The cap floor

Roomtemperature

Registered User
Apr 8, 2008
5,846
683
New Jersey
This is the next big CBA fight. Its hurting teams that its gotten so high at this point. Maybe not the next one but the one after that I think the owners are going to be looking to get rid of it. The next CBA I predict the ceiling is a bit higher while the floor goes lower.
 

macavoy

Registered User
May 27, 2009
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Houston, Tx
They should have left the floor at the % value it was the first year instead of settling on the arbitrary $16m amount imo.
 

cheswick

Non-registered User
Mar 17, 2010
6,764
1,094
South Kildonan
They should have left the floor at the % value it was the first year instead of settling on the arbitrary $16m amount imo.

The formula to calculate hasn't deviated since the first year. The midpoint between the floor and the cap is based on a % of revenue. From there $8 million up is the cap and $8 million down is the floor.

I agree that something is going to be done. They may increase the amount they go above and below the average, try sharing less % or a hybrid of the two but too many teams are strugglign to make money while having to spend at the floor for nothing to be done.
 

Tekneek

Registered User
Nov 28, 2004
4,395
39
Yep, it is this cap floor, that is now HIGHER than the cap maximum in the first year of this CBA, that is breaking a lot of the smaller market US-based teams.
 

Confucius

There is no try, Just do
Feb 8, 2009
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Toronto
If you don't spend to the floor, what's the penalty? No rev sharing? So nI'm guessing a team doesn't have to spend to the floor if they are better off fielding a team with a 20 million dollar payroll.
 

kdb209

Registered User
Jan 26, 2005
14,870
6
If you don't spend to the floor, what's the penalty? No rev sharing? So nI'm guessing a team doesn't have to spend to the floor if they are better off fielding a team with a 20 million dollar payroll.

AAAAARRRRGGGGHHHHH!!!!!!!!!!

kdb209 said:
Correct me if I'm wrong, but I thought teams only had to spend to the floor to be granted revenue sharing. The Avalanche seem to have enough support to not need revenue sharing, am I wrong here?

Yes.

kdb209 said:
Sigh. As I have stated multiple times in multiple threads over the last several days - trying to stamp out this piece of misinformation:

The Cap Floor Has Absolutely Nothing To Do With Revenue Sharing.

All teams are required to be above the Lower Limit (except during the offseason) - it is a mandatory requirement of the CBA. A team which willfully falls below is subject to Article 26 sanctions for Cap Circumvention ($1M-5M fines, loss of draft picks, forfeiture of games, suspension of the GM, etc).

CBA Article 50.5(c)(i) said:
(i) Lower Limit. No Club shall, after commencement of the regular
season, be permitted to have an Averaged Club Salary that falls
below the Lower Limit for that League Year.

kdb209 said:
What is the penalty for being below the Lower Limit at the start of the season? We don't know - because it has never happened yet, and will in all likely-hood never happen.

There are no set penalties for being below the Lower Limit - however doing so willfully would be a prima facie example of circumvention and open the team up to any/all of the available sanctions under Article 26 (at the discretion of the commissioner): fines of $1M-$5M which count against the cap, forfeiture of draft picks, forfeiture of games, suspension of the GM, etc.
 

IU Hawks fan

They call me IU
Dec 30, 2008
28,516
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NW Burbs
People amaze me.

Being above the cap floor is equally as important as being under the cap ceiling. Why would losing revenue sharing be such a punishment? How is that fair to the players?
 

Tinalera

Registered User
Feb 3, 2007
6,522
50
The Known Universe
AAAAARRRRGGGGHHHHH!!!!!!!!!!

You gonna be alright kdb?? ;)


And yea, I would say possible fines, forfeiture of draft picks is certainly something serious.

It is certainly an issue I think that should be looked at in the next CBA, I think it's getting too high-I mean the ceiling, if teams can spend to it go to it, but if the floor is artifically too high for teams to reach, then something needs to be done- but what NEEDS to be done, and what WILL be done are probably two different things.
 

barneyg

Registered User
Apr 22, 2007
2,383
0
The formula to calculate hasn't deviated since the first year. The midpoint between the floor and the cap is based on a % of revenue. From there $8 million up is the cap and $8 million down is the floor.

I agree that something is going to be done. They may increase the amount they go above and below the average, try sharing less % or a hybrid of the two but too many teams are strugglign to make money while having to spend at the floor for nothing to be done.

So is a potential answer simply to change these $8M numbers into percentages?

2005-06 cap midpoint = 31M
2005-06 upper limit = 39M (31 + 25.8%), lower limit = 23M (31-25.8%)

Then 2011-12 midpoint = 56.3M
2011-12 hypothetical upper limit = 70.8M (56.3 + 25.8%)
2011-12 hypothetical lower limit = 41.8M (56.3 - 25.8%)
Basically floor and ceiling 6.5M further away from the midpoint (compared to where they are now with a fixed $8M).

Wouldn't the PA agree with it?
 

Dado

Guest
You're looking at some teams being twice as expensive as other teams. Personally, I have no problem with that, teams with vibrant, willing-to-spend fan bases *should* reap the benefits. But I don't think my feeling is universal.
 

kdb209

Registered User
Jan 26, 2005
14,870
6
C & P from another thread.

kdb209 said:
Actually, the cap floor does not directly provide any extra money to the players.

Floor or no floor, the Players are guaranteed their 54-57% of HRR Players Share - no more, no less. If the players earn more, they give it back through escrow - if they earn less, the League sends the NHLPA a big check to distribute for the difference.

If the floor went away tomorrow and some teams cut their Payroll, it would just reduce the amount that the Players give back through escrow - or cause the League to make good the difference.

In fact, it may benefit the majority of players and hurt the majority of teams if the Lower Limit went away. Players on those low payroll teams may earn less, but the majority of other players would lose less through escrow. The low payroll teams would save money, but that would have to be made up League-wide, prorated by Payroll - effectively acting as indirect Revenue Sharing from the rich teams to the poor.
 

Tekneek

Registered User
Nov 28, 2004
4,395
39
I thought the reason for the cap floor was an attempt to force "competitive" teams onto the ice, because of the belief that salary caps are anti-competitive. That they needed to force teams to at least spend a certain amount of money on payroll every year.
 

kdb209

Registered User
Jan 26, 2005
14,870
6
Does the NHLPA have a policy on how such monies would be distributed - weighted by contract or evenly per-capita?

Actually, the teams make supplemental payments to the players. Payment amounts are made pro-rated on players actual Salary and Bonues and club contributions are pro-rated based on team payrolls (Actual Club Salary).

CBA Article 50.11(c) said:
(c) Procedures in the Event of a Shortfall. In the event of a Shortfall in a
League Year, the entire amount of funds in the Escrow Account shall be released to the
Clubs for payment to the Players, in the amount of each Player's escrow account, net of
applicable payroll taxes. In addition, in order to ensure that, in the aggregate, the Players'
Share has been spent on League-wide Player Compensation, each Player shall also
receive, pro rata to his actual Player Salary and Bonuses, supplemental payments from
each Club, net of applicable payroll taxes. The funds for such supplemental payments
shall be raised collectively from the Clubs, with each Club contributing an amount in the
proportion that its individual Actual Club Salary is to the aggregated Actual Club Salaries
in that League Year.
The Clubs shall not be jointly and severally liable for the
supplemental payments for which each is responsible, but the NHL will make the
payment(s) in the event any Club fails to timely make such supplemental payment(s).
For any League Year in which there is a Shortfall, the Clubs shall receive the payments
referred to in the first sentence of this paragraph out of the Escrow Account as soon as
practicable following the Escrow Agent's receipt of the Notice, as set forth in paragraph
(b)(iii) above, for that League Year. The Clubs shall remit such payments to the Players,
and shall also remit the supplemental payments to the Players, no later than 15 days
thereafter. With respect to any such payments made to the Players pursuant to this
subsection (c), the NHLPA shall provide a written certification confirming that any
disbursements paid to the Players out of the Escrow Account were correct in amount.
 

r0bert8841

Registered User
Jan 2, 2009
7,635
770
Michigan
I don't know very much about the CBA, but couldn't their be a way to implement something that limits that amount the floor could increase each year? I don't know if they ever anticipated the floor increasing so much in one year.
 

Fourier

Registered User
Dec 29, 2006
25,438
19,570
Waterloo Ontario
kdb,

When you say this has never happened, are you including the possibility of teams dropping below the floor after bonuses could no longer be earned al la the 2008-2009 Kings?
 

kdb209

Registered User
Jan 26, 2005
14,870
6
kdb,

When you say this has never happened, are you including the possibility of teams dropping below the floor after bonuses could no longer be earned al la the 2008-2009 Kings?

I explicitly qualified it as being below the Lower Limit at the beginning of the season - to do so would be a willful prima facie example of circumvention and be subject to all the nasty Article 26 sanctions.

The League has set the precedent that it accepts teams falling below the limit due to unearned bonuses - so it is not likely they would try to apply sanctions in the future.

However, if a team tried to reach the Lower Limit through unrealistic bonuses, the League could reject the SPC and/or pursue Article 26 proceedings and sanctions - that SPC itself would likely fall under the permissible circumstantial evidence - "including without limitation, evidence that an SPC or any provision of an SPC cannot reasonably be explained in the absence of conduct prohibited by this Article 26".
 

Pinkfloyd

Registered User
Oct 29, 2006
70,227
13,595
Folsom
Come up with a better revenue sharing program if you're going to keep going with a floor. And I'd prefer them to keep the floor but they got to make it so that their smaller market teams can spend that much w/o putting themselves at risk.
 

sh724

Registered User
Jun 2, 2009
2,823
603
Missouri
there needs to be a salary floor or we'll end up with feeder teams just like MLB. Although i think the difference between the cap and floor could be tweaked.

It would not be as bad as the MLB. The reason baseball is so lopsided is because there is not a salary limit times can spend as much as they want with the only punishment is having to give the league money if they go over an arbitrary number. There has only been a handful of teams that have gone over the number and over 1/2 of the money that has been paid to the league has come from NYY. Also the way MLB revenue sharing is set up teams like PIT will make more money having a bad team with an extremely low payroll than they would make if they sold out every game. This could not happen with the NHLs revenue sharing system.
 

Hull Fan

The Future is Now
Mar 21, 2007
6,351
641
Arlington, TX
The floor needs to be lower than 40 million. That's the high side and it needs to be a percentage of the lower half of the league's revenue rather than the entire league's revenue. The Islanders' revenue has nothing in common with Philadelphia. Same with Phoenix vs. Vancouver. Nashville vs. New York Rangers and the like. Tying all teams together to set up a lower limit bankrupts the minnows.
 

iceless

Guest
I thought the reason for the cap floor was an attempt to force "competitive" teams onto the ice, because of the belief that salary caps are anti-competitive. That they needed to force teams to at least spend a certain amount of money on payroll every year.

In theory, sure. The reality is that there are going to be a dozen or so teams that just won't be able to turn a profit by spending to the floor. Personally, I think they should get rid of a "team" cap and simply impose a "player" cap. This way, big market teams can still spend whatever they like without over-inflating individual player salaries, while small market teams don't have to worry about crippling their bank roll.
 

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