Speculation: What If The Salary Cap Goes Down?

[Prairie Habs]

but.... that is “pay cut”? Players don’t care about cap hit. They care about money. For example. Say the players would owe 30% in escrow .

option 1. Pay 30% right now. So take the 10% ish that is already gone AND. Then pay an additional 20% today.

so if you made 10 million last year. Then you write a cheque for an additional 2 million today.


option B: take the remaining 20% and pay it back over the next 4 years at 5%.

So now over the next 4 years you pay 500k more back into escrow.

Everyone and their mother would take that.

Your cap hit is now 9.5

Except that means players with longer term contracts would be the only ones paying for the shortfall. If you're John Tavares and you are signed for 6 more years why do you agree to lower your contract for 6 years when it would be more than just paying the escrow? What if you are Taylor Hall and you don't have a contract? If he waits to sign after this "scale back" not only will be get full value on his deal, but the paycut everyone else is taking will open up more room for him.

The only sensible way to do it is keep a flat cap and spread the escrow hit from this year over multiple seasons. Similar to your idea, but it doesn't tie it to current contracts. There was also talk on the 31 thoughts podcast about letting teams and players renegotiate the yearly rates the players are making, but keeping cap hits and overall payouts the same. For example, you signed 7 years at 7M and were meant to be paid 9, 9, 8, 7, 6, 5, 5. If one year has already gone by on the contract then you are owed 40M over the next 6 years, but instead of the remaining structure you could back load it so that your higher paid years will be lower escrow years. You still get paid the same over the life of the contract and have the same cap hit, but the payment structure is different.

 

[Legion34]

Except that means players with longer term contracts would be the only ones paying for the shortfall. If you're John Tavares and you are signed for 6 more years why do you agree to lower your contract for 6 years when it would be more than just paying the escrow? What if you are Taylor Hall and you don't have a contract? If he waits to sign after this "scale back" not only will be get full value on his deal, but the paycut everyone else is taking will open up more room for him.

The only sensible way to do it is keep a flat cap and spread the escrow hit from this year over multiple seasons. Similar to your idea, but it doesn't tie it to current contracts. There was also talk on the 31 thoughts podcast about letting teams and players renegotiate the yearly rates the players are making, but keeping cap hits and overall payouts the same. For example, you signed 7 years at 7M and were meant to be paid 9, 9, 8, 7, 6, 5, 5. If one year has already gone by on the contract then you are owed 40M over the next 6 years, but instead of the remaining structure you could back load it so that your higher paid years will be lower escrow years. You still get paid the same over the life of the contract and have the same cap hit, but the payment structure is different.

because the escrow is already over. Say Tavares
made 15 million this year.

he Would owe 5 million ish. He could pay that over the life of the contract.

He doesn’t pay more. They get the bill for the year at the end of the year based on the 50/50 split.

whatever that number is. You pay it out either


1.) right now
2.) over x number of the years as agreed to.

Changing the escrow changes the 50/50 split.

say that they went to the flat cap. And the economy bounces back. By the letter of the law, the owners each year have to provide the 50/50 split. That would Change the CBA.

 

[Junohockeyfan]

because the escrow is already over. Say Tavares
made 15 million this year.

he Would owe 5 million ish. He could pay that over the life of the contract.

He doesn’t pay more. They get the bill for the year at the end of the year based on the 50/50 split.

whatever that number is. You pay it out either


1.) right now
2.) over x number of the years as agreed to.

Changing the escrow changes the 50/50 split.

say that they went to the flat cap. And the economy bounces back. By the letter of the law, the owners each year have to provide the 50/50 split. That would Change the CBA.

And what about the inevitable scenario where the league revenues increase in the near future and the cap increases? How does Tavares recoup the losses from a paycut? For example, in year 2, if league revenues increase 20%, then the profits (say half of that figure - 10%) get split 50/50. So Tavares would get a 5% increase on his salary (1.05 x salary). If he takes a paycut now, he gets screwed later.

 

[Prairie Habs]

because the escrow is already over. Say Tavares
made 15 million this year.

he Would owe 5 million ish. He could pay that over the life of the contract.

He doesn’t pay more. They get the bill for the year at the end of the year based on the 50/50 split.

whatever that number is. You pay it out either


1.) right now
2.) over x number of the years as agreed to.

Changing the escrow changes the 50/50 split.

say that they went to the flat cap. And the economy bounces back. By the letter of the law, the owners each year have to provide the 50/50 split. That would Change the CBA.

As would scaling back every contract in the league...

 

[Legion34]

And what about the inevitable scenario where the league revenues increase in the near future and the cap increases? How does Tavares recoup the losses from a paycut? For example, in year 2, if league revenues increase 20%, then the profits (say half of that figure - 10%) get split 50/50. So Tavares would get a 5% increase on his salary (1.05 x salary). If he takes a paycut now, he gets screwed later.

? He doesn’t? If the entire league takes a pay cut by percentage until it’s over... the ratio is the same.

Every year the league and the players split 50/50. In the event that say the players got paid X extra. He owes that amount of money. THIS year. Regardless of what happens in the future. If the revenues tank this year and the escrow becomes 30-35% this year. He owes about 5 million. This year. That Never changes. Ever. He owes that.

regardless of what happens next year tavares owes that money. Say it’s 5 million. He either


A.) writes a cheque for 5 million to the NHL owners this year. July 1. Or
B.) he agrees to a payment plan. He still pays the 5 million no matter what.

Each individual player will have to payback that money. So Tavares writes a cheque now or says hey why dont you just garnish my wages for the next X number of years to make up the difference.
It’s just like escrow. But it’s a deferred payment. The players will push for that because they can’t afford to just sell all their investments, take money out of the market at a huge loss.

maybe players like tavares or Crosby can just pay the money. Players like spezza would laugh at it. But many players don’t have millions just in their accounts. A lot is tied up in investments/market etc.


As for the owners. I’m sure they just want their cheques now. If I’m them that’s what I want. But they didn’t keep 30% in escrow. It would be a fight to get it. So maybe they just agree to a rollback until the debt is paid

 

[Legion34]

As would scaling back every contract in the league...

no it wouldn’t? It’s a 50/50 split. That’s what they had the lockout for.

If the players owe 30% in the 50/50 split. This year. They either


A.) pay it all upfront
B.) pay installments.

If the owners want they just say pay me now. I would. But the players won’t want to just give up millions im assuming. They have a lot In investments. And the market is in the tank.


But if they just want to agree to write cheques
Then good for them. It’s probably simpler

 

[Junohockeyfan]

no it wouldn’t? It’s a 50/50 split. That’s what they had the lockout for.

If the players owe 30% in the 50/50 split. This year. They either


A.) pay it all upfront
B.) pay installments.

If the owners want they just say pay me now. I would. But the players won’t want to just give up millions im assuming. They have a lot In investments. And the market is in the tank.


But if they just want to agree to write cheques
Then good for them. It’s probably simpler

Players would have no choice but to give back now to the owners unless they want to pay in installments with interest.

 

[Junohockeyfan]

Technically, the cap should go down as it is tied to league revenues. The calculation is 50% of total league revenue (of prior season) divided by the number of teams. Then a 15% bump above this figure for the cap ceiling. The league and NHLPA can agree to an artificial cap - in this case the same as last season would make sense.

Given that GM's were all expecting the cap to rise (prior to the last revenue report), i think a compliance buyout makes sense.

 

[Legion34]

Players would have no choice but to give back now to the owners unless they want to pay in installments with interest.

Yes. Maybe. The agents were floating that deal. But they don’t have to. Getting money isn’t as easy as people think. It’s easier really to just take it off the pay rather than suing for money.


They have not signed papers regarding interest as far as I know. That’s not a legal precedent.

Bottom line.

1.) owners demand money. They can try to get it out of players. Maybe most pay right away. Maybe they don’t.

maybe they go full tiger king and blow it up.

2.) they agree to payments in installments in exchange for concessions

 

[Legion34]

Technically, the cap should go down as it is tied to league revenues. The calculation is 50% of total league revenue (of prior season) divided by the number of teams. Then a 15% bump above this figure for the cap ceiling. The league and NHLPA can agree to an artificial cap - in this case the same as last season would make sense.

Given that GM's were all expecting the cap to rise (prior to the last revenue report), i think a compliance buyout makes sense.

you have still never explained why the owners who lost money will pay more money to a player for not playing and replace them. It makes no sense really.

 

[Junohockeyfan]

you have still never explained why the owners who lost money will pay more money to a player for not playing and replace them. It makes no sense really.

Buying out Lucic will cost the owner less on a per/year basis than playing Lucic at the detriment of the team.

 

[Legion34]

Buying out Lucic will cost the owner less on a per/year basis than playing Lucic at the detriment of the team.

if that was the case they would have done it already.

compliance buyouts are about artificial cap penalties. It gives room to spend more

 

[Warden of the North]

Theres going to be compliance buyouts and caphit rollbacks.

Now would be a good time for a luxury tax too. The league will need the extra cashflow

 

[Halla]

Technically, the cap should go down as it is tied to league revenues. The calculation is 50% of total league revenue (of prior season) divided by the number of teams. Then a 15% bump above this figure for the cap ceiling. The league and NHLPA can agree to an artificial cap - in this case the same as last season would make sense.

Given that GM's were all expecting the cap to rise (prior to the last revenue report), i think a compliance buyout makes sense.

gonna be a rollback as well. cant see the NHL saying "well here are 2 buyouts, deal with it" considering 70% of the league was within 3 million of the cap.

 

[Legion34]

gonna be a rollback as well. cant see the NHL saying "well here are 2 buyouts, deal with it" considering 70% of the league was within 3 million of the cap.

and the NHL came out and made a projection.

 

[Warden of the North]

Could caphit rollbacks but not salary rollbacks work?

My brain isnt up to thinking that one through today.

 

[Legion34]

Could caphit rollbacks but not salary rollbacks work?

My brain isnt up to thinking that one through today.

I personally don’t think so. The idea is that teams lost money. Paying the same money doesn’t help.

What people forget is there is no obligation for teams to spend to the cap. People worry so much about artificial ceilings. It’s not an obligation. Teams can also spend to the floor.

instead of lowering the cap for X years. Just make a payment plan or lower the floor.


Why don’t GMs just say “no”. GMs can choose to spend 60 million instead of 81 now.

 

[Junohockeyfan]

gonna be a rollback as well. cant see the NHL saying "well here are 2 buyouts, deal with it" considering 70% of the league was within 3 million of the cap.

There won't be a rollback in salary. Probably a flat cap with a buyout option. NHL won't touch salaries.

 

[mouser]

I'm expecting a flat cap with no buyouts and no rollbacks.

 

[Warden of the North]

There won't be a rollback in salary. Probably a flat cap with a buyout option. NHL won't touch salaries.

Why not? They rolled back in 2005.

 

[mouser]

Why not? They rolled back in 2005.

2020-21 is not a permanent long term change like instituting a salary cap was in 2005. It's likely at worst a one year blip. It doesn't require long term solutions.

 

[Dache]

The only logical thing to do is for the league to lower all salaries in proportion to how much the cap drops. Forcing every team to buyout players to fit under the cap defeats the purpose of the Cap since you will have teams spending much more while giving a bonus payday to players bought out and then re-signed.It also creates all kinds of unnecessary transactions and chaos when it's easy to avoid.

This very much feels like wishful thinking for many here and just something to talk about for the media. There has yet to be any kind of intelligent reason put forth to create all this kind of chaos for no reason when a fair solution is so simple and obvious.

It's like people think the league is run by 10 year olds.

You mean every player takes a pay cut? You think the NHLPA would prefer that over a compliance buy out?

 

[SI]

Without any amnesty buyouts it will hurt the free agent market and PA won’t be cool with it.

A precedent has been set for a lost year - After the 2012 lockout the league had a lower cap (by 4.5 million) and 2 amnesty buyouts per team.

 

[Legion34]

Without any amnesty buyouts it will hurt the free agent market and PA won’t be cool with it.

A precedent has been set for a lost year - After the 2012 lockout the league had a lower cap (by 4.5 million) and 2 amnesty buyouts per team.

it didn’t In practice from what I remember. They could spend to the same flat cap as they could before. It was pro rated for 48 game s

 

[Kaners Bald Spot]

I'm expecting a flat cap with a buyout or two.