Mirtle: Why the NHLís push for a variance limit matters
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01-04-2013, 11:16 AM
Join Date: Dec 2011
Originally Posted by
The PA believes the front loaded contracts also benefited the "middle tier" of its membership:
1) Cap space opened up by those deals was not only spent on the superstar getting the deal; plenty was directed toward the supporting talent;
2) The length of those deals had another inflationary effect in favor of the middle class beyond the obvious circumvention. Assume 10% growth (last year's impressive growth!) and a $70M cap (just for easy math). In the last CBA, no individual player could be paid more than 20% of of the cap -- Oh heck, here's a chart:
Growth Cap Ind Max Spread Year
$70.00 $14.00 N/A 1
0.1 $77.00 $15.40 $(1.40) 2
0.1 $84.70 $16.94 $(2.94) 3
0.1 $93.17 $18.63 $(4.63) 4
0.1 $102.49 $20.50 $(6.50) 5
0.1 $112.74 $22.55 $(8.55) 6
0.1 $124.01 $24.80 $(10.80) 7
The "Spread" column is the difference between Year One's Max Individual Salary (or whatever cap number the Superstar gets), and the new, higher Max Salary made possible because of growth and a rising cap.
Since the Superstar is bound to a long deal, he doesn't have a claim on that new money. So where does it get spent? On middle class players.
The longer the deal, the bigger this effect.
What happens with shorter deals?
Superstars "reset" more often, consuming more of the new money generated by growth (superstars always get paid), leaving less spread for the rest of the roster.
Whenever trying to suss out why one side or the other is making some claim, it's helpful to remember that both Bettman and Fehr don't represent monolithic individual entities. They represent agglomerations of interests, some of which are not well aligned. So while they have to negotiate with one another, they also have to negotiate with their internal constituencies. The options they wind up presenting across the table are often already compromises their own sides have made among themselves.
Thanks for the work. So the variance would be in addition to the 20% of cap restriction? Also with variance( I should know this ) is the variance off the most expensive year in the salary or within subsequent years?
If the variance is 10% and you start with 14 million then no year can be less than 12.6. If its from the previous year the cap hit at the end is way less than 12.6 and if you assume you stretch the contract out and use the gowth you hypothesised the superstars proportional cap hit is way low.
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