Thread: Setting the cap
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12-17-2005, 09:48 AM
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Originally Posted by hockeytown9321
They take a set % of revenue, divided by 30 to get the midpoint. They have a negotiated range for each season. I think its $16M from now own, so the cap is set $8M above the midpoint, the floor is $8M below.
Right, the 39 million is just the top end of the range determined by projected revenue. The 39 million per team figure actually assumes 2.2 billion revenue (roughly).

The range is only in place to keep teams from not spending too much more or less than the ball park of what is estimated to be 54% of total revenue.

As noted, the player's have a chunk of their salaries frozen in escrow, so in the event that, at the end of the season, it is determined that total player payroll exceeded 54% of actual revenue... the owners get re-imbursed.

Team payrolls in relation to revenue are examined periodically throughout the season in order to determine the escrow amount withdrawn from player's paychecks. So theoretically, there should always be enough funds in escrow to cover the difference, even if all teams were spending at or close to the cap limit.

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