely no one would now be overpaid. If you could carry that system forward, they'd be ok

No, that's not the case. Because to qualify for arbitration, you need more years of play than was in your initial contract. If you signed your 3 year entry deal as an 18-20 year old, you need five years of play before you can ask for arbitration, etc

Yes sorry, not entry level contract, but likely their 2nd contract in their first 5 years as you said before they qualify for arbitration for the 1st time

 

[Buffaloed]

The NFL is the only league with a hard cap and they do not have arbitration. However in the NFL, players become RFA's after 3 years and UFA's after 5 seasons.

There's a lot of other leagues with hard caps; AFL, MILL, NLL, MISL, MLS, ECHL, etc..

 

[Buffaloed]

I think you're seriously under-representing arbitration here. There were *sixty seven* arbitration filings this past year. Those players got 158.1 million in salary for this season alone, total raises of $50.2 million or 46.6%.

The current season was record for arbitration filings due to the uncertainty of the CBA. Players didn't want to be without a contract when the lockout ended and perhaps subjected to new terms. I doubt there would have been so many if they'd known the NHLPA was going to concede a 24% rollback. In 2003, there were only 31 arbitration cases filed, and in 2002 there were 40. In the 4 years prior to that there were a total of 141 filings.

 

[thinkwild]

Most of the time a player filed for arbitration, fans and GMs were relieved - he'd be in camp at the going rate. Many players agreed to a deal rather than risk arbitration.

 

[Go Flames Go*]

The players can give there wifes to the NHL, it will still not be enough to accept a luxury tax that they offered.

 

[John Flyers Fan]

There's a lot of other leagues with hard caps; AFL, MILL, NLL, MISL, MLS, ECHL, etc..

I was just speaking of the big 4.

 

[me2]

Most of the time a player filed for arbitration, fans and GMs were relieved - he'd be in camp at the going rate. Many players agreed to a deal rather than risk arbitration.

And if the deal they get is better than what they would get in arbitration then they have driven up arbitration for the next player.

 

[me2]

Yes the threat of arbitration is to get a deal, because you know the going rate. If teams dont want to pay the going rate, the slam the player in arbitration and say he isnt as good as the player he is comparing himself too.

But the arbitrators are pretty good with comparables. And if he gets that rate its because he's worth it.
[/qutoe]

According to some other GM.

He's not resetting anything.

He is if he holds out for slightly more than arbitration.

If all RFAs, including ones used as comparable took a 20% paycut, surely no one would now be overpaid. If you could carry that system forward, they'd be ok

But the NHLPA doesn't want to carry that system forward. If the NHLPA were to

a) agree to lock arbitration prices to the 2003-2004 prices less 24% for the life of the CBA. Of course that means we'd have cost certainty since we know exactly what players cost.
b) introduce payment of picks from teams for signing UFAs to teams losing UFAs (up to 2 or 3 1st rounders for $9m contracts).