The Business of HockeyDiscuss the financial and business aspects of the NHL. Franchise sales, valuations, TV contracts, ratings, expansion, relocation, the CBA and work stoppage discussion goes here.
Arthur: Gap between NHL and NHLPA is "crack is the sidewalk".
Yep. And it's not as if the '2 million' players get cut to 'minimum wage'. The '2 million' guys get signed to other teams who don't have 3 Sidneys on their team. The majority of teams.
You're wrong.
Those teams already have middle-class players.
These teams don't magically come up with more room just because Pittsburgh signs Crosby.
So basically, the players like back-diving deals. Crosby gets paid, but the cap hit is reduced so that guys like Mayers can also get paid. My question is this...doesn't uncapped escrow ensure that guys like Mayers and Crosby feed from the same finite bowl regardless as to what their cap hits are?
The way I think it works is this. Salary cap & escrow are both calculated on the cap amounts, not actual dollars. So in 2013/14 Sidney Crosby's cap hit is $8.7 million but the money actually paid to him is $12 million. His escrow payments, however, are based off the cap hit, so at say 5%, he pays $435,000 (or 3.625% of his actual money paid to him). He might or might not get all/part of that money back. Meanwhile, Jamal Mayers signs a 1 year deal at $600,000. He pays his 5% escrow on that full amount ($30,000) and may or may not get it all back.
Both Crosby & Mayers feed from the same finite bowl, but Crosby potentially benefits more from it than Mayers would - to the tune of a 1.4% "escrow shelter". I shudder to do the math on Parise/Suter contracts.
It's the resulting "accounting gymnastics" from this scenario (and others) why the NHL is seeking to put a cap on contract terms & limit term variance, but what they should be looking at is a TRULY linked system, where the amount of actual dollars paid in a season to players wouldn't exceed the negotiated linked % amount, not a falsely reduced cap hit amount - which is nothing more than voodoo accounting.
The way I think it works is this. Salary cap & escrow are both calculated on the cap amounts, not actual dollars. So in 2013/14 Sidney Crosby's cap hit is $8.7 million but the money actually paid to him is $12 million. His escrow payments, however, are based off the cap hit, so at say 5%, he pays $435,000 (or 3.625% of his actual money paid to him). He might or might not get all/part of that money back. Meanwhile, Jamal Mayers signs a 1 year deal at $600,000. He pays his 5% escrow on that full amount ($30,000) and may or may not get it all back.
Both Crosby & Mayers feed from the same finite bowl, but Crosby potentially benefits more from it than Mayers would - to the tune of a 1.4% "escrow shelter". I shudder to do the math on Parise/Suter contracts.
It's the resulting "accounting gymnastics" from this scenario (and others) why the NHL is seeking to put a cap on contract terms & limit term variance, but what they should be looking at is a TRULY linked system, where the amount of actual dollars paid in a season to players wouldn't exceed the negotiated linked % amount, not a falsely reduced cap hit amount - which is nothing more than voodoo accounting.
The league needs to pick between a hard cap(every dollar accounted for...Redden, back dive deals, etc) or no cap. The soft cap that has been in place since 2005 just creates a bunch of problems, and the cap might as well just not exist anyway.
The NHL needs to account for every dollar, or get rid of teams and jobs. Or put 30 teams in Toronto, whatever.
An explanation from Jamal Mayers on why the NHLPA is opposed to 5 year term limits and instead proposed 8 year limits.
So basically, the players like back-diving deals. Crosby gets paid, but the cap hit is reduced so that guys like Mayers can also get paid. My question is this...doesn't uncapped escrow ensure that guys like Mayers and Crosby feed from the same finite bowl regardless as to what their cap hits are?
Nevertheless, he feels there is a deal to be made soon.
The way I think it works is this. Salary cap & escrow are both calculated on the cap amounts, not actual dollars.
Both Crosby & Mayers feed from the same finite bowl, but Crosby potentially benefits more from it than Mayers would - to the tune of a 1.4% "escrow shelter". I shudder to do the math on Parise/Suter contracts.
If that's the case (and I honestly do not think so), and Weber is paying 5% on his cap hit (7.8m) that's 392k out of his 1m salary. Is there even enough on that pay cheque to cover his taxes (has to be close to 40-50%), union fee's, and whatever other deductions come off of a players cheque, as well as an escrow hit based on his cap hit?
__________________ "It’s not as if Donald Fehr was lying to us, several players said. Rather, it’s as if he has been economical with information, these players believe, not sharing facts these players consider to be vital."
Jeopardizing Fan Loyalty and Corporate Sponsorship money are good arguments to start ASAP
Those are not events but are ongoing conditions. Another week or three isn't likely to make much of difference to either side versus what is still at stake, ie, the remaining negotiable terms of the next CBA.
I dont suppose he'd like the idea of lowering the maximum cap hit a player can have.
He wouldn't, of course. And why should he if other solutions can be found? The CBA should be an agreement that maximizes $$ and potential for everybody -- Big Market owners, Small Market owners, Top Level talent, Supporting talent.
The PA's mid-tier cap exemption idea is one way. The cap overage comes out of escrow (the 50/50 split is maintained), with revenue growth taking up the slack. (The PA, again, bets on growth...).
Longer term with modest back diving is another way to direct money to the rest of the roster (a Lite version of the most recent system). Assuming continued growth (noticing a trend from the PA side?), year one's max individual player salary slides down to middling range at the end of an eight year contract. That's more money to spread among the middle class. More frequent top talent contract renewals (5 year term), means more frequent top talent max salary resets, sucking up more of the available dollars.
Do you really not understand? Or are you pretending?
If I'm a superstar I'll take 5 Years $50M. Now, maybe if I have the chance for an 8 year deal, I'll take 8 Years at $8.5M a year. That $1.5M goes to someone else.
Do that 3 or 4 times on a team. That's 3 or players who go from being $2M to minimum wage players.
Get the picture yet?
The other side is this. If Crosby is only worth 5 Years $60, doesn't that make it harder for a medium to good player to get any kind of security in his contract?
Everyone else is going to slot in lower.
Less money. Less security for the middle class.
That is completely devoid of logic. Best players will be paid what the market will bear. Saying that someone will take 1.5 less per on a longer deal is really reaching and assuming a whole lot.
What a proper cap with no backdiving does is assure that not only the top tier players are not overpaid, but the mid guys aren't either. no way a guy like Ron Hainsey should have EVER, under any circumstance be given 5MM a year. A proper cap will ensure that doesn't happen.
Nobody can offer them that under the owners' offer
Pardon? I'm getting the feeling you are arguing for arguments sake here. You use the 8 year example when it suits you but then when someone applies it to real life logic you reject it.
Do you really not understand? Or are you pretending?
If I'm a superstar I'll take 5 Years $50M. Now, maybe if I have the chance for an 8 year deal, I'll take 8 Years at $8.5M a year. That $1.5M goes to someone else.
Do that 3 or 4 times on a team. That's 3 or players who go from being $2M to minimum wage players.
Get the picture yet?
The other side is this. If Crosby is only worth 5 Years $60, doesn't that make it harder for a medium to good player to get any kind of security in his contract?
Everyone else is going to slot in lower.
Less money. Less security for the middle class.
Just about everything operative you said in this post is an assumption that doesn't really have a basis (?) and contradicts what basic free market economics suggests would happen: that everyone in the league would suffer a pro rata portion of the loss. Just because you say GMs would suddenly overpay superstars until there's no money left to pay anyone else doesn't mean they all have to go along and shoot themselves in the foot. It didn't happen when the cap was $39M, it won't happen now.
The way I think it works is this. Salary cap & escrow are both calculated on the cap amounts, not actual dollars. So in 2013/14 Sidney Crosby's cap hit is $8.7 million but the money actually paid to him is $12 million. His escrow payments, however, are based off the cap hit, so at say 5%, he pays $435,000 (or 3.625% of his actual money paid to him). He might or might not get all/part of that money back. Meanwhile, Jamal Mayers signs a 1 year deal at $600,000. He pays his 5% escrow on that full amount ($30,000) and may or may not get it all back.
No. Cap compliance is based on cap hits (Average Club Salary), but the 54-57% Players Share and escrow is based on actual salary and bonuses paid (Actual Club Salary).
Back diving contracts help teams and players by freeing up some cap room on the front end - but it is a zero sum game. Crosby counts $12M against the Players Share and pays escrow on the full $12M. Any add'l spending the Pens do due to the extra cap room all comes out of the pockets of the other players through escrow.
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