Why the owners SHOULD honor the 04-05 contracts to get the rollback

Discussion in 'Fugu's Business of Hockey Forum' started by WC Handy*, Jun 5, 2005.

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  1. WC Handy*

    WC Handy* Guest

    As your probably have heard by now, the rumor is that the owners must honor the 04-05 contracts to get the 24% rollback. Most responses about this have been that the owners shouldn't even considering honoring them. What I'm going to show you below is exactly why they SHOULD honor them.

    Most teams are better off by honoring them to get the 24% than by starting off after this lockout with no rollback and the 05-06 contracts.

    Only Boston, Dallas, New Jersey, and Toronto are better off starting off with the 05-06 contracts and no rollback. A few others (Buf, Phi) are debateable, but IMO better off honoring the 04-05 contracts.

     
  2. txomisc

    txomisc Registered User

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    Damn, did you do all the figuring? Good job. Id say if the option is 24% rollback and honoring or nothing, the owners would be pretty insane to not take the rollback.
     
  3. Phanuthier*

    Phanuthier* Guest

    Real give and take there.

    The negative side is that some GM's signed players to contracts so then end at 36, 37 or whatever. To make this more fair to those contracts, I think they make contracts of players 34 and older's last year on their contract an option.
     
  4. Resolute

    Resolute Registered User

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    If the players want the owners to honor these expired contracts, the players under these contracts should accept that their UFA status be backed up one year from whatever is agreed. ie: If the new deal says UFA at 29, then every player who has an 04-05 contract revived doesnt get that status until 30.

    The players are demanding this becuase they know that they wont get anywhere close to that kind of money in the new deal, even after a 24% rollback. If they truely wanted last year's money, they might have been wiser to have actually negotiated at some point before February.
     
  5. sparr0w

    sparr0w Registered User

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    The league has to take the 24%. Whether or not '04-'05 gets honored is secondary IMO.

    Plus I think the individual players ought to be able to choose whether they want that year or not. There are a bunch that I believe would rather have free agency than the deals they are in.
     
  6. Epsilon

    Epsilon #basta

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    Thanks for crunching the numbers, this confirmed what I suspected. I suppose reasons the owners might not be favouring this approach are:

    1. They want to get everything from the old CBA off the books as quickly as possible, and the fastest way to do that is with contract runoffs and buyouts.

    2. They are hoping to get both concessions in exchange for making concessions elsewhere.
     
  7. missK

    missK Registered User

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    Great post! I knew that in the Lightning's case the rollback would be in our favor but based on your numbers I'm actually surprised at the small number of teams that would be over the cap with the 04-05 and rollback. I can also confirm the Lightning's numbers you quoted are good.
     
  8. i am dave

    i am dave Registered User

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    Then if 04-05 contracts have to be honored, both sides will have to agree that buyouts can't count towards the cap.
     
  9. Titanium

    Titanium Registered User

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    I'm not sure how many are arguing that in this situation (either all or nothing) it would be better not to honour contracts! Certainly from my perspective, it would be wiser to get the rollback! I think many people simply believe that honouring contracts is a daft system, since the players wouldn't have lost any money by sitting out! The theory goes that the players don't deserve the money from last season, plus there should be a 24% rollback! Whether or not the PA says they either get both (rollback and salaries paid) or nothing, the issue is being split into a) Rollback is needed to reset the market; and b) What's that point of cancelling the season and earning nothing, only to pay the players anyway!

    The fact is, the PA wants to link two separate issues to get themselves a better deal, which is their prerogative! That doesn't, however, mean that it should be a case of either/or! Personally, I am of the opinion that paying contracts is stupid (for the reason outlined above), plus the rollback is needed to reset the market somewhat! Why do I think the NHL should get this scenario? Because the PA have assumed all along that they are in control, that the NHL will capitulate, that they can simply accuse the NHL of creative accounting without backing it up, that the NHL isn't in a difficult position financially and that the NHL doesn't need a cap! The NHLPA haven't negotiated meaningfully until recently and Goodenow's arrogance has backfired horribly! If a PA is going to behave in such a manner, the NHL deserves to get exactly the system it NEEDS to survive and prosper, almost completely on its own terms, if only so that lessons can be learnt for next time and this never happens again! If the PA can't understand a basic argument like "We can afford X today, but only Y tomorrow" (where X>Y), they really can't complain when they get themselves a poor deal! And again, the NHL NEEDS a good deal for its long-term future! This isn't pure greed from the owners (don't get me wrong, there's always going to be some greed on both sides), this is largely to do with the tough economic realities they face, and will face in the near future! If the PA had been willing to help the league, the league would have made concessions as a thank you, everyone would be happy and this would have been sorted a LONG TIME AGO! Maybe that's a little idealistic, but a little faith from the PA would have gone a long way, that I'm pretty sure of!

    I await the pro-PA bandwagon's attempt to ride roughshod over my post!

    Edit: Sorry, got a little carried away there! :eek: My basic point is: the rollback is essential; the honouring of contracts will depend on how hard-nosed both sides are, along with the owners' basic philosophy on honouring contracts (ie. is that a waste of a lockout from their viewpoint or not)! And yes, great info and kudos for putting the time in to do that for us! :clap:
     
    Last edited: Jun 5, 2005
  10. Isles72

    Isles72 Registered User

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    thanks a ton for all that info , very interesting .

    mods should pin this
     
  11. allelsefails

    allelsefails Registered User

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    Very nice data gathering and analysis.

    In my mind, it's pretty much a given to take the 24%, as it helps reset some of the rise in contractual problems across the board. If no rollback occurs, will some players still point to current contract amounts when renegotiating and holdout?

    I say accept the rollback, however if on the individual basis some players do not wish to honor their contract themselves then they are not obligied to. If the owners do not want them around, then it's buyout time.
     
  12. GSC2k2*

    GSC2k2* Guest

    Mind you, I doubt that the players are in much of a position at this point to demand anything. My strong suspicion is that the owners will gain both. That is obviously the preferred position. Of course, if you ask Massager or his cronies, the PA has the league exactly where they want them.

    THe most I would offer the players in their position would be a third option that I proposed on another thread compared to what has been discussed: league takes the 24%, and the contract year is tacked on as a club option.

    The ancillary benefits of taking the 24%, of course, is that the hundreds of unsigned players (and even without the year off there are nearly 200) is that it does reset arbitration comparables and QO's. That has an impact.
     
  13. X0ssbar

    X0ssbar Guest

    WOW - nice job Handy.. great read!
     
  14. Epsilon

    Epsilon #basta

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    The fairest thing to have happen is if both occur, then everyone without a contract becomes a UFA, as do all unsigned drafted players. It's the only thing to do to maintain consistency.
     
  15. GSC2k2*

    GSC2k2* Guest

    Sorry, I don't get it Three questions:

    1. How is that fair, even between the players? Those fortunate to be unsigned at this point get FA riches, while everyone else is stuck in the system?

    2. Upon what do you base and define "fair"? From whose perspective?

    3. What does "fair" have to do with anything?
     
  16. Epsilon

    Epsilon #basta

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    The point is if all contracts are going to roll off, then all the players who didn't get signed or offered qualifying offers by the correct deadline should become UFAs. In other words, no writing in a special exemption so teams don't lose players who they otherwise would, just because they gambled and lost.
     
  17. Kritter471

    Kritter471 Registered User

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    Very nice number crunching, Handy. :handclap:

    I too think they should accept the 24% rollback tied to the 04/05 contracts, for two reasons. One, it automatically resets the market without leaving the opportunity for players to attempt to use early contracts to bring their value "back up," as it were. Two, I think the last thing the league needs when it comes back is huge player turnover. From a PR standpoint, they're going to want as much familiarity with the faces on each team as possible. Local favorites (such as Aaron Downey in Dallas) could be huge assets in pitching the game again to the local, more casual fans who would recognize their faces already.
     
  18. GSC2k2*

    GSC2k2* Guest

    But that is writing in a special exemption for unsigned players. If player A is 26 and unsigned, why should he become a FA just because his last contract happened to come up that year? Why should he be allowed to become a UFA several years before his union brothers?

    As for the correct deadline, what is that? The deadline in an expired agreement?
     
  19. Hunter74

    Hunter74 Registered User

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    Well according to the numbers in this thread.

    If the NHL honoured the 04-05 contracts and recieved teh 24% rollback they would spend:

    Before Rollback: $853mil
    Rollback Savings 1yr: $204.72mil
    Amount after rollback: $648.28mil
    # of players under contract: 592
    # of players who need contracts: 128
    Average of players needer per team: 4.26
    Average salary of just these players(592) under contract: $1.1mil/player
    Teams have spent $21.61 on salary already.
    Leaving only a max(38 cap cieling) of $16.39mil/team to sign remaining 128 players who need contracts.
    Average players(128) needed/team div by Average amount left/team : $3.899mil/player

    Now if they didn't honour the 04-05 contracts and didn't get the rollback they would have on the books:

    Amount for players under contract: $658.9mil
    # of players under cotnract: 288
    # of players who need contracts: 432
    Average of players needed /team: 14.4
    Average salary of just these players(288) under contract: $2.29mil/player
    Teams on average have spent $21.96 on player salary already
    Leaving only a max(38 ceiling) of $16.04mil/team to spend on the remaining 432 players in need of a contract
    Average players(432) needed/team div by average amount left for payroll: $1.1138mil/player


    Difference between the 2 player payroll amounts 658.9-648.28=$10.26mil

    But this is just looking at 1 year. im sure the people involved are looking at a longer term when they decide what method would be better for there party.

    Personally i think the owners are shooting for the the smaller amount of payroll left on the teams books and the higher number of players who need to fit in. Would be hard to ask for 5mil when the club on average only has $16.04mil of payroll left to spend and needs to sign on average 14.4 players. which equals roughly $1.1138mil per player.

    I was to lazy to break it down from team to team so i averaged some things by the 30 teams.
     
    Last edited: Jun 5, 2005
  20. Street Hawk

    Street Hawk Registered User

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    Lower the rollback....

    If the owners don't want the 04-05 contracts to be honored, then it would be in their best interests to get a lower rollback percentage. Drop it down to around 15%, give or take, because for the players without contracts, it gives the GMs and UFA/RFA a resetted market, along with the arbitration process.
     
  21. Kritter471

    Kritter471 Registered User

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    Oh, and I've run the Dallas numbers with all their players (including minor leaguers not included in the NHLPA's write-up).

    With rollback + 04/05 contracts, they have 23 players under contract at $43.554 million. Without the rollback or the 04/05 contracts, they have 9 players under contract for a little over $30 million. If they buyout one particular French Canadian guy, they get to a $38 million cap pretty easily. For their situation, I think they'd much rather have the 04/05 contracts and the rollback, which allows them to resign some of their core players the next season rather than having to squeeze them in now.
     
  22. SENSible1*

    SENSible1* Guest

    The league will get both.
     
  23. missK

    missK Registered User

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    The bold areas above jump out at me. Does the league want to reset ALL salaries so that the GM's trying to sign RFAs & UFAs and arbitrators will all have the SAME numbers to work with? If so than $1.1M average stands out. If you don't think it matters that the 05-06 contracts will cost twice as much than more power to you. I happen to believe that 04-05 with the rollback is the best for the league. The responsible teams who followed the NHL's suggestions about watching their salary numbers are not penalized in the 04-05 scenerio, just the handful of team who continued to over spend.

    Again just my 2 cents.
     
  24. AXN

    AXN Registered User

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    I don't know what happens to the year on the players contracts. Do they lose a year or does everyone's contracts get prolonged by one year. If it gets prolonged then the players must play this year as if it was last year. Everything just gets pushed back one year. This way players are still restricted and must play final year of contract. The same thing with the draft. Wait until next year and push every draft pick back a year. Draft players at 19.
     
  25. Titanium

    Titanium Registered User

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    Alternatively, it punishes those teams who signed players as if there was going to be a season! Hardly a bad thing for them to have done from anyone's perspective, surely?
     
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