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Bob McKenzie: NHL doesn't need max contract length

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11-11-2012, 01:36 PM
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Ginu
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Bob McKenzie: NHL doesn't need max contract length

Bob McKenzie, in his latest article on TSN.ca, states that, with the salary cap + a 50-50 split of HRR, the league doesn't need max contract lengths of 5 years. He says the players, however, should accept a max 5 percent variance in contracts to prevent cap circumvention.

He makes an additional point that the league should have made their offer of covering the Make Whole back in October when there was still a chance of an 82 game season. Their concession of covering $149M in the first year would have made up the difference if we're talking revenues based on this full season projection.

He explains it very well here:

Quote:
Last season's revenue of $3.303 billion with a growth factor of 5 per cent means the total projected Hockey Related Revenue for a full 2012-13 season would be $3.468 billion. The players' share of that at 50-50 is about $1.734B. But the players have been insistent on not taking a dollar less the $1.883B they took home in salaries last season. That leaves a shortfall of $149 million, which is the amount the NHL is prepared to pay back to the players as part of "Make Whole."

Even though this $149 million has been defined as "outside the system" or not part of the HRR breakdown, the truth is the owners still have to pay it out of their own pockets, so it's ultimately coming out of their share one way or another. Recognizing the $149 million is deferred by one year, if you were to include it as part of the $1.883 billion the players are guaranteed, the amended players' share in Year 1 of a new CBA would be the equivalent of about 54.3 per cent (1.883/3.468).

In Year 2 of a new CBA, with another 5 per cent factored in for growth, 100 per cent of HRR would be $3.641B. Fifty per cent of that (the players' share) is $1.82B but the NHL would top that up by $62 million to ensure the $1.883B they earned last season remains intact. This time, again realizing the $62 million is deferred for another year, the amended players' share in Year 2 of a new CBA would the equivalent of about 51.7 per cent (1.883/3.641).

All the propaganda aside, and recognizing there are other important issues besides cracking the how-to-share-HRR nut, I daresay that if the players were on Oct. 16 offered the chance to play an 82-game schedule, including the Winter Classic, with a deal that effectively gives them what amounts to 54.3 per cent in the first year, 51.7 per cent in the second year and then 50-50 after that, many would either take it or think long and hard about taking it.
I wonder where we'd be if the NHL didn't decide to just play in the park until November and seriously got down to it with their first offer, or October at the very least.

http://www.tsn.ca/nhl/story/?id=409277

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11-11-2012, 01:44 PM
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we would be still where we are right now, fehr every time the nhl goes for the goal line with a concession the players wants, he moves the posts to something else.

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11-11-2012, 01:45 PM
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Bobby Mac is the best one out there to get info from, he does it so we can all understand, and breaks it down on behalf of both sides...the guy is as good as it gets from my perspective....no rumour mongering, no specualtion without being able to give reasons etc.

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11-11-2012, 01:47 PM
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Originally Posted by Barrie22 View Post
we would be still where we are right now, fehr every time the nhl goes for the goal line with a concession the players wants, he moves the posts to something else.
That's incorrect. There is more than one major problem with this league. Recognize that. The league is focusing on the wrong issues.

Player contracts beyond prevent cap circumvention are completely irrelevant vs. revenue sharing and fixing small market teams.

The league should be focusing on Make Whole and revenue sharing and cap circumvention.

The NHL wasted everyone's time. The NHLPA is playing hardball. For me, understandably. I don't want to be back here in 7 years when the NHL realizes they still haven't fixed their league.

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11-11-2012, 01:49 PM
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Quote:
Originally Posted by Ginu View Post
That's incorrect. There is more than one major problem with this league. Recognize that. The league is focusing on the wrong issues.

Player contracts beyond prevent cap circumvention are completely irrelevant vs. revenue sharing and fixing small market teams.

The league should be focusing on Make Whole and revenue sharing and cap circumvention.

The NHL wasted everyone's time. The NHLPA is playing hardball. For me, understandably. I don't want to be back here in 7 years when the NHL realizes they still haven't fixed their league.
But they may not be able to fix the league, in 1 CBA...it make take a couple...

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11-11-2012, 02:02 PM
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Quote:
Originally Posted by Ginu View Post
That's incorrect. There is more than one major problem with this league. Recognize that. The league is focusing on the wrong issues.

Player contracts beyond prevent cap circumvention are completely irrelevant vs. revenue sharing and fixing small market teams.

The league should be focusing on Make Whole and revenue sharing and cap circumvention.

The NHL wasted everyone's time. The NHLPA is playing hardball. For me, understandably. I don't want to be back here in 7 years when the NHL realizes they still haven't fixed their league.
they are focusing on the make whole and revenue sharing (it is now up to something like 200 million).

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11-11-2012, 02:07 PM
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At the end of this cba or in 5 or 6 years, HRR will be $5 billion and the players share $2.5 billion. What is it they are going to have not gotten right, forcing the league next time to lock players out to fix again? Is it possible that the revenue sharing the league is saying isnt now a problem or an issue, will suddenly become an issue, and one that no one could have reasonably been expected to forsee? Will half the teams be losing money again?

Can we set the excuses now for the next lockout? Or can we say no such viable excuse would exist or be acceptable in those circumstances? Of course, the NHL has shown they dont need excuses, just a desire to pay less with nebulous justification from a forbes site they themselves discredit.

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11-11-2012, 02:19 PM
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Both a five year max contract length or max 5% difference in year to year salary would kill cap circumventing contracts in their current shape.

The NHL putting both of them in their proposal is most likely to insure that they get what they want and I suspect they'd be willing to give up one of the options.

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11-11-2012, 02:23 PM
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Obviously cap circumvention is something that needs to get fixed.

But the contract length issue is more about the owners protecting themselves from doing stupid things. If the owners could be relied on to not do stupid things, the NHL wouldn't need a linked salary cap in the first place.

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11-11-2012, 02:24 PM
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Quote:
Originally Posted by Ernie View Post
Obviously cap circumvention is something that needs to get fixed.

But the contract length issue is more about the owners protecting themselves from doing stupid things. If the owners could be relied on to not do stupid things, the NHL wouldn't need a linked salary cap in the first place.
True, but if it is not in the CBA, and the owners stop giving out 10 yr deals, then they will get sued for colluding...

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11-11-2012, 02:25 PM
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The players want guaranteed money, independent of revenue growth. The owners want guaranteed operating margin percentage, independent of revenue growth. Round and round we go.

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11-11-2012, 02:29 PM
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Quote:
Originally Posted by Ginu View Post
Bob McKenzie, in his latest article on TSN.ca, states that, with the salary cap + a 50-50 split of HRR, the league doesn't need max contract lengths of 5 years. He says the players, however, should accept a max 5 percent variance in contracts to prevent cap circumvention.
This has the same effect as a limit on contract lengths for the most part. It would be fine with me. If a team wants to lock up their superstar for 10 years in this way I don't think it would hurt the game.

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Originally Posted by Crease View Post
The players want guaranteed money, independent of revenue growth. The owners want guaranteed operating margin percentage, independent of revenue growth. Round and round we go.
This really is the bottom line for both sides. I wonder how much longer the owners are going to wait before they say that they want guaranteed contracts eliminated if Fehr isn't willing to get it done based on linking salaries to revenue.

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11-11-2012, 02:30 PM
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They arent cap circumventing contracts, why do you guys keep calling them that? They dont circumvent the player cap, the team cap, or the league cap. At no time does the player receive more than the individual player cap. There is no circumvention there. Its a max cap contract in early years that then declines over time as would happen if he was offered a series of 1 year contracts.

If the worry is that they will retire before playing the last year of the contract, that is very easy to fix, the mechanism is already in place for buying out front loaded contracts - same principle could apply.

Of course the irony is that it wont likely be the player wanting to retire, it will be the team wanting the player to retire because he is not as good as his cap hit is costing them and they will want him to retire for the good, and cap space savings, of the team.

Currently it seems its all the systemic issues that are new choke point in negotiations. The PA saying if you have a cap and linkage, why do you need all these other concessions; they obviously wont affect the bottom line. But as BobbyMac points out, the same could be asked of the players.

But if you are trying to create a system of 30 equal teams, and are so worried about circumvention, that even a hint of a back diving deal is seen as unfair, then isnt it really important that every player be paid exactly his worth with no discounts for young players that are really good, otherwise, arent those ELC's and cheap 2nd contracts just cap circumvention by the same logic?

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11-11-2012, 02:40 PM
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Quote:
Originally Posted by Freudian View Post
Both a five year max contract length or max 5% difference in year to year salary would kill cap circumventing contracts in their current shape.

The NHL putting both of them in their proposal is most likely to insure that they get what they want and I suspect they'd be willing to give up one of the options.
Even better... cap hit == actual salary+bonuses paid (excepting injured players), and teams could do whatever else they want.

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11-11-2012, 02:59 PM
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Originally Posted by knorthern knight View Post
Even better... cap hit == actual salary+bonuses paid (excepting injured players), and teams could do whatever else they want.
That would lead to other ways to manipulate the cap.

For example a teams with young stars on ELCs would have the other players earning massive amounts during those ELC years and have their salary drop off after that so you can afford the young stars + other stars under the cap.

It would basically make the salary situation a puzzle where you try to fit in as much player power in the most optimal way.

The current system is better. They just need to get rid of the contracts that circumvent the cap by having a much lower cap hit than salary for the years the players are active and then they retire to flush the bad cap hits out of the system.

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11-11-2012, 03:03 PM
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If there were a 5% year to year variance limit then I'd agree no contract limits are needed. I'm not quite as sold on the various ideas to "fix" up the difference towards the end of the contract though. I think there would still be GM's willing to kick the can down the road that maybe the team suffers a cap penalty many years in the future to gain a cap advantage today.

The fundamental concern is cap circumvention, not the wisdom of handing out DiPietro-like contracts.

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11-11-2012, 03:07 PM
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Quote:
Originally Posted by Freudian View Post
They just need to get rid of the contracts that circumvent the cap by having a much lower cap hit than salary for the years the players are active and then they retire to flush the bad cap hits out of the system.
The contracts dont circumvent the cap, in letter or spirit.

And you implicitly acknowledge that when you say the only problem is that they nobly retire to help their team save cap space that they can no longer live up to.

But if that really is the issue, you can easily put in a mechanism that works only to remedy that exact problem. As the buy out provisions for front loaded contracts work. And if an owner management team can see that their GM is going to sign a contract that will kick the problem down the road, what are they doing to earn their money?

Why take a hammer to the entire contracting structure and lock players out to fix something that already has a mechanism for solving that exact very small and not really overall consequential problem?

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11-11-2012, 03:38 PM
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Quote:
Originally Posted by BLONG7 View Post
But they may not be able to fix the league, in 1 CBA...it make take a couple...
If we focus on the following:
-50/50 of HRR
-salary cap
-5% variance year to year on contracts
-honouring existing player contracts
-~$250M of revenue sharing to help small market teams

Three of those are in favour of the owners, the 4th is in favour of the players and the 5th benefits the league in general. The players would take that deal.

You fix these problems and it fixes the major problems with the game. And we play hockey.

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11-11-2012, 03:40 PM
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Originally Posted by Barrie22 View Post
they are focusing on the make whole and revenue sharing (it is now up to something like 200 million).
The article is arguing that the NHL should have made this step earlier. Now that we can't do a full 82 game season, the NHL may have shot itself in the foot.

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11-11-2012, 03:42 PM
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This would be much more tolerable if my NFL team (Bills) was not so damn bad

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11-11-2012, 03:54 PM
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Quote:
Originally Posted by Ernie View Post
Obviously cap circumvention is something that needs to get fixed.

But the contract length issue is more about the owners protecting themselves from doing stupid things. If the owners could be relied on to not do stupid things, the NHL wouldn't need a linked salary cap in the first place.
Seems like a simple fix to me: Just make the cap hit = dollars / years.

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11-11-2012, 03:57 PM
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Quote:
Originally Posted by Ginu View Post
If we focus on the following:
-50/50 of HRR
-salary cap
-5% variance year to year on contracts
-honouring existing player contracts
-~$250M of revenue sharing to help small market teams

Three of those are in favour of the owners, the 4th is in favour of the players and the 5th benefits the league in general. The players would take that deal.

You fix these problems and it fixes the major problems with the game. And we play hockey.
I completely agree: The owners seem intent on screwing their employees.

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11-11-2012, 04:11 PM
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Originally Posted by DyerMaker66 View Post
Seems like a simple fix to me: Just make the cap hit = dollars / years.
..that's what it is now and what allows for the circumvention...

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11-11-2012, 04:19 PM
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Originally Posted by thinkwild View Post
The contracts dont circumvent the cap, in letter or spirit.

And you implicitly acknowledge that when you say the only problem is that they nobly retire to help their team save cap space that they can no longer live up to.

But if that really is the issue, you can easily put in a mechanism that works only to remedy that exact problem. As the buy out provisions for front loaded contracts work. And if an owner management team can see that their GM is going to sign a contract that will kick the problem down the road, what are they doing to earn their money?

Why take a hammer to the entire contracting structure and lock players out to fix something that already has a mechanism for solving that exact very small and not really overall consequential problem?
Of course they circumvent the cap. It allows team to constantly stay above the cap ceiling because they get to have players with a much lower cap hit than salary and never have to suffer from the bad cap hits since the players retire.

It allows teams to field $75M worth of players with a $70M cap ceiling. You'd have to have a very strange definition of circumvention to not call it exactly what it is.

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11-11-2012, 04:47 PM
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They in no way circumvent the cap - in letter or spirit!

Only if the players retire. And that isnt the way it usually works that players are looking forward for the first possible opportunity to retire and they have to be dragged back to the ice by GM's and teams to finish their contracts.

What makes you think players are going to want to retire? That isnt the history or the norm. And if it doesnt happen, the teams will lose all those savings in early years when they had a window for their later years when they dont. Seems like smart management you would want to reward to me.

How many players do you think wont play the last years of their contracts and because they are the ones that dont want to? Im thinking that might be one player a year. And we can easily penalize their teams for that so they completely lose any benefit from that without any changes to contract lengths.

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