The real reason the cap works in the NFL

Discussion in 'Fugu's Business of Hockey Forum' started by Malefic74, Nov 9, 2004.

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  1. Malefic74

    Malefic74 Registered User

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    Did anyone else see the TV deal the NFL finalized yesterday? For the rights for FOX to broadcast the NFC on Sundays and for CBS to broadcast the AFC on Sundays through 2011 the NFL received $8 BILLION. And that's not all. They are still negotiating with ESPN for Sunday Nights and ABC for Monday Nights.

    That breaks down to roughly 250 million per team and over 7 years is nearly 36 million per year. That is nearly half of each teams salary cap number. Now if you add the other two TV deals to come, merchandising, parking, concessions and admissions for 80,000 seat stadiums 8 times a year or more and it is pretty easy to see how these franchises can make money in the tough racket that is sports.

    Bettman was right about one thing when he took the job all those years ago... TV is the engine that drives sports. He made it his biggest priority. Unfortunately he never got that big deal he was looking for, and that became his single biggest failing. All the expansion and all the rule changes were made for the sake of chasing those TV deals. It didn't happen and should have cost Bettman his support if not his job.
     
  2. dawgbone

    dawgbone Registered User

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    So your saying that the NFL Cap (which is a % of revenues), only works because of a billion $ TV deal?

    No... the only reason why the NFL Cap is so high is because of a billion $ TV deal. If they didn't have that, the cap would be reduced, and it would still work.

    The reason why the NHL doesn't get the big TV deals is because Americans don't give a crap about it (and we are talking about the majority here, not the American hockey fans). They don't give a crap about it because it's boring as hell most nights, and that is because of the players.
     
  3. degroat*

    degroat* Guest

    It didn't happen? Bettman increased the nation TV deal from $17M to $120M (before it fell back down to $60M+). Nobody could have possible expected him to get higher than he did.
     
  4. Jag68Sid87

    Jag68Sid87 Nothing Else Maattas

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    dawgbone is correct. It's a chicken and egg question. Did the lucrative TV deal come before immense parity and league-wide interest in the NFL, or the other way around? IF interest were to wane, the cap number would go down. It's as simple as that.

    So, yeah that MASSIVE TV deal in the NFL looks like an unreachable climb for the NHL right now, but it should still be the league's goal. And the only way to get there is with a salary cap that WORKS BEST FOR THE NHL.

    Let's not forget another point: Each NFL team has only 8 guaranteed home dates. NHL clubs have 41 (I'm excluding preseason and the playoffs for each sport). That alone can't make up the difference but it's a starting point. Also, from a popularity standpoint, I can understand why the NFL does so well in merchandising, compared to the NHL. However, from the merchandising point of view, NHL stuff has a chance to be big sellers (hockey jerseys are a good buy, and are increasingly popular).

    The problem with the NHLPA's stance on the NFL's salary cap is this: They're looking for every possible glitch in their sport that would make the NFL model unreasonable, instead of looking at the way the NFL model DOES work and try to make amendments to cater to the NHL hockey player.

    Of course, one of the biggest differences is that no NFL team will ever get saddled with an Alexei Yashin-type contract, which is one of the things the NHLPA is savagely trying to protect, IMHO.
     
  5. Brent Burns Beard

    Brent Burns Beard DontTouchMyDonskoi!

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    why should the players have non guaranteed contracts and the owners get guaranteed contracts.

    i say, if the owners can break the contract because they are paying too much, its only fair if the player can do the same if they are being paid too little.

    and dont tell me it happens NOW, because it doesnt. Yashin tried it and it didnt work, Tkachuk tried it and the team caved. There are no other examples of players succesfully reneging on a valid contract.

    dr
     
  6. dawgbone

    dawgbone Registered User

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    A player can do the same... he can hold out while under contract looking for more money.

    Though I don't think non-guaranteed contracts are the way to go... I personally feel any signed contract should be honoured by both sides.
     
  7. Jag68Sid87

    Jag68Sid87 Nothing Else Maattas

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    Shayne Corson did it to the Montreal Canadiens under Rejean Houle. Habs lost four games in a row and Houle caved.

    Circumstances on the ice usually dictate the outcome of a holdout.
     
  8. Malefic74

    Malefic74 Registered User

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    41 home dates at a league average attendance of what...12,000 people? That's about 500,000 seats sold. That's 5 games in the bigger stadiums in the NFL, there is a discrepancy there that really can't be solved. Necessitating a lower cap number.

    But you're absolutely right about how the PA nitpicks the NFL model without looking at positives about it. Without that deal, there is no way offensive linemen earn 5 or 6 million a season. Cornerbacks make 6 or 7 million now. Before the current CBA system even the quarterbacks weren't paid that. The NHLPA is objecting to a cap size that is HALF of an NFL teams cap; despite the fact that an NHL team's roster is less than half of an NFL team. Sure their cap is 80 million, but they are paying 53 guys! And the PA is saying 40 million can't possibly pay 25?

    I do think a cap (of some kind) will work, but the PA seem to think the league ranks up there with the NFL and the NBA. My point (which I illustrated very poorly; apologies) was that TV deals like that throw that notion right out the window.
     
  9. Jag68Sid87

    Jag68Sid87 Nothing Else Maattas

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    My point about Yashin's deal wasn't so much about non-guaranteed contracts. You don't want to eliminate guaranteed contracts, you don't have to. The cap itself should be a powerful-enough mechanism to dissuade anybody from giving a hockey player a 10-year guaranteed contract--which could saddle your cap space for years. If anything, you'd do it with far more of a "sure thing" than Alexei Yashin.

    And, if the player is deemed indispensable by that organization, then they will give him the money and know full well that they will have to build their team a little differently than the others--something that is likely to happen anyway.

    So, Toronto can still ice a 35-and-over crowd but the difference will be in what those over-the-hill gangsters will be earning.
     
  10. degroat*

    degroat* Guest

    The league averages 16,500 people per game.
     
  11. Jag68Sid87

    Jag68Sid87 Nothing Else Maattas

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    I agree with you. And you're right about the attendance issue for the 41 home dates. But again, that's another chicken and egg question: What came first, increased attendance or a salary cap? Add a cap, and I think there is a good chance the league might prosper in several markets. But you're right, not enough to match the NFL.

    The point we both are making, I think, is that the NHL doesn't need to get to where the NFL is right now in order to prosper under its own NFL-type salary cap model--with some differences that would reflect the discrepancies of both sports.
     
  12. fan mao rong

    fan mao rong Registered User

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    Why all the talk about NFL attendance? The NFL gets it's entire salary cap number from network television moneys. Each NFL team gets around $80 million in network television payments. NHL equivalent---a salary cap of --$0 dollars.
     
  13. copperandblue

    copperandblue Registered User

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    I don't think that non-gauranteed contracts will ever be an issue for the NHL in the near future.

    However, if it's thrown out for discussion and is based on the NFL model I would actually contend that a non-gauranteed contract is something that is very attractive to a player in terms of making money.

    For example, a star player signs a 6 year 60 mil contract but for cap purposes has the contract structured as a 6 years 40 mil contract with a 20 mil signing bonus.

    After three years he is cut loose by the team because a young up and comer who will cost half as much comes along.

    Well the star player that has been cut loose then walks away with 40 mil in his pocket (3 years salary plus the full guaranteed bonus) where as a straight 60 mil 6 year contract would only have paid him 30 mil for his time there.

    On top of that, the player that was cut loose is free to negotiate a brand new similar deal with a different club.

    It doesn't seem like such a bad deal too me from the players standpoint and if the PA is most concerned about their "star" players cashing in, then this looks like it would be a good way to do it.

    If anything, it's the owners that should be worried about it because it gives the GM's an out in the event that they pull a Milbury at the expense of the teams bottom line.
     
  14. X0ssbar

    X0ssbar Guest

    I think Ray Bourque says it best:

    ""All I wish for, regardless of how long it takes to settle, is just to get it right," said Bourque, the senior of the three high-scoring defencemen, during yesterday's ring presentation. "They're all saying 'get it fixed' so let's fix it, so we don't have to go through this again in five or 10 years.""

    http://slam.canoe.ca/Slam/Hockey/NHL/2004/11/09/707149.html

    We've already gone this far and at this point I'm with the owners and am ready to wait it out to "get it fixed" for the long term and not some band aid solution. I think some form of a cap with a combination of other measures will be absolutely neccesary for getting it fixed for the long term. The league should definitely leverage the NFL model and tweak it to fit the NHL's current financial landscape while making it robust enough to handle the peaks and valleys of the financial future.

    As stated numerous times, the players are not gonna starve regardless of the model that comes out of this mess.
     
  15. Malefic74

    Malefic74 Registered User

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    The guaranteed contracts issue is where it all gets tricky. The NFLPA doesn't like it either. Owners love it because they can walk away from underperforming players or from players who have served the organization for a long time but are slowing down; who are unceremoniously cut. (Think Junior Seau) Because the signing bonuses for some of these guys are so huge and the fact that those bonuses count towards the cap really promotes a lot MORE mercenary player movement. Having said that it would make trade deadline day even more interesting... ;)

    The system is flawed however; I don't think any player who has signed one of those big long term deals has EVER actually played it out. Management and agents announce those numbers with a pretty big wink, knowing that all that counts is the bonus and the terms of the first couple of years.

    What it does though is really bring into sharp relief the smart GMs versus the dumb ones. Pioli in New England is porbably more valuable to the Patriots than half their roster. Meanwhile management in San Francisco has fumbled its way through salary cap hell twice in the last 10 years. Suddenly GMs are as accountable as coaches and I for one would love to see more of it in the NHL.
     
  16. copperandblue

    copperandblue Registered User

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    I am not advocating the concept, I am just suggesting that from a players financial standpoint this is a pretty sweet deal.

    If you look at the types of numbers that the UFA's have attracted, if you look at how many of those contracts are perhaps a little regretable a couple years after signing them, combined with many of the star players now being able to play into their late 30's and your potentially looking at a lot of bank for the players. Certainly more money than they have seen so far.

    Instead of having (for example) 2 kicks at the UFA market, some of these guys could end up getting 4 or 5 if their original team decided to change direction part way through the deal. Instead of having 3 teams out bid each other on contract numbers it then turns into outbidding on the bonus number (which is gauranteed either way).

    I just figured the suggestion that the players were being victimized by the concept didn't hold water so I thought I would throw an aternate perspective out there.
     
  17. thinkwild

    thinkwild Veni Vidi Toga

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    As long as the agent and the player got to announce that they got a contract that big, whether he actually gets the money isnt important, its just bling bling? No NFL team will ever be saddled with management responsibility or accountability for their contract decisions. Handy system

    I hadnt heard the new tv numbers for NFL announced. Overall, will it go up or down?

    I think the NFL model is that the players split the extraordinary windfall tv contract equally, and the owners make all the rest of the money. The model is the extraordinary revenue sharing - not the cap. If they didnt have the extraordinary revenue sharing, it wouldnt work. The glitch in the NFL agreement is the cap itself. Take everything but that from them.

    The NFL gets the majority of its money from television not gates, its a tv show. Although local NHL tv revenue in some markets is making it close. You cant just take the cap part of the NFL model and expect it will work without the revenue sharing that covers payrolls.

    And its rather obvious that the egg came before the chicken. :)


    It is an interesting thought. Especially for players if they had free agency early enough that 2 or three owners could renege on their contracts and he is still 32 or so and can get another one. But I dont see the issue as much as protecting the right for the top players to get as much as possible, although it rightly also is, but more for all role players to be able to negotiate their value to the team, not how low they will go to get under the cap room left after the stars from the bidding wars have been paid..

    I dont think Millbury was a disaster because of long term UFA signings. He was a disaster because ownership, being absolute idiots, told him to get rid of these players and left him no leverage, so he did the best he could in trades. He will have more work in the capped NHL not less, because there will be more roster movement needed to juggle to the cap all the time by everyone. And when NYI first signed Yashin, they were still under a $35 mil payroll.
     
  18. Hasbro

    Hasbro Can He Skate?! Sponsor

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    Bettman just needs to get a league where the TV deal is a big part of the income. Forget about the $8Billion. It was that kind of thinking that lead the NHL into overexpansion in the first place.
     
  19. thinkwild

    thinkwild Veni Vidi Toga

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    The owners would love a big national tv deal. But Hockey is Canada's sport, not America's. It will never get a big national contract like an American sport. Well it does have a big national TV contract in Canada.

    What the big TV money allows is revenue sharing. When they have that, greed will force them to ruin the system to accomodate it. Until then, hockey has different requirements and realities.
     
  20. vanlady

    vanlady Registered User

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    Ahhh a vioce of reason. You're right.
     
  21. PecaFan

    PecaFan Registered User

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    I'm generally pro-owner, but non-guaranteed contracts suck. You sign a deal, you live with it. For both sides, none of this re-negotiation crap either.

    That's the whole point of a contract, both sides are considering the short term benefits vs the long term, the risk of the player not being worth it in the future if he slumps, vs the benefit of having a guy locked in at a lower rate if he really blossoms. A player is risking a lower salary for long term security, etc.
     
  22. degroat*

    degroat* Guest

    First of all, the NFL is not what you 'think' it is. Google is a pretty handy tool, try it some time.

    This is what the NFL model is:
    - 64.75% of revenue goes to players
    - Home team gets 60% of gate for games, Road team gets 40%

    Perhaps you could explain how exactly the model is not the cap but instead the extraordinary 60/40 gate revenue sharing? In the grand scheme of things, the revenue that the teams share is very little compared to the television deals and has a pretty small effect on the system.

    The system clearly works because of the cap. The NFL would be in the same boat as the NHL if the Green Bay Packers had to compete with the New York Giants in a non-capped system.
     
  23. vanlady

    vanlady Registered User

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    I guess you missed the TV money they share, and the money generated by other NFL revenues. Do you realize the NFL could stop playing for 2 years and still pay thier players and not loose money. Just on the TV deal signed today each team will receive 35 million a year. That does not account for the other 2 national TV contracts that pay each team another 25 million a year. Jeez I wonder what makes the NFL work the cap or revenue sharing. Oh and by the way what makes the NFL work is the business and marketing minds behind that league. It started with Pete Rozel and hasn't stopped.
     
  24. degroat*

    degroat* Guest

    Sorry, but I didn't miss anything. I didn't list the TV money that they 'share' because splitting up the money generated by the league evenly among the 32 teams isn't revenue sharing. Revenue sharing is when teams share revenue that the teams generate individually and the only revenue that is shared in the NFL is 40% of the gate.

    If what he meant to say is that the NFL cap works because of the TV money the league gets, he'd still be wrong. The league could get 10% of the TV money that they get and the system would still work because... and here's an amazing concept... SALARIES ARE TIED TO REVENUES!
     
  25. Coffey77

    Coffey77 Registered User

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    i agree. Both sides should have to live with the contract. I really don't like what Yashin did, holding out when he was still under contract and I don't like the NFL where you can just cut guys loose.

    Eg. Detroit with Cujo. They were rightly punished for having Hasek and Cujo on the payroll. They couldn't trade Cujo so they were stuck with him. I wouldn't want a situation where they could just release him outright. It's their fault for signing him to that big deal, they should have to live with it.
     
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