What's wrong with the luxury tax

Discussion in 'Fugu's Business of Hockey Forum' started by jcpenny, Dec 14, 2004.

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  1. jcpenny

    jcpenny Registered User

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    Bettman says that the tax will no prevent the salaries to go down but if it is harsh enough why not? Eveybody is saying that its the way to go except Bettman,why? Is it his infatuation with the salary cap that's blinding him or the tax is not the way?
     
  2. X0ssbar

    X0ssbar Guest

    See Major League Baseball.
     
  3. Street Hawk

    Street Hawk Registered User

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    Nba

    Check out the thread of this page called:

    What's the other three major sports CBA's?

    Someone posted what the NBA team payrolls are and it clearly shows that 26 of the 30 teams are over that threshold.

    That's why the NBA will lockout its players come next October.
     
  4. Vlad The Impaler

    Vlad The Impaler Registered User

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    A luxury tax can definitly work. But the inner workings of the tax would need to be extremely ridiculous, IMO.

    I think a cap might be more straightforward and work for all parties, just as a tax could.

    By constantly talking about a cap, ownership has been able to force the ruthless, dishonorable, whiny, lunatic, spoiled union to finally recognize in part the problems and offer something substantial.

    I think some of Bettman's position at this point is posturing. I don't believe he is nearly as fixated on a cap as he claims to be and with the right *sane* proposal from the NHLPA without a cap, he would consider it.

    There are many forms of caps, taxes and ways to tie revenues to salaries. The particular form that will take the next CBA is irrelevant as far as style goes. But the substance needs to be there.

    At first I was disappointed that ownership came back only with a cap. I think they could have laid out two proposals. One with a cap, one with a tax. But further thinking about it, maybe now is not the right time. The more the clock ticks, the better this deal will be for the owners. If they had given up on the idea of the cap now, the players would never have backed down.
     
  5. Silver

    Silver Registered User

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    A luxury tax won't work, because when that term gets brought up, both sides are talking about different things.

    From the NHLPA perspective, it's a small tax. Just to put a little brake on salaries.

    From the NHL side, it'd be a very harsh, very punitive tax.

    Which the NHLPA would call a de facto salary cap.

    Back to square one...
     
  6. Son of Steinbrenner

    Son of Steinbrenner Registered User

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    whats wrong with major league baseball? you do realize the money the yankees pay goes back to the small market teams. funny nobody complains about the luxary tax when that check is written. you do also realize that nobody complains about they yankees when they come to town and sell out. baseball has never been as healthy as it is today.
     
  7. jcpenny

    jcpenny Registered User

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    Thanks its clearer now for me. I think that if they lose this this season everbody come out losers. They'll lose the fans, eventually teams, sponsers, any kind of TV deal posible and a bundle of money. I dont see no good comin out of this.
     
  8. Silver

    Silver Registered User

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    Besides the boring fact that the Yankees are in the playoffs every year, the commissioner manages to stick up a city for a new ballpark and the players are juicier than watermelons?

    Not much I guess. People still watch it. But people drink Coors too. There's no accounting for taste.
     
  9. me2

    me2 Calling out the crap

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    In real estate the three main things are "location, location and location". Bettman is standing in the best location. Right now the "cap" position is the prime location, if he is forced to call an impasse he calls it from his "cap location". The man would be a fool to go discussing other option because that blows away his strength at any hypothetical impasse.


    Bettman is not going to move from his "cap position" unless he gets an offer from the union he can't refuse. I agree with Vlad in that I don't think the cap isn't the be all and end all of his thinking. IMHO he'd take a luxury tax if he thought it could be worked through and had teeth to work. He can do nothing and get stronger, its up to the union to come to him with their next blink. The NHLPAs 24% reduction was excellent, now if they come back with a $1 for $1 cap in the $35-40m range and tie salaries to that -24% level for the duration of the CBA then I think Bettman is tempted down from his "cap or death" perch.

    If you are on the high ground in a battle you don't charge down the hill and give up your advantage, you make your opponents run up the hill so they are exhausted by the time they get to you.

    Yep, bide their time. While they don't move from the cost certainly position it makes the impasse threat more valid.
     
    Last edited: Dec 14, 2004
  10. Son of Steinbrenner

    Son of Steinbrenner Registered User

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    the braves are in the playoffs every year. they aren't a large market team funny you just bring up the yankees :dunno:
     
  11. Boomhower

    Boomhower Registered User

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    The NHL won't even talk about a Luxury tax and doesn't view such an option as a viable solution, so really who's to say what their idea of a Luxury tax is.

    The NHL can't negotiate off a luxury tax for an obvious reason, the teams that were the biggest losers last year (least profitiable), The St.Louis Blues and Anaheim Mighty Ducks of the world, would also have had payrolls that would far surpass any luxury tax threshold. Does it really make sense to further gouge the teams that were already losing the most? Keep in mind Bettman has to look out for the interests of all 30 franchises.

    Anyways the only things the league will negotiate off are 'cost certainty', 'linkage' and a 'hard cap'. Bettman seems more disgusted when there is mention of a luxury tax, than he does when the term 'open market place' comes up.
     
  12. SENSible1*

    SENSible1* Guest

    Good post.

    One factor that plays into the cap/luxury tax scenario from Bettmans POV is that the big markets are willing to lose their competitive advantage over the small markets due to the size of the potential payoff in a salary cap scenario. If they are forced to give up their built in excuse (cap) for not signing players, see their profits drop while their payroll increases due to fan pressure and are forced to give money to their competitors under a luxury tax, I think the big markets support for Bettman would dwindle.

    Cost certainty is the best way to keep ALL the owners firmly behind him.
     
  13. Brent Burns Beard

    Brent Burns Beard DontTouchMyDonskoi!

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    you know what ? i agree with you. this is the real reason Bettman says a luxury tax doesnt work. he isnt referring to it not working from the point of view of being a drag on salaries, he means it wont work because he wont get support from the big market teams if he pushes this concept.

    this is what aggravates me. he isnt lying when he is says it wont work, but he isnt being honest with his intent. and most fans, not you though, eat it up.

    dr
     
  14. SENSible1*

    SENSible1* Guest

    Bettman and Goodenow will both say whatever it takes to get the best deal possible for their side. If they didn't, they wouldn't be doing their jobs.

    I don't support the owners or Bettman because I feel they are honest or their motivation is pure, but simply because their solution is the best for the NHL. It will come at a cost to the players, but frankly the players are so overpaid that being forced to work for 54% of league revenues is more than fair.

    I want a level playing field where teams succeed or fail based on their brains not their bank accounts. If the owners happen to make buckets full of money to get that type of league, so be it.
     
  15. Malefic74

    Malefic74 Registered User

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    Exhibit A: The Arizona Diamondbacks. They still owe the league $55 million in defferred salaries. They owe a further $80 million to their investors. Their one star player demands to be traded to (guess who?) the Yankees. Since the Yanks have all the cards they basically try to dictate terms to the D'backs to basically steal Johnson from them. Arizona says no.

    Their only hope is to convince Johnson to stay by making the team competitive. The only way to do that with the line-up they have is free agent help. So they spend $78 million on Troy Glaus and Russ Ortiz in two days.

    So the team that was already at least $135 million in debt goes out and puts itself another $78 million in the hole because the richest team in baseball held a gun to its head.

    Oh, yeah, baseball's fine. Never been better. Please.

    If the luxury tax in baseball had any teeth at all that kind of thing would never happen.
     
  16. Brent Burns Beard

    Brent Burns Beard DontTouchMyDonskoi!

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    we disagree, but i dont believe at all the game will be better and i am not looking forward at all to a capped NHL.

    dr
     
  17. Brent Burns Beard

    Brent Burns Beard DontTouchMyDonskoi!

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    i admit i dont follow baseball. however, i dont see what the problem is. so what some guy wants to blow a fortune on his company. who cares ?

    its not your money and if he goes bankrupt, tough beans. you think the team will just fold ?

    when was the last pro team to simply fold in any of the NHL, NBA, NFL or MLB ?

    what you just described has nothing to do with "the game". its business, and do you care if EA Games goes and spends 200m on their company ? no, then why do you care what some corporation sinks into their baseball team.

    dr
     
  18. TonySCV

    TonySCV Golden

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    Gleaned from John Buccigross' e-mail bag and I couldn't have given a better analogy...

    "Here's a story idea for you as the NHL talks focus on salary cap vs. luxury tax.

    Send a reporter to Wisconsin. Start him in Green Bay, where the team operating in the NFL's smallest market can be as or more competitive than teams in New York and Chicago and can hold onto its marquee quarterback. Then send him to Milwaukee, where the Brewers will never be more than a glorified farm team for the bid spenders.

    That, it seems to me, is the difference between a luxury tax and a salary cap."
     
  19. Brodie562

    Brodie562 Registered User

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    Is that not a problem for the fans of the Diamonbacks, or the rest of the MLB. if it could happen to them after winning a Championship in 01' then it could happen to any other team that isnt the Yankees or Red Soxs.
     
  20. Brent Burns Beard

    Brent Burns Beard DontTouchMyDonskoi!

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    so ?

    dr
     
  21. rt

    rt DingDongTippIsGone! Sponsor

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    What do you consider 'teeth' for an NHL luxury tax? 100% over 35M? 100% over 40M? 200% over 40M?
     
  22. ceber

    ceber Registered User

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    In my opinion, that situation is bad for fans. Being a fan, that's the only side I really care about here.
     
  23. Malefic74

    Malefic74 Registered User

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    Starting at 300% at $40 million and going up from there.

    Sure some egomaniac owner might still go over (Hi George!) but at least he has to think twice and the money being paid is very substantial. The problem with the MLB system is that there is no floor. Bad teams can just take the tax money they get from the league and line their pockets with it. Doesn't help the team they own and it embitters the fans.

    You need detterants at the top and the bottom of the scale.
     
  24. Doc Hollywood

    Doc Hollywood Registered User

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    See, that is where the problem is. Letting the Yankees come in and letting them escalate salaries provides a competitive imbalance. I was never in the favour of a "Cap" but looking at it now it works. Having a Cap like the NFL provides Competitive Balance within the League. The NFL is always making money since salaries are tied to revenue. The NFL pays out roughly 65% in player salaries. Players and owners are happy with their CBA. The Rangers, Leafs, Red Wings etc will just keep signing players from other teams cause that team can't afford him anymore and pay the tax with ease. Having a Cap and not being able to go on top of it provides a stable Competitive Balance within the league.
     
  25. Hockeyfan02

    Hockeyfan02 Registered User

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    What part of the salary structure that I question is that even if their is a system in place with revenue sharing and a salary cap, how does that gurantee that these teams are going to spend money on their clubs? I havent read the proposal entirely, but there is a system to prevent teams from spending over a limit...is there something that prevents teams from spending below a limit? Like the salary teams cant go over is 35 million, is there a salary teams have to spend like 25 million?
     
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