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Old
07-07-2009, 10:01 PM
  #1
BrookswasHere44
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Cap Question

So is it just speculation about the cap dropping next year? Why would this happen? Is this to FORCE teams to lose some key players inevitably? A cliffs notes explanation would be greatly appreciated.

P.S. Is there a basement to where the cap may drop?

Brooks4Prez!

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07-07-2009, 10:12 PM
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gialloneri
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The salary cap is tied to revenues. The economic meltdown has meant less people are buying stuff, including tickets to NHL games. Teams are generating less revenue, therefore the cap is predicted to drop after the 09-10 season.

Why not this season? Because this season is tied in large part to revenues from the past year, including season ticket sales that were made before everyone started tightening their belts.

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07-08-2009, 02:12 AM
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HuskerTornado
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Quote:
Originally Posted by gialloneri View Post
The salary cap is tied to revenues. The economic meltdown has meant less people are buying stuff, including tickets to NHL games. Teams are generating less revenue, therefore the cap is predicted to drop after the 09-10 season.

Why not this season? Because this season is tied in large part to revenues from the past year, including season ticket sales that were made before everyone started tightening their belts.
Yeah, it'll definitely be interesting to see the difference in season ticket sales last year to this year for all of the franchises.

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07-08-2009, 03:18 AM
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Midnight
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Apart from consumer spending, the Canadian dollar - USD exchange rate affects league revenues to some extent too. The cap calculations are in terms of USD, but the Canadian teams (20% of the league) get most of their revenue in Canadian dollars. A weaker Canadian dollar will tend to depress overall league revenues and thus the salary cap.

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07-08-2009, 03:46 AM
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Killswitch7187
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Actually... Revenue went up 110 million this year, than last. (If I can find the link again--I'll come back later and post it for you all).


HOWEVER... the Cap Dropping is just a rumor based on the Canadian Dollar hurting. But the Owners know about what's happening in the world right now, obviously. With this "Recession" (put it in quotes, because if you look up "depression" in the dictionary, you'll find that it fits what we are in now), it just causes a CHANCE that the cap will drop. The thing that will be a factor in it, will be how the merchandise and ratings go. We'll have a better idea as the season progresses.

The Cap was supposed to DROP this year, however it did not... it actually raised a 100 K which surprised some people. So don't be surprised if it actually raises again... just don't expect it to stay the same at all by next year.

Again, don't think I'm saying it won't drop... it's going to depend on the merchandise sells and ratings once more. Which last year (08-09), it turned out to be better than expected.

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07-08-2009, 04:07 AM
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Big McLargehuge
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A very high percentage of money was spent before the markets collapsed, such as signed contracts with advertisers, television deals, season tickets, etc.

When I was a season ticket holder I had my season tickets paid off by the end of July. I can't admit to being anything near an economist, but I know there is a domino effect and it takes time for many things to be effected by the circumstances that lead to it. Sports economies generally run two years behind the markets.


Also remember, the cap would have fallen by a couple million this year had the 5% escalator clause been invoked by the NHLPA.

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07-08-2009, 04:43 AM
  #7
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Quote:
Originally Posted by BrookswasHere44 View Post
So is it just speculation about the cap dropping next year? Why would this happen? Is this to FORCE teams to lose some key players inevitably? A cliffs notes explanation would be greatly appreciated.

P.S. Is there a basement to where the cap may drop?

Brooks4Prez!
The league raises the cap based on revenues generated for the season. What doesn't help are teams like Florida, Tampa, Atlanta and Phoenix that pull their weight and when most of the teams are earning while the rest aren't, you are going to be left with lower earnings for the year and that means to remedy that, they need to drop the cap.

Bang up job by Bettman, to keep a team in Phoenix that hasn't earned a profit in its entire time in Arizona. Tampa has been losing money for how many seasons in a row? I heard Tampa even lost money the year they won the cup.

So thank you Gary.

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07-08-2009, 06:42 AM
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Quote:
Originally Posted by Big McLargehuge View Post
A very high percentage of money was spent before the markets collapsed, such as signed contracts with advertisers, television deals, season tickets, etc.

When I was a season ticket holder I had my season tickets paid off by the end of July. I can't admit to being anything near an economist, but I know there is a domino effect and it takes time for many things to be effected by the circumstances that lead to it. Sports economies generally run two years behind the markets.


Also remember, the cap would have fallen by a couple million this year had the 5% escalator clause been invoked by the NHLPA.
Yup. Everyone said it was BS that the cap was going to drop $2m to $3m when it was leaked a month or so ago but it would have if not for the NHLPA's escalator clause. I sure hope that the economy picks up soon and the cap doesn't have a BIG drop next season.

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07-08-2009, 03:54 PM
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D Heinze
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What % of League revenue in NHL is fan-based vs. what is corperate-sponsership-based?
e.g. Season ticket sales vs. ad revenue?

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07-08-2009, 07:38 PM
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Sjb141
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I was under the impression (and someone can absolutely correct me if I'm wrong) that there's a "glass bottom" clause tied into the cap stipulating it can only drop a certain percentage in a single year, despite a significant fall in league revenue. Supposedly it's meant to protect teams from a situation where the cap drops like, 8m in one year and half the league is locked up way over.


And the cap was always supposed to be reasonably steady this year since the real economic downturn didn't occur until the season was already underway. Most owners/pundits have been more concerned on its effect for next years numbers, as far as I'm aware.

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07-08-2009, 07:53 PM
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Midnight
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Quote:
Originally Posted by Sjb141 View Post
I was under the impression (and someone can absolutely correct me if I'm wrong) that there's a "glass bottom" clause tied into the cap stipulating it can only drop a certain percentage in a single year, despite a significant fall in league revenue. Supposedly it's meant to protect teams from a situation where the cap drops like, 8m in one year and half the league is locked up way over.
There's no such provision in the CBA. But the NHL and NHLPA could conceivably agree to make a one-time amendment to the CBA formula to handle drastic situations.

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07-08-2009, 08:45 PM
  #12
gialloneri
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Quote:
Originally Posted by WilliamRast View Post
The league raises the cap based on revenues generated for the season. What doesn't help are teams like Florida, Tampa, Atlanta and Phoenix that pull their weight and when most of the teams are earning while the rest aren't, you are going to be left with lower earnings for the year and that means to remedy that, they need to drop the cap.

Bang up job by Bettman, to keep a team in Phoenix that hasn't earned a profit in its entire time in Arizona. Tampa has been losing money for how many seasons in a row? I heard Tampa even lost money the year they won the cup.

So thank you Gary.
You know, not so long ago, Pittsburgh was at the top of the list of teams to be shut down amongst people who want to contract. We, of all fans, should be the last to criticize other organizations for financial struggles.

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Old
07-09-2009, 03:21 PM
  #13
Sjb141
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Quote:
There's no such provision in the CBA. But the NHL and NHLPA could conceivably agree to make a one-time amendment to the CBA formula to handle drastic situations.
Is there some sort of amendment clause in place, or is it something they'd have to negotiate?

If it isn't already there, it seems an absurd oversight.

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