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degroat* 11-12-2003 04:28 AM

STL Post Dispatch: Blues [players] get economics lesson
 
http://www.stltoday.com/stltoday/spo...onomics+lesson

Motown Beatdown 11-12-2003 04:46 AM

Quote:

Originally Posted by degroat



Quote:

A matrix of revenue sharing that resembles a luxury tax. The teams with the highest payrolls would pay a penalty that would be redistributed to the teams with the lowest payrolls to use on player acquisition


I wish they had more detail than just this. What is the "cut off" number they are using to tax? Is it 60 million or 40 million? It makes a huge difference.


All in all, it looks like if the owners are dead set on a salary cap. There is gonna be a long lockout.

discostu 11-12-2003 05:10 AM

Quote:

Originally Posted by JWI19
All in all, it looks like if the owners are dead set on a salary cap. There is gonna be a long lockout.

It appears that way, but keep in mind, we are still a long way from the expiration of the current CBA. I'm hoping that the owners are just holding off on moving from their salary cap demands, hoping that the players try tweaking their offer a bit more to the owners liking. Then, they have the ability to negotiate a better non-cap solution.

I really like what the players have come up with. To me, that 5% reduction right away is a very generous offer by the players. I would also like to know what they had in mind in terms of revenue sharing.

I also would like to see a statement by the NHLPA explaining why they are so against a salary cap. They obviously feel that a reduction in salary is necessary, based on their current CBA offer. Are they opposed to the cap in principal, or are they against it because the owners continue to suggest caps at levels that will involved a much more drastic reduction in salary than they are willing to take. If the owners were discussing a higher cap (say $40 to $50 million), would they consider it?

I think the owner's should be making the next move. The players look to be fairly co-operative. I honestly never expected them to offer this many concessions this early in the game. The owners should be making a counter-proposal. I don't expect them to take their focus off a cap at this point, but I imagine they would probably make an offer that involves raising the cap level from the very unreasonable $31 million they have offered.

HFNHL PIT GM 11-12-2003 07:52 AM

Quote:

Originally Posted by discostu
I also would like to see a statement by the NHLPA explaining why they are so against a salary cap

While I shouldnt speak on behalf of the NHLPA, I can understand why they are so against a cap.

1) It promotes total instablity in player movement and shortens their careers. Look at the NFL where players are treated like cattle and once you make more than league min you are pretty much replaced by another piece of beef willing to work for less.

2) Its not the players responsibilty to protect the owners from each other. Each team has a salary cap currently, they refer to it as a "budget". The purpose of a league wide cap is to protect NSH from NYR (for example) and they players shouldnt have to be the sacrificial lamb to make that happen.

3) If a cap was set at $31m, $35m or $65m, whatever teams like NYR dont spend just goes into the owners pockets. Even with revenue sharing, the NYR owners will still pocket all the unspent revenue and the players probably figure they are entitled to some of that cake.

DR

discostu 11-12-2003 08:15 AM

Quote:

Originally Posted by DementedReality
While I shouldnt speak on behalf of the NHLPA, I can understand why they are so against a cap.

The items on your list can still result without a salary cap. It looks like the players are willing to take on part of the responsiblity to protect owners from themselves. They are willing to take a 5% paycut, and they are willing to implement some sort of luxury tax. This is money that will go into the owner's pockets, the same way it would with a cap. Why are they opposed to a cap, when they are willing to accept many of the drawbacks of one? :dunno:

It could be a matter of principle (i.e. they decided at the beginning that they weren't going to take a cap, and they are going to stand by that decision), or it could be because they feel that the drawbacks of any cap are worse than any other agreement they may come up with (I disagree with the latter alternative, BTW)

It's impossible for us to tell. In fact, it's also possible that the players may actually be willing to accept a cap, and everything they have said to date has just been negotiating tactics. We don't know.

Emule Richard 11-12-2003 03:46 PM

Quote:

Originally Posted by discostu

I also would like to see a statement by the NHLPA explaining why they are so against a salary cap. They obviously feel that a reduction in salary is necessary, based on their current CBA offer. Are they opposed to the cap in principal, or are they against it because the owners continue to suggest caps at levels that will involved a much more drastic reduction in salary than they are willing to take. If the owners were discussing a higher cap (say $40 to $50 million), would they consider it?

At this point, I think a main reason that the NHLPA is currently so opposed to a cap is because of the teams' lack of complete financial disclosure. Without verifiable, fair financial statements for all teams, as well as in depth interpretations of them, the NHL has its cost certainty, but there is no certainty whatsoever for the players and their salary limitations; the NHL gains complete control over salaries once again because THEY set the cap because ONLY THEY know what revenues (whether manipulated or not) really are. Maybe if the salary cap were at a higher level and the NHLPA and a group of highly scrutinizing accountants were satisfied with the revenue numbers and financial statements produced, the NHLPA could possibly consider looking at a salary cap...it all depends...even then, unless new information is presented to me, I hope the league maintains its objection to a salary cap. If the owners can't manage their budgets, that's their own problem. Teams are starting to smarten up (see Boston, New Jersey), but there are still a lot of idiot GMs out there (when it comes to business) IMO.

To equalize the teams in the league, I think that a higher degree of revenue sharing would solve a majority of the NHL's problems. The biggest problem today, which causes teams to have a difficult time making a profit, is that some teams can offer top-line players big money, and some can't. If revenue is moved to the smaller market teams, they will have more money to spend on the top line talent that would have otherwise ended up with large market teams. Also, the 60-40 proposal for ticket sales could help. Regardless, revenue sharing equalizes the teams and puts more emphasis on management, as opposed to money, in creating a competetive balance amongst teams.

As for the rest of the offer, I am really happy to see Goodenow taking such a collaborative approach to this. It implies that he wants to see both sides benefit from these negotiatons. However, I am disappointed with Bettman's win-lose type approach thus far, and I hope it doesn't continue throughout negotiations because it will no doubt result in a lock-out. Luckily, it is still early in negotiations, so his response is very reasonable, as it is probably just a tactic to get more out of the PA because the pressure isn't on yet.

With this reasonably considerate offer by the NHLPA, things look a bit better for 2004.

Trottier 11-12-2003 09:54 PM

Quote:

Originally Posted by discostu
It appears that way, but keep in mind, we are still a long way from the expiration of the current CBA....I really like what the players have come up with....

I agree. Predictions of doom and gloom are waaaay premature. Everyone would like a CBA to be hammered out today, but Pronger is correct: come next summer, the pressure to negotiate will escalate exponentially. And it's funny how deals can get hammered out under the pressure of the clock.

I, too, like the framework of the NHLPA preliminary offer. but then again, I'm not an owner. :p That said, when all is said and done, I am a firm believer that an individual who invests in a team is entitled to generate every single cent of revenue out of it that he can. And that includes managing his payroll (players' salaries) to his benefit. Clearly, NHL ownership, as a whole, has done a poor job of that, in recent years particularly. Now will be their best chance to correct it (even if only temporarily).

To that end, here is a summary of the owner's counter-offer (with me representing them :joker: ):

- 10% rebate on all current salaries. (As opposed to the 5% offered by players.)

- "Matrix of revenue sharing" concept - don't have enough specifics in the article, but it seems as though this approach could serve as a de facto luxury tax. Or at least a "drag" on spending. It would certainly incent some teams to curtail spending (or at least give them a good excuse to do so), and it would promote a level of equitability league-wide. Not suggesting that NYR will be spending anywhere near the low amount of, say, Calgary at the bottom. But if the "matrix" has some teeth to it, it could be effective in promoting a limited re-distribution of wealth league-wide, while simultaneously allowing the big spenders to keep burning cash, as they wish (free market). Clearly, any "matrix" would need to address currency exchange and the huge US/Canadien taxation discrepancies, to "even out the playing field" somewhat for Canadien teams. (Why? For the good of the league, that's why.)

-The rollback of the entry level max salary is good, however, the owners should not agree to extension of the entry-level contract from the current three-year length to four years.

- No cap, and accordingly, no change on the age for unlimited free agency. Likewise, push back (make more restrictive) eligibility for RFA status. Could be as simple as delaying it a year or so for each player compared to the current arrangement. Also, status quo on league salary minimum.

That's a start. Get Goodenow on the phone, pronto! :joker:

discostu 11-13-2003 04:48 AM

Quote:

Originally Posted by Richard
At this point, I think a main reason that the NHLPA is currently so opposed to a cap is because of the teams' lack of complete financial disclosure. Without verifiable, fair financial statements for all teams, as well as in depth interpretations of them, the NHL has its cost certainty, but there is no certainty whatsoever for the players and their salary limitations; the NHL gains complete control over salaries once again because THEY set the cap because ONLY THEY know what revenues (whether manipulated or not) really are.

This is where things get interesting.

The players have agreed to take a pay-cut already. To me, this is an extremely important piece of information. To me, it indicates one of the following scenarios:
1) The owners are losing money, and the players believe them
2) The owners are not losing money, yet they have convinced the players that this is the case
3) The players have not offered to take a paycut, and the information that is being leaked out has been false.
4) The owners are not losing money, but are so determined to improve their financial situation anyways, that the players have resigned themselves to the fact that they will need to make some concessions.

We've now seen a couple of sources report that this was the players offer, and nothing has been reported that it is false, from either side, so I am inclined to write-off option 3. The players are not likely to be scared off easily, so that write-offs option 4. That means that the owners have convinced the players that they are losing money.

Now, we do not know what access players have been given to the books, but I think it is quite possible that they have been given more information that what is made public. They obviously will not have the complete financial picture, but they have felt confident enough in it to make concessions. This is very indicative behaviour. Personally, I give the NHLPA a lot of credit. They won the last round of collective bargaining, and they are not idiots. I do not think that the owners would be able to convince the players that they need a pay cut without some level of substantive proof. The players probably do not believe the owners full claims of $300 million in losses, but they believe them enough to take a 5% pay cut.

Motown Beatdown 11-13-2003 05:53 AM

Quote:

Originally Posted by discostu
This is where things get interesting.

The players have agreed to take a pay-cut already. To me, this is an extremely important piece of information. To me, it indicates one of the following scenarios:
1) The owners are losing money, and the players believe them
2) The owners are not losing money, yet they have convinced the players that this is the case
3) The players have not offered to take a paycut, and the information that is being leaked out has been false.
4) The owners are not losing money, but are so determined to improve their financial situation anyways, that the players have resigned themselves to the fact that they will need to make some concessions.

We've now seen a couple of sources report that this was the players offer, and nothing has been reported that it is false, from either side, so I am inclined to write-off option 3. The players are not likely to be scared off easily, so that write-offs option 4. That means that the owners have convinced the players that they are losing money.

Now, we do not know what access players have been given to the books, but I think it is quite possible that they have been given more information that what is made public. They obviously will not have the complete financial picture, but they have felt confident enough in it to make concessions. This is very indicative behaviour. Personally, I give the NHLPA a lot of credit. They won the last round of collective bargaining, and they are not idiots. I do not think that the owners would be able to convince the players that they need a pay cut without some level of substantive proof. The players probably do not believe the owners full claims of $300 million in losses, but they believe them enough to take a 5% pay cut.



I think your right, the players know that the majority of owners are losing some money. But not to the extent Bettman likes to portray. I would say some believe they are overpaid. And i think it must kill Goodenow to hear players say that.

The owners IMO are being foolish not to negotiate with the players. If it's true the players already offered a 5% paycut. See if they will up that number up to 10%. That would mean it would save the owners $130 million right off the top. Including a luxury tax, and limit on entry level contracts could make this league profitable.

It's gonna take both side to work together. All the NHL/Bettman is doing is pissing off the union who is atleast is making an effort.

degroat* 11-13-2003 06:41 AM

Quote:

Originally Posted by Richard
At this point, I think a main reason that the NHLPA is currently so opposed to a cap is because of the teams' lack of complete financial disclosure. Without verifiable, fair financial statements for all teams, as well as in depth interpretations of them, the NHL has its cost certainty, but there is no certainty whatsoever for the players and their salary limitations; the NHL gains complete control over salaries once again because THEY set the cap because ONLY THEY know what revenues (whether manipulated or not) really are.

You really couldn't be more wrong. When a cap is agreed on, the CBA will determine what exactly is included in the revenues. The owners will be required to report these accurately and they will have to sign the CBA agreeing to do so. Not doing so will result in fraud.

discostu 11-13-2003 07:04 AM

Quote:

Originally Posted by degroat
You really couldn't be more wrong. When a cap is agreed on, the CBA will determine what exactly is included in the revenues. The owners will be required to report these accurately and they will have to sign the CBA agreeing to do so. Not doing so will result in fraud.

Even carefully regulated revenue definitions can be side-stepped. It's happened in the NBA, where the Lakers and the Kings both receive equal share of luxury box revenue, despite not the Lakers being the bigger draw.

There will always be loopholes in deals like these, and as long as owners stay true to the text of the CBA, they cannot be found guilty of fraud.

Tom_Benjamin 11-13-2003 07:30 AM

Quote:

Originally Posted by discostu

We've now seen a couple of sources report that this was the players offer, and nothing has been reported that it is false, from either side, so I am inclined to write-off option 3. The players are not likely to be scared off easily, so that write-offs option 4. That means that the owners have convinced the players that they are losing money.

Except the players aren't really making any significant concessions. A luxury tax is tied to revenue sharing and the players know the owners won't go for that. The big concession being made by the players is reducing the salary cap for rookies and appearing willing to negotiate around bonuses. Even this last is not that big of a deal because contrary to the claims of the owners, few players get these big bonuses.

The 5% pay cut is a stroke of genius. It looks great - and it is in a sense that it ratchets back wages - but we have to remember that the player's strategy is predicated on two beliefs:

1) The owners are completely untrustworthy and nothing they say about money can be accepted with a straight face.

2) The owners will pay what they can afford to pay under this CBA. No more and no less. As long as the structure says the same - there are no artificial spending controls - this will be the case.

The players think that the 5% pay cut will be very temporary. If Brian Burke's budget is $40 million and the players take a $2 million pay cut, Does he cut his budget or find a new way to spend the $2 million saving? The players are confident he will spend it because he can afford to spend it. Under their worldview, the market rules.

Of course, if the owners are telling the truth about money they will gratefully accept the cut and take the opportunity to avoid stupidity in the future. If the owners are doing their usual song and dance, they will immediately turn around and spend the money.

The players believe the market is setting salaries. If they are right, a 5% or 10% pay cut doesn't mean anything because the market will quickly correct itself. The owners claim the CBA is driving up salaries. If they are telling the truth, an across the board cut is a genuine concession.

If the owners are telling the truth, the combination of concessions is probably worth $200 million next year. The teams can get their financial houses in order and the league carries on. If the owners are not telling the truth, the combination of concessions is worth next to nothing.

Which is it? The NHLPA offer is designed to force the hand of the owners. If they are telling the truth, the players are willing to meet them halfway. If they are lying, the players get locked out.

Tom

discostu 11-13-2003 08:06 AM

Quote:

Originally Posted by Tom_Benjamin
Which is it? The NHLPA offer is designed to force the hand of the owners. If they are telling the truth, the players are willing to meet them halfway. If they are lying, the players get locked out.

Tom

So, if the owner's don't accept the players first offer, it means they are lying? :confused: How does that work?

By offering an immediate paycut, and introducing a luxury tax into the mix, the players are opening the door to a less favourable CBA than what they have now.

By offering a 5% pay cut now, the players are opening the door to the owners countering with something more, like a 10%, 15% maybe even a 20% paycut. Yes, those could be temporary, but it's still takes time for the payrolls to adjust to that. In the short term, it would be a costly move for many players.

The introduction of a luxury tax is also crucial. We don't know the metrics of it, but it's on the table now. Even if it's a very "loose" tax, that will not have much of an impact, bringing it into the negotiations now means that if a tax does go in, they players would have to accept a harsher tax in order to meet the owners halfway. Such a tax will have a permanent downward pressure on salaries (as opposed to the temporary ones offered by the salary reduction).

If the players were as skeptical as you are, then why wouldn't they hold firm on the current CBA, and only start discussing any form of cost control near the later stages in negotiations. It's what the players did in baseball. They were reluctant to agree to any form of cap or tax. Only near the end of the negotiations did they agree to a tax. The result was a tax that would optimistically only impact a handful of teams, and do little to slow down the escalation of salaries. It was a very successful tactic for them.

That's why I was suprised by the players first offer. Based on their comments, I thought they were going to fight tooth-and-nail for every little change to the CBA. Instead, they are suggesting some fairly drastic changes. If they truly felt that the current CBA was fair, and was in the best interest in the game, I don't think would be so quick to stray from it.

Tom_Benjamin 11-13-2003 10:02 AM

Quote:

Originally Posted by discostu
By offering an immediate paycut, and introducing a luxury tax into the mix, the players are opening the door to a less favourable CBA than what they have now.

How? The pay cut does not produce a less favourable CBA, and they know the luxury tax will be rejected because the owners are not interested in revenue sharing.

Aside from the rookie salary cap, the CBA does not set salaries. Player agents, players and teams set the salaries. That's the way the players want it. The owners want "cost certainty". They want the CBA to set a global ceiling on salaries.

The NHLPA is being clever. If the owners have all these losses, the players are willing to help. They will give up 5% and the owners can stick that in their pockets. If the owners do not have all these losses, they will turn around and spend the 5%. It is a win-win.

If the owners are telling the truth, the NHLPA is making a good offer. If they are not telling the truth - and they have a different agenda than the announced one - the offer doesn't help.

I think the owners do have a different agenda and the flat rejection of the NHLPA offer is evidence of it. The owners want to eliminate elite teams. That is the purpose of a salary cap. The players could offer a 20% cut and it would be rejected because a 20% cut would not prevent a half dozen teams from dominating the next decade. The NHL wants a different winner every year. This, they think, is the route to higher revenues across the board.

How do you prevent Ottawa from dominating the next decade? Set a salary cap low enough that they can't keep all their good players.

Is there any other way?

Tom

degroat* 11-13-2003 10:09 AM

Quote:

Originally Posted by discostu
Even carefully regulated revenue definitions can be side-stepped. It's happened in the NBA, where the Lakers and the Kings both receive equal share of luxury box revenue, despite not the Lakers being the bigger draw.

There will always be loopholes in deals like these, and as long as owners stay true to the text of the CBA, they cannot be found guilty of fraud.

How much of those luxury boxes go towards the NBA's revenues was determined by the CBA. If that CBA didn't specify 50% then the Lakers would be submitting an even lower percentage. In other words, that's not a loophole, that's what was agreed upon.

Av-merican 11-13-2003 10:48 AM

Quote:

Moore, has appeared in five games with the Blueshirts since being recalled from Hartford on October 31 (he was subsequently reassigned to Hartford on November 8 and recalled on November 9), collecting three assists. Those three assists came in his NHL debut on November 1 at Montreal, tying a club record for most points scored in a Rangers/NHL debut.
Oh, man, a record-setting performance? Disgraceful. Send him down! :dunno:

discostu 11-13-2003 11:05 AM

Quote:

Originally Posted by Tom_Benjamin
How? The pay cut does not produce a less favourable CBA, and they know the luxury tax will be rejected because the owners are not interested in revenue sharing.

How do you know that a luxury tax solution will never be accepted by the owner? They won't accept a tax right now, because they're still pushing for the cap. This is how a negotiation works.

Their initial offer is that of a hard cap. They claim they will not sign a deal that doesn't have a cap, or cost certainty, if you prefer their euphemism.

The players are offering a luxury tax, likely a weak one. They claim they will never accept a salary cap.

Now, if we take both sides claims as absolute truths, then there is no compatable solution. The lock-out will continue indefinitely.

The more realistic solution is that this negotiation will occur like nearly every negotiation in history. A solution will be reached somewhere in-between, probably a soft-cap at a higher payroll level, or a stricter luxury tax that is currently being offered by the players.

Why are you so confident that the owners won't accept a luxury tax? Do you think the players are more likely to back-down than the owners? :dunno:



BTW, a luxury tax and revenue sharing are two very distinct items, and shouldn't be used interchangeably.

discostu 11-13-2003 11:30 AM

Quote:

Originally Posted by degroat
How much of those luxury boxes go towards the NBA's revenues was determined by the CBA. If that CBA didn't specify 50% then the Lakers would be submitting an even lower percentage. In other words, that's not a loophole, that's what was agreed upon.

Are you certain on that? I have my doubts.

Still, there's a million, legal ways to get around CBA specifications. All you need is creative accountants, and since Andersen has gone belly-up, there's been a bunch of them looking for work. ;)

A good example is what's happened in Ottawa with TicketMaster. Melnyk was unhappy with Ticketmaster, and has now created a company called CapitalTickets.ca that sells and distributes tickets for various Ottawa events. Now, the reasoning behind this move makes sense from a business view. A dispute with a supplier, lead to Melnyk creating a new business as an alternative.

If ticket surcharges aren't covered under the CBA (as 29 other teams do not have any control over it) then Melnyk just needs to raise his price to save money on revenue sharing.

Now, the easy solution would be to say that the new CBA would cover this, however, if it didn't happen right before the CBA, no one would likely think about it. THere's probably dozens of other similar scenarios that can be conceived as well. If they are not thought about at the outset, then there will be loop-holes.

Emule Richard 11-13-2003 02:51 PM

Quote:

Originally Posted by degroat
You really couldn't be more wrong. When a cap is agreed on, the CBA will determine what exactly is included in the revenues. The owners will be required to report these accurately and they will have to sign the CBA agreeing to do so. Not doing so will result in fraud.

I understand your argument, but before they determine what revenues to use, the NHLPA has to see what revenues HAVE BEEN used and then must decide how that must be adjusted. The point I wanted to make was that until the NHLPA sees complete financial disclosure of the numbers that HAVE BEEN used, they shouldn't even consider a salary cap because they will have nothing to compare future revenue calculations to. Right now, they don't know what sources of revenues all of the owners have, related to their teams, and how owners can disguise or manipulate them into other accounts that won't be included in "Defined Gross Revenues" or whatever other term they come up with. Without complete financial disclosure by all teams, the NHL has a significant negotiating advantage when determining what "Defined Gross Revenues" will include; "Defined Gross Revenues" must be defined to the T to try to avoid the numerous owner-favouring loopholes that will likely result if the owners have a significant advantage in the negotiations over the definition. Again, this advantage would come as a result of a significant difference in knowledge about teams' accounting standards and abilities.

Nonetheless, once a "Defined Gross Revenues" is agreed to, teams will have to make this completely available to the players. However, what kind of accounting loopholes will be present if the definition fails to include accounts or sources of revenue that the NHLPA had no knowledge of prior to negotiations? It is possible that teams could broaden the definitions of these particular of revenues to include revenues included under "DGR," thus decreasing "DGR." The players may have thought they had a certain type of revenue covered in "DGR," but it may turn out that this other unconsidered revenue account is more representative of the form of revenue. The NHLPA can't agree to a salary cap with this kind of risk.

Trottier 11-13-2003 04:51 PM

Nothing personal, but you are singing the same old tune that player's unions in all major professional sports have been repeating for decades. The script goes like this:

Player's Union: "Owners need to disclose their financials!"
Owners then provide financials.
Player's Union: "These numbers are incomplete and manipulated to favor the owner's agenda! We don't believe them!"

It is soooo predictable and such a red herring, IMO. Player's union doesn't trust the owners? Fine, that's their perogative. As it is the perogative of owners not to accept a CBA that doesn't meet the needs of their business investment.

The owners have, in fact, gotten themselves into this economic mess, no doubt. (And the players aren't even questioning the fact that the league has financial problems; only the most cynical idealogue would at this point). The next CBA is the owners' "hammer" to rectify the problem of skyrocketing employee payrolls. I'm looking forward to them using it.

Emule Richard 11-13-2003 06:37 PM

Quote:

Originally Posted by Trottier
Nothing personal, but you are singing the same old tune that player's unions in all major professional sports have been repeating for decades. The script goes like this:

Player's Union: "Owners need to disclose their financials!"
Owners then provide financials.
Player's Union: "These numbers are incomplete and manipulated to favor the owner's agenda! We don't believe them!"

It is soooo predictable and such a red herring, IMO. Player's union doesn't trust the owners? Fine, that's their perogative. As it is the perogative of owners not to accept a CBA that doesn't meet the needs of their business investment.

The owners have, in fact, gotten themselves into this economic mess, no doubt. (And the players aren't even questioning the fact that the league has financial problems; only the most cynical idealogue would at this point). The next CBA is the owners' "hammer" to rectify the problem of skyrocketing employee payrolls. I'm looking forward to them using it.

I'm not saying that the league doesn't have financial problems; it's pretty obvious that it does when you look at the NHLPA's initial offer. However, what is the extent of the league's financial problems, and how much of that can be fixed without a salary cap? I think a pretty darn good solution can be made without a cap. Anyway, the fact still remains that without complete financial disclosure, the NHLPA is at a high risk of being exploited by the NHL once again. Sure, we can tie a salary cap in at 60% of "Defined Gross Revenues," but without the NHLPA knowing all of the sources of revenue for the teams, it is too easy for the teams to find ways around the rules. In a labour agreement, especially one that will be as highly scrutinized as this one, before agreeing to anything, each side must know exactly what they are getting themselves into; any tiny slip-up or loophole can be magnified to a tremendous extent, and without complete financial disclosure, the potential for a tiny slip-up, and the cost of it, is enormous for the NHLPA. It's just like the little slip-up by the NHL with the rookie salary cap; Barnett found a way to exploit that through a lucrative incentive structure, and now teams are paying huge cash to their top draft picks.

As a general and easy to visualize example (in reality, discrepancies won't be nearly this obvious), the NHLPA and NHL may agree that all revenues from ticket sales going to the team must be included in "Defined Gross Revenues." However, this simple statement does not mention revenues going to the arena due to ticket sales. Now, if the team owns the arena, what is stopping them from changing the agreement with the team such that the arena receives a much higher percentage of ticket sales revenue. That could decrease "DGR" immensely, thus significanlty decreasing the portion of revenues going to the players. Revenues can very easily be shifted from one company in a corporation to another, or from one business unit to another. If the NHLPA doesn't examine all of the possible options for the owners, they ARE going to get burned, plain and simple.

Another question that would come to mind if I were the NHLPA is...what is the revenue recognition policy for NHL teams, and are they allowed to change it freely? If the teams can freely change their revenue recognition policy, that could have a HUGE impact on revenues. Teams receive huge amounts of money for advertizing, tv revenues, and ticket sales. I'd assume that many of these revenues are included on financial statements as soon as a contract is made, or as the contract is being fulfilled by the teams. However, what's to stop teams from waiting until they are actually PAID for the services, which could take years, especially if they are very lax on receiving this payment; other companies would be extremely happy to hang on to their money for longer and gain interest, and if it saves the teams money on player salaries, the players would clearly be the only losers. Heck, the league could even completely dominate this little slip-up through TV revenues. The league could hold on to TV revenues until the next CBA, at which point they could pay it all in a huge sum to the teams. In the years between CBAs, teams would be recognizing no/little TV revenue; imagine the impact on salaries if they are tied to revenues! The impact of deferring revenues can be enormous and, once again, greatly magnified if measures are taken through the use of companies that own NHL teams. Cablevision could have a ton of fun with this.

Though the situations above are rather far-fetched, I chose them because they are easy to understand and can have a tremendous impact. Because financial statements get a lot more complex than this, the search for potential loopholes becomes just as complex. If the owners have significantly more information about revenues than the players, they have a distinct advantage and should be able to exploit that advantage to benefit extraordinarily. I'm taking just my first University accounting course right now, but if I were the owners, I know that I would spend weeks analyzing my financial statements, looking for every little thing that the NHLPA may miss, hoping that it results in a loophole that lets me cheat (unfraudulantly of course) at my own game (salary cap).

HFNHL PIT GM 11-13-2003 07:26 PM

Quote:

Originally Posted by Trottier
The next CBA is the owners' "hammer" to rectify the problem of skyrocketing employee payrolls. I'm looking forward to them using it.

fair comment, but the owners have had the hammer for the entire duration of the current CBA and chose time and time again to not use it.

is it or is not a fact that the owners have agreed to each and every contract that an NHL player has ?

dr

Trottier 11-13-2003 08:46 PM

Quote:

Originally Posted by DementedReality
is it or is not a fact that the owners have agreed to each and every contract that an NHL player has ?

dr

Fact, absolutely!

From my previous post: "The owners have, in fact, gotten themselves into this economic mess, no doubt."

And, pragmatically speaking, any rollback or drag on salaries coming out of the next CBA will be temporary and will last only as long as the first owner makes the next absurd contract decision...and others follow suit.

***

Richard, I understand and agree that there should be full disclosure of revenues and uniformity in accounting for those revenues league-wide. My cynicism is based on seeing countless past examples of the unions refusing to acknowledge the numbers provided by owners. Perhaps legitimately, perhaps not. In fact, the only instance where there is consensus on "revenues" seemingly is the NBA, as the annual salary cap is adjusted to reflect a certain percentage of total league revenue. Would be interesting to find out how they managed to arrive at an understanding in that case.

PS - I am not an advocate of a salary cap, certainly not a hard cap.

HFNHL PIT GM 11-13-2003 08:52 PM

[QUOTE=Trottier] last only as long as the first owner makes the next absurd contract decision...and others follow suit.
QUOTE]

so why is it the players responsibilty to protect the owners from giving out big contracts ?

the owners need to take care of themselves and not expect the players to take the responsibilty for it.

the mechanics to do this are in the current CBA, thats what the players are saying.

DR

Trottier 11-13-2003 09:46 PM

[QUOTE=DementedReality]
Quote:

Originally Posted by Trottier
last only as long as the first owner makes the next absurd contract decision...and others follow suit.
QUOTE]

so why is it the players responsibilty to protect the owners from giving out big contracts ?

the owners need to take care of themselves and not expect the players to take the responsibilty for it.

the mechanics to do this are in the current CBA, thats what the players are saying.

DR

It's not the player's responsibility, never said it was.

And, the owners, as you say, do need to take care of themselves.

My point is this: Yes, the mechanics are in place, for the most part, in the current 1995 CBA for owners to manage payrolls properly. And, collectively, they haven't. But since the "money train" left the station, there is no conceivable way for owners to undo their self-inflicted damage of the last nine years, other than negotiating their way back to fiscal sanity at the next CBA. That is, to expect all NHL owners to suddenly (and independently, so as to avoid collusion) "see the light" and simultaneously cut back en masse on hefty contracts is, of course, fiction. Even if this implausible scenario did occur, they could never enact an impactful rollback of salaries league-wide.

So, yes, they are their own enemy. And to "protect them from themselves" :p , they will likely seek to impose significant salary restrictions in the next CBA.

"Fair" to the players? Not really. Just laying out why owners must take advantage of this upcoming "opportunity".


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