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The Business of Hockey Discuss the financial and business aspects of the NHL. Topics may include the CBA, work stoppages, broadcast contracts, franchise sales, and NHL revenues.

Creative CBA solutions? Do you have one? Have you seen any?

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Old
08-27-2012, 07:06 PM
  #1
DL44
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MY 10 yr CBA proposal. Does it work?

(maybe merge in appropriate thread if not thread worthy)

My New proposed CBA:

10 Yr term.

For the first 3 yrs of the deal:
- Full socialist model of revenue sharing.. Like to the MAX. $300 mil/yr to shared from the top 10 teams to the bottom whatever.
- Players : 2% rollback.. decrease of 1%/yr of HRR.

- Annual revenue gains would be inflating the cap, would be slightly offset with the decrease in players share. So salaries would likely still be rising, but more modestly.
- Meanwhile the weak sisters should be THRIVING with their boost in savings in addition to REALLY fat revenue sharing cheques.
- so 3 seasons of serious money being pumped into the weaker teams by the top teams should help really boost stability, promotions and investments into development and on ice product.
....
After 3 seasons... Revenue sharing reverts down to $150-$200 mil/yr (owner proposal) for the next 7.


How does it all look?...

With (conservative/optimistic?) average annual increase of 5%.. the NHL revenue and players salaries over 10 yrs:

Right now: $3.3 bil, 57% - 62.2 mid point, $70.2 mil cap

Yr 1: $3.30, 56% - 61.6 mp, $69.6 cap
Yr 2: $3.47, 55% - 63.6 mp, $71.6 cap
Yr 3: $3.64, 54% - 65.5 mp, $73.5 cap
Yr 4: $3.82, 53% - 67.5 mp, $75.5 cap
Yr 5: $4.01, 52% - 69.5 mp, $77.5 cap
Yr 6: $4.21, 51% - 71.6 mp, $79.6 cap
Yr 7: $4.42, 50% - 73.7 mp, $81.7 cap
Yr 8: $4.64, 49% - 75.8 mp, $83.8 cap
Yr 9: $4.88, 48% - 78.1 mp, $86.1 cap
Yr 10: $5.12, 47% - 80.2 mp, $88.2 cap

Over 10 yrs
Overall revenues grow: 55.2%
Players salaries Increase: 30.2%
Owners Revenue Increases: 86.8%


This way Players don't get slapped with a significant rollback, and remain rich.
The gradual drop instead of the sudden drop to whatever percent seems much more desirable.

The owners don't get what they want the first 3 yrs, but it pays off in the long run...
In the short term, significant revenue sharing props up the bottom of the league. And then they start to reap more significant saving as the yrs go by.
The carrot for the big markets is that last 6-7 yrs as the revenue grows and their already huge piece of that revenue pie goes up with every yr that goes by.


Your Welcome Donald and Gary.

Ok.. now go start the season.

-----

So who says no?


Last edited by DL44: 08-27-2012 at 07:13 PM.
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Old
08-27-2012, 07:46 PM
  #2
GordieHoweHatTrick
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I'm pro revenue sharing unless someone else has a better idea?

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08-27-2012, 08:54 PM
  #3
Faltorvo
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Quote:
Originally Posted by GordieHoweHatTrick View Post
I'm pro revenue sharing unless someone else has a better idea?
I'm all for free market.

Hell, if my tickets are free market, then so should the entertainment product i pay for.

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08-27-2012, 10:20 PM
  #4
DL44
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Another reason this should fly:

It's the CBA version of a frontloaded contract for the Players... heh heh.

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Old
08-27-2012, 10:40 PM
  #5
Balk
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Quote:
Originally Posted by Faltorvo View Post
I'm all for free market.

Hell, if my tickets are free market, then so should the entertainment product i pay for.
I hope that means that you want to eliminate the cap as well. Free market all the way.

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Old
08-28-2012, 01:19 AM
  #6
DL44
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Quote:
Originally Posted by DL44 View Post
With (conservative/optimistic?) average annual increase of 5%.. the NHL revenue and players salaries over 10 yrs:

Right now: $3.3 bil, 57% - 62.2 mid point, $70.2 mil cap

Yr 1: $3.30, 56% - 61.6 mp, $69.6 cap
Yr 2: $3.47, 55% - 63.6 mp, $71.6 cap
Yr 3: $3.64, 54% - 65.5 mp, $73.5 cap
Yr 4: $3.82, 53% - 67.5 mp, $75.5 cap
Yr 5: $4.01, 52% - 69.5 mp, $77.5 cap
Yr 6: $4.21, 51% - 71.6 mp, $79.6 cap
Yr 7: $4.42, 50% - 73.7 mp, $81.7 cap
Yr 8: $4.64, 49% - 75.8 mp, $83.8 cap
Yr 9: $4.88, 48% - 78.1 mp, $86.1 cap
Yr 10: $5.12, 47% - 80.2 mp, $88.2 cap

Over 10 yrs
Overall revenues grow: 55.2%
Players salaries Increase: 30.2%
Owners Revenue Increases: 86.8%
A step further:

Owner Revenues in above proposed model:
Yr 1: 1.45 bil
Yr 2: 1.56 bil
Yr 3: 1.67 bil

Yr 10: 2.71 bil

Savings per yr from the original 57% players share:
Yr 1: $30 mil
Yr 2: $70 mil
Yr 3: $110 mil

Yr 10: $510 mil

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Old
08-28-2012, 01:47 AM
  #7
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I don't think the CBA's going to be for that long.

Aren't sports CBAs generally much shorter?

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Old
08-28-2012, 02:07 AM
  #8
DL44
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Quote:
Originally Posted by Hockey Team View Post
I don't think the CBA's going to be for that long.

Aren't sports CBAs generally much shorter?
True..
I was thinking if they really wanted to play it out, this could be a potential structure of a long term deal where the players would be ok with getting down to an average of 51.1% over the course of the deal.

It strings it out, and keeps their salaries stable... whereas any model on a shorter term where the owners are fighting for a 46% starting point will result in extremely strong rollbacks.

But yeah.. your point stands.. CBA's aren't usually this long. Hell the players came out with a 4 yr proposal... so this whole thing is completely hypothetical.

Brilliantly awesome... but obviously extremely unlikely.

Further into the numbers of the proposal...

Total revenue over the 10 yr projection: $41.5 Billion
Players share: 21.2 Billion, 51.1%
Owners share: 20.2 Billion, 48.9%

Keep in mind those are numbers BEFORE NYI get a new arena, and without resolution of the Pheonix situation... Both of which will explode revenues.

Get'er Done!


Last edited by DL44: 08-28-2012 at 02:15 AM.
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Old
08-28-2012, 02:14 AM
  #9
madhi19
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The next CBA is definitively not going to be that long. The owners made some serious mistake with the current CBA and they had to live with it and in some case die with it for 7 years. I expect that length will become one of the major issue in the negotiation with likely both side settling at around 5 years max.

Throwing more money into revenue sharing should not happen until the BoG come up with a list of what market are realistically salvageable and off course a list of market that they need to get the hell out ASAP. I would love to be a fly on the wall when (not if) the BoG have that meeting. Otherwise if the NHL don't make that list and don't act on it they end up burning money into revenue sharing for no reason but to buy time. Kicking the can is fine if you expect a big payday soon but the NHL already had that payday with the US TV contract and that was not a big enough payday anyway.

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Old
08-28-2012, 12:12 PM
  #10
SJeasy
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Quote:
Originally Posted by madhi19 View Post
The next CBA is definitively not going to be that long. The owners made some serious mistake with the current CBA and they had to live with it and in some case die with it for 7 years. I expect that length will become one of the major issue in the negotiation with likely both side settling at around 5 years max.

Throwing more money into revenue sharing should not happen until the BoG come up with a list of what market are realistically salvageable and off course a list of market that they need to get the hell out ASAP. I would love to be a fly on the wall when (not if) the BoG have that meeting. Otherwise if the NHL don't make that list and don't act on it they end up burning money into revenue sharing for no reason but to buy time. Kicking the can is fine if you expect a big payday soon but the NHL already had that payday with the US TV contract and that was not a big enough payday anyway.
There is a solution to pegging it long. Incorporate profit level into the CBA and link it to salary percentage. There is no magic number like 50/50 that is inherently fair. If a company makes widgets and can't compete in the market if labor costs are over 20% because raw materials themselves are 50%, then that company sure isn't going to pay its labor at 50/50.

Some others posted that 5-7% was a reasonable return on investment in this era. The answer is to give that to the owners and the player percentage is what is left. Audit the owners' expenses for various line items and set the averages. Essentially an audit each year for non-player payroll costs. Take the averages and subtract from total revenue with the two items remaining to be player payroll and owner profit with owner profit taking primacy. Let the owners distribute the profit among themselves as they see fit. Have a stipulation that contraction of a team due to lack of profit will entail a penalty. Allow the owners to spend as they wish on non-player payroll but if they increase spending above average for things such as GM ($3mil instead of the average of $1.5mil) then the league and team won't get an allowance for that overage of $1.5mil in non-payroll costs. If a new or relocated arena comes into the picture it must lower the arena costs or optimally raise the revenues by itself. If the cost is higher than the expected revenue, the owners don't get a break for the associated debt service, etc. and the players don't have veto power over the arena but do have veto power as to the additional shared expense being allowed in calculations. They would have to have a CBA that dealt with the owner line items as well as player issues (essentially a mini-tax code for owners).


Last edited by SJeasy: 08-28-2012 at 12:29 PM.
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Old
09-01-2012, 11:53 AM
  #11
LadyStanley
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How to get sides back to negotiating table?

The one thing the NHL seems to be doing is demanding certain changes, not offering a concession in exchange.

So here are two ideas.

First -- allow RFAs (last two years before UFA status) limited NTCs.

Players could either select a max of 5 teams they won't go to OR a minimum of 10 teams they would accept a trade to.


Second -- allow limited renegotiation of contracts based on (offensive) performance.

So, let's say a guy jumps from below 50% to above 75% in league standings (in one or more categories of goals, assists, points). Renegotiation would only be allowed to add bonuses to contract.

And if a guy slips performance (including because of long term injury), base salary could be reduced by up to 25% and replaced with performance bonuses.

Teams could only renegotiate max of one new contract/season and only do this with a player once in his tenure with team.




What things do you think the NHL should offer in exchange for players to agree to get back to negotiating table, if anything?

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Old
09-01-2012, 02:37 PM
  #12
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The PA needs a week or so to reflect...they will get back to the table, but not in the next few days...

Owners own, players play...

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Old
09-01-2012, 03:32 PM
  #13
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Came up with these last night while trying to fall asleep.

Have a 6-8 year deal.

The NHL wants the cap artificially at 58 and then 62 I believe to control costs. Iíd say start at 60 or 62 for the initial cap. In order to get this have a salary rollback of something like 15% the first year and then 5% the second year. Percentages could be changed to fit actual dollar values. Hereís the key though. During these two years, no escrow. That would be the thing that gets the players to buy into the rollback. Again, actual percentages and numbers could be reworked but the key is the no escrow during these two years of the rollback.

After this I would suggest a 48% owners Ė 52% players share with escrow. With regards to HRR, I have no idea. All I know is that if the players want anything to do with revenues on non hockey nights then the owners should start asking for endorsements to be calculated in the players percentage share. After all, both wouldnít exist without hockey but both arenít 100% related to hockey.

Maybe instead of having the cap specifically linked to HRR have the increases fixed based on a range of revenue increases. For example:
0 Ė 2% increase = 1 million
2 - 5% increase = 3 million
5%+ increase = 5 million

Also, based on the increases suggested above, the cap couldnít go below 50%. So if the increase leads to less then 50% then it would be bumped up to 50%. Similarly it canít go above 52%. Iím not sure if these two ideas are contradictory or not but itís an idea.

Player contract limit of 8 years where the contract canít be more or less than 50% of the first year and no more than 50% can be in signing bonuses.
UFA should stay the same. RFA compensation on offer sheets as well though there might be wiggle room. Olympics, let them go in exchange for no part of the relocation process.

Trading of cap space will be allowed using the following formula:
0 Ė 2 million Ė 50c/dollar
2-4 Ė dollar for dollar
4-7 = 2 dollars for every dollar.

This is calculated on a team by team basis to not allow for multiple trades fewer than two million to avoid the higher dollar values. There would also be a cap of 7 million on cap space a team could trade for over the course of a year. It would also have to be determined whether or not you can trade cap space for more than one year. It would also also have to be determined whether or not itís calculated for the whole yearly cap value or the amount left on the contract for that year. Iím specifically referring to trade deadline acquisitions.

Somewhat new buyout system where there are two option. You can buy out 3/4 of the salary at 1/4 of the cap hit or 1/2 of the salary for 2/3 of the cap hit. Or something like that. Actual numbers could be reworked but this would allow for the richer teams to pay out more and not get hammered on the cap and the players would get more on buyouts.

Anyways these are just ideas. Not sure if theyíd actually work or if they make sense but they made sense to me last night.

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Old
09-01-2012, 03:44 PM
  #14
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How about:

1. Reduce RFA compensation to allow more player movement:
  • Below $1.5M, no compensation
  • $1.5M to $2.3M 3rd round pick
  • $2.3M to $3.2M 2nd round pick
  • $3.2M to $4.5M 1st round pick
  • $4.5M to $6.5M 1st and 2nd round picks
  • $6.5M to $8.0M 1st, 2nd and 3rd round picks
  • Over $8.0M, Three 1st round picks
All RFA Offer Sheets include a one time, non-refundable donation of $1.0M to the next season's revenue sharing pool (does not count against cap space).


2. Luxury tax of 100% on the amount of player salary and signing bonuses which exceed the player's cap number. Proceeds go to revenue sharing pool. This would not eliminate front loaded contracts, but it would make them more costly.

3. Contracts for players over the age of 33 are limited to 4 years. Existing contracts are grandfathered.

4. Eliminate the existing RFA arbitration system (the owners hate it as it has been very player friendly).

5. Allow arbitration for the purpose of renegotiating contracts. Multi-year contracts can have performance clauses that trigger salary arbitration based on performance targets. Players who have been on IR or LTIR are not eligible.

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Old
09-01-2012, 04:03 PM
  #15
Some Other Flame
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NHL gets to redefine HRR to some extent (to be negotiated upon). In exchange, the NHL agrees to greater revenue sharing amongst teams.

The players share of the revenue falls from 57% to 52% (~49 -50% based on previous definition of HRR). In exchange, no salary rollbacks but instead, decreases to salary cap are phased in and short amnesty buyout window is instituted.

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Old
09-01-2012, 04:06 PM
  #16
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I think the league understands it doesn't really have to give up anything, as players are paid so well its really not in their interest to sit out a season.

Putting aside issues of "right" or "wrong" - which are unanswerable in any case - it seems to me the NHL is following a pretty logical path. When you have a hammer, use it.

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Old
09-01-2012, 04:43 PM
  #17
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Contracts are out of control not because of ELC or UFA contracts as much as RFA contracts.

Players get through their ELC say for 1M and then are signing 4-7M deals on 5-10 year terms...the drastic jump in pay is hurting owners.

There is a cap system on what an ELC can attain with bonuses etc...that covers the first 3 years. Why not have a system which caps the next 2 years of a players contract as well?

Years 1-3 cap salaries and bonuses at approx 3M...base salary of 1M max

Years 4-5 cap salaries and bonuses at approx 4.5M....base salary of 2.5M max

Years 6 and beyond a player can make max value of 20% of salary cap


It is important to remember that many players burn years of their ELC off in the minors or junior hockey. This system would control the big jump in contract amounts after the ELC and base contracts off years of service as well as performance. This system also allows a team to get a better read on their players value by forcing them to remain consistent on 5 years vs 3 years.

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Old
09-01-2012, 05:01 PM
  #18
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It's going to take a few months to break the resolve of the players. That's how it always seems to be.

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Old
09-01-2012, 05:43 PM
  #19
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Quote:
Originally Posted by Freudian View Post
It's going to take a few months to break the resolve of the players. That's how it always seems to be.
Sounds about right because right now they don't seem to have any interest in even starting to negotiate. I'm not sure playing hardball is the right approach for them because in the end it's the owners who is in control. Can you imagine if another season is lost....Some guys will have lost 2 years of their career for this crap.

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Old
09-01-2012, 08:56 PM
  #20
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The players are having fun with their summer and boating and parties, once the weather gets cold and other hockey leagues are playing they will get that itch.

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Old
09-02-2012, 02:35 AM
  #21
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From a business perspective, and knowledge of the ordeal in 04-05, I would say that the best move is for the league to contact their partners (OLN etc) and announce that they will be cancelling all games until december 1st. Its cheaper to shut all operations down than to do updates every week. A secondary effect is it proves that you are serious AND SMART. You arent going to waste money when nothing is getting done.
Second I would likely debate removing anything that could be determined HRR from the market.
Take a guy like Shea. He supposed ly got a big signing bonus... but if percentage of player cost dollars are higher than agreed in regards to revenues than he has to pay it back. No revenues, no money.
The above point is moot. The league is best served by going into hibernation. They also have a pretty good case for a court hearing on the basis of bad faith negotiating.

Personally i think the current CBA is fine IF:
drop rev sharing to 52% for the players.
Contracts are contracts. you sign for 8 years? you play and take up a roster spot for 8 years. The only way out is if you are dead or 20 doctors say you are a vegetable. Team has to live with it. You have to live with it. 2 years or 15 years, you do as you said you would. In other words players have to actually keep their word. Anything outside an ELC and over 2 years is a automatic 1 way deal. you can not demote. you can waive but the player is not removed from your cap hit, and if not claimed... he does not go to the ahl but stays on your team and takes a roster spot.

Now try signing those 10+ year contracts.
Think you will walk away from a contract? we will treat you like every other profession and sue you for every penny and your childrens souls as interest on investment. Im pretty sure fraud in most cases would be a relevant investigation and criminal charge. Jail would be a good lesson.

This is contracted employment.

-------------

Or you can take the example of civil engineers.
salarys are based on an industry salary matrix and are for the most part set -based on alot of factors.

----------------
or the league controls everything. I would assume a lawsuit based on bad faith negotiation might have this specific end and players in NA would be forever completely controlled. take it or leave it. This is not a good system for ANYONE. Bettman has brought it up in 04 but made it clear that he doesnt want to touch this at all. It would be 100% control but thats the problem... it lowers the authenticity of the product. If the league controls everything you might as well just script the results. There are so many reasons NOT to want this system but in business it would be easy to make a case as to why this method would be the best model. The NHL would be the employer, which already happens since the wages are based on LEAGUE revenues and not Teams... and the union agreed to that relationship.

making a case for bad faith is difficult but the PA has actually made it easier than any other negotiations i have witnessed. Saying they want the NHL to continue playing under an expired CBA (this is the golden statement in my mind). Turning down numerous invites to start negotiations. Not having any proposal in mind. Also i feel the firing of Kelly , and removal of his good faith communication with the league... and pro-active, big picture, co-operative relationship in the partnership with the league on behalf the players. And of course going completely off course with counters, never having a propoosal at all, and not even doing due diligence up to the bargaining session in preparation for collective bargaining

----------------------

in closing contact sponsors and partners and let them know that the league will be shutting down and exploring legal options until the Association wants to negotiate in good-faith. Season cancelled until december 1st. If no deal is reached by then there is no point having a season and the year will be cancelled. After the season is cancelled the league will want all player salaries back because as per the CBA the contracts were signed under... there will be little to no revenues and all salaries and bonuses will be re-evaluated.
lawsuit to go around association based on bad faith. make own cba. players that want employment can play and sign... or go unemployed.


NHL controls the best venues. The players are gonna get full on hammered. their life is so tough.


Last edited by oilinblood: 09-02-2012 at 02:49 AM.
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09-02-2012, 04:00 AM
  #22
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This league has held a monopoly for too long. They are abusing it!

Bettman has one trick that he rolls out every few years, knowing the Player's Union is a joke. Why not insist the owners are starving? Why not claw back wages? Who is going to stop it? Is the guy losing out a year of his very brief working life going to tough it out on a strikeline? Hahahaha!

What's the average career of the average player? Five years? In the NFL it's three. Is a guy going to give up twenty percent of his lifetime earnings to save the Owners?

It's ****. Time to start a new league. Seriously!


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09-02-2012, 05:15 AM
  #23
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If the NHL were to:

agree to a sliding cap from 54% (under current rules) HRR in 2012/13 to 50% (under revised NHL rules) over the next 4 years (ensuring that current contracts are reasonably assured to get fully paid), then 50% from then on out (for how ever many years the deal is for)

And the players were to agree to:

The pay cut mentioned above, and term limits

Then other issues could be worked out IMO.

Prob is: don't think the NHL wants to pay that much...

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Old
09-02-2012, 07:24 AM
  #24
madhi19
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Quote:
Originally Posted by echlfreak View Post
Contracts are out of control not because of ELC or UFA contracts as much as RFA contracts.

Players get through their ELC say for 1M and then are signing 4-7M deals on 5-10 year terms...the drastic jump in pay is hurting owners.

There is a cap system on what an ELC can attain with bonuses etc...that covers the first 3 years. Why not have a system which caps the next 2 years of a players contract as well?

Years 1-3 cap salaries and bonuses at approx 3M...base salary of 1M max

Years 4-5 cap salaries and bonuses at approx 4.5M....base salary of 2.5M max

Years 6 and beyond a player can make max value of 20% of salary cap


It is important to remember that many players burn years of their ELC off in the minors or junior hockey. This system would control the big jump in contract amounts after the ELC and base contracts off years of service as well as performance. This system also allows a team to get a better read on their players value by forcing them to remain consistent on 5 years vs 3 years.
Owners don't get hurt by giving big long term contract to RFA they get hurt by giving those long term contract to the WRONG RFA! It gambling, they make a bet that the player would get even better peak numbers by 27 and the team will lose him to the UFA market or pay even more to keep him. So they buy UFA years off contract by paying an RFA more than what they are worth now in order to pay less than what they will maybe be worth two years later! If it the right player the team make a bargain but like every gamble you take a risk and must assume it. If anything it the RFA who sign for long term who are getting screwed out of hitting UFA status at the right time to cash in. But everything is a trade off and some players will take security in exchange for a bit less money. It is after all a dangerous game.

You want to stop all that you put mandatory UFA status at 27. Meaning that players cannot sign contract during their RFA status that will last beyond 27. Anyway if you cap RFA contract all you get is that players will take the max RFA and all hit the UFA market anyway. Nobody is going to sign for capped years now with more for UFA years later. They just take their two years and hit the UFA market anyway since players and agent will be piss that they had to get capped for two more years your chance of signing them again will be slim to none.

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09-02-2012, 10:11 AM
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