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07-02-2008, 12:40 PM
  #46
Yanner39
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Location: Ottawa ON
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Quote:
Originally Posted by hillbillypriest View Post
In addition to growth of the business and general inflation (e.g. ticket price increases), the growth from $39 m to $56.7 m has been the product of some distinct, and in some cases irreproducible factors including:
- that the original cap did not reflect a reasonable baseline revenue estimate
- that the NHLPA lost Saskin, and as a result waived their original consent to not automatically increase escrow formulas by 5%. (While the 5% escalator is now in place, and expected to be on a go forward basis, in terms of growth, it was a one-time event).
- that the Canadian dollar rose to near parity.
- that the CBA formula increases the players percentage share with revenue growth (but only to a limit).

Although there will be other "pie-expanding" things that can be done to increase revenue, when you take these "exogenous" factors into account, I think there's serious potential that the rate of cap growth will slow down, and even some risk of a pull back if the Canadian dollar were ever to fall back away from parity.

Conversely, while the cap just when up 12.7%, the rate of salary increase is catching up quickly and is threatening to overtake. For example, the increase in average league salary between 06/07 and 08/09 can be measured by comparing the levels of year to year increase in the RFA compensation schedule band levels. This was 11.6%, but did not include either last summer's big extensions (such as Vishnovsky's) or the big dollars being thrown at UFA yesterday, or the much higher dollars being given to RFAs after Penner/Vanek for contracts that start next year (e.g. Getzlaff, Perry, Richards, Carter, Green....).

Basically, I'm worried that salary increases have their own momentum, because they determine what next year's free agents thing they deserve, and many of them will get similar if not better increases, so I'm really worried that even if the cap keeps going up, if it starts to go up slower, there will be a serious capspace crunch in a couple of years, and potentially a vastly different player marketplace. If you overpay, but the crunch doesn't happen for a few years, you may still have a player under contract at below market. However, when you're talking about a contract that's in the region of 9 million, you're talking serious money any way you slice it. I don't forsee any day when 9 million will seem "cheap", particularly if the term is long and Hossa has longer teeth.

That having been said, I take your point that the Oilers probably have a cap management strategy to go along with their dance with Hossa. It certainly does seem out of character that the Oilers of all teams would be reckless about the cap implications. After all - they apparently let Glencross slip away because they've had their eyes on the "pennies". I guess I need to have some faith, but the numbers being thrown about for one player for that long have me very anxious.
Wow, good post HBP. That's good info concerning the cap.

What it boils down for me is that the OIlers lately have taken a few stands (Glencross like you mentioned) and they were not willing to budge with Pitkanen, and they did not want to overpay Stoll, etc...I'm pretty confident that they've covered their bases here and that if they have a chance to get a player of Hossa's caliber, they'll do what they can.

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