Thread: Salary Cap: $64.3M Upper Limit for '11-'12
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06-29-2012, 04:11 AM
  #773
Ola
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Quote:
Originally Posted by GAGLine View Post
No, I know what a rollback is.

http://www.sportsbusinessdaily.com/D...s-New-CBA.aspx



That means whatever they were making before, they were now making 24% less. They didn't just roll back the cap dollars. They rolled back actual salaries. If it was just the cap hits, the NHLPA wouldn't care. They'd be in favor of it, in fact, as it allows the teams to spend more money.

Look at Jagr:

http://www.capgeek.com/players/display.php?id=1910

He was making 11 mil before the lockout and 8.36 mil after.

24% of 11 mil is 2.64 mil.
No, sorry, but with all due respect, the first and bolded part is not what a roll back is about. Its only connected with the second bolded part, but that's not correct either. You wouldn't even roll back "actual salaries", you would only roll back the number on the contract. Let me explain it. The cap has nothing to do with the salaries, the cap is tied to the HRR (the NHL org's combined hockey related revenues).

A roll back is that you adjust existing contracts. The amount of money the PA gets is not directly tied to their contracts. They get a certain % of HRR. If there are indications that all existing contracts will superseed that amount, a certain % is put into escrow and the players are forced to pay back that amount after the HRR has been calcluated.

So the cap can go down without a roll back(!).

That's what being discussed. Like many have pointed out, it would be possible to lower the cap without having a roll-back, if, like in this case, the cap only goes down with like 3-4m in comparision with last season (down to 60 insted of up to 70)... And this would especially be doable if Bettman gets the PA to accept like 50-52% instead of 57%, but the PA gets Bettman to go from 57% to 50-52% step by step over a three year period, or whatever.

Example:
Bettman and the PA agree on 50/50. For example, lets say that HRR is 100 and that the upper level of the cap is HRR/2 +5 and that the lower level is HRR/2 -5 (we jump over the step with 30 teams to simplify the numebrs). Instead of getting 57 (cap range=52-62) the players get 50 (cap range=45-55). 50 here is the amount all players will get.

And lets say that if you add up all existing contracts going into next off-season, they total 47 (there is some thought behind this number because we assume that all teams always spends up to the max cap 47 is roughly 3/4 of the previous roof of 62). Lets assume that 1/4 of all players are FA in a off-season, spread evenly over the board, this would mean that normally the FA's were due to make 15 (47 / (3/4) - 47 = roughly 15. And 47+15=62(the previous max under the cap)) that summer. But the room under the cap is only 8. Let's say that hypotetically, that they do get 8 (everyone maxes out their cap (in real life there is basically a set room to, but its of course less than the range under the cap because teams have budgets lower than the cap etc., but in principle its the same thing)), all contracts added up would then total 55. But since the players no matter what only will get 50, roughly 10% of 55 would go into escrow. The result is the following.

No roll back:
After the first summer after the lockout, players with existing contracts gets 100% on paper and 90 % after escrow.

After the first summer after the lockout, players without existing contracts gets 8/15=0.53% to divde among them (the smaller room under the cap holds back what they get), of what normally would be available, and after escrow they get 0.53 * 0.9 = 0,48. 48 % as opposed to 90 % for players with contracts. They are screwed.

Roll back:
The alternative is to have a roll back. Do you remember that 47 number we talked about above? The amount of all existing contracts going into the summer. A roll back means that you roll back those contracts on paper. The mid point went down from 57 to 50. Thats 12.3%. Lets say you roll back all contracts with like 10 %, you start with 47 * 0.9 = but tget 42.3 instead. The FA were due to normally have 15 to divde among them, but the room under the cap is only 12.7 (upper level cap - 42.3). Everyone maxes out their cap (meaning that all contracts total 55 while the players only are entitled to get 50) meaning that a escrow of around 10% will be applied again.

Players with contracts going into the summer after the lockout gets 47 * 0.9 * 0.9 / 47 = 81 %.

Players without contracts going itno the summer after the lockout gets 12.7 * 0,9 / 15 = 76 %.

A third option could be amnesty buy outs. But as is apparant when you look at the above numbers, the room would certainly grow some, but combined it would never be that much.

HRR 3,300,000,000
Player's percentage 57%
Today's share: 1,881,000,000
Players with contracts after the first season (assumed share in relation to FA's): 3/4
Assumed player's percentage 50%
Combined players share: 1,650,000,000
On the books going into the first summer: 1,237,500,000
Room opend up with a rollback of 10%: 123,750,000

How much money would you free up with a amnesty buyout? 123,750,000 is 4,125,000m per team. With a amnesty buyout, I recon roughly that around 30 m maybe would be freed up (30m divded with the combined players share opens up 30,000,000 / 1,650,000,000 = 1.8 % more for the FA's only. If no roll back, that 1.8 % or whatever is only added to the number of 48% above. As you realize, you need massive buyouts to close the gap for FA's (48%) in relation to players with contracts (90%)).

Hence, its easy to understand why the PA decided on a roll back last time, and in many situations, it would make sense this time too.


Last edited by Ola: 06-29-2012 at 04:45 AM.
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