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.
Interesting article discussing some of the things that's important but hasn't been discussed much.
* NHLPA has dropped their demand that player salary in absolute terms can never be lower than the year before
* NHLPA suggested "the cap and floor be plus and minus 20 percent of the midpoint. That would widen the payroll range, allowing rich teams to spend more and poor teams to spend less.". NHL likes the idea of percentage but wants a smaller range to maintain parity.
* NHLPA wants mid-level cap exemption, unclear how. NHL don't want this since it acts as an inflationary mechanic.
The NBA's system is riddled with exceptions and loopholes and has led to tons of awful contracts and teams constantly moving overpaid players in pursuit of cap relief. Would prefer to stay as far away from their system as possible.
I think Fehr's endgame, since he knows he has very little leverage, is to try to get as many ways for players/agents/GM to bend the system in the future.
He's trying to get to keep a little bit of the back diving mechanic, get a cap on escrow, let teams buy out contracts without a cap hit and now mid-level cap exemptions. A high cap ceiling should act as an inflationary mechanic since richer teams will be able to dictate salary levels.
He's showing his hand and I'm not sure he'll get too many wins.
The midpoint +/- 20% is great little change that will minimize the squeeze on the middle class.. enables better for spenders to spend and give floor teams a little more give.
Old CBA:
62.2 mil mp = 70.2 cap, 54.2 floor
New CBA:
62.2 mil mp = 74.6 cap, 49.8 floor
I think Fehr's endgame, since he knows he has very little leverage, is to try to get as many ways for players/agents/GM to bend the system in the future.
He's trying to get to keep a little bit of the back diving mechanic, get a cap on escrow, let teams buy out contracts without a cap hit and now mid-level cap exemptions. A high cap ceiling should act as an inflationary mechanic since richer teams will be able to dictate salary levels.
He's showing his hand and I'm not sure he'll get too many wins.
It's also a carrot for the big market teams, to try to drive a wedge between teams in the NHL. NHL does their wedge driving by trying to appeal to the lower levels of players, who also have shorter careers. There are more of these types of players than any other if you take a snapshot at any given time. In three years, the makeup of this group will be vastly different. If you consider the guys who will have tenure, or currently have it, they probably have a greater vested interest and more say, perhaps.
What's meant by mid-level cap exemption? Never heard of it before
In the NBA, the Mid-Level Cap Exemption allows a team to sign a player(s) to a 4 yr contract with a 1st year salary of up to $5M ($3.09M if the team is above a Luxury Tax threshold) and 4.5%/yr raises - even if the team does not have cap room.
It is one of a myriad of exemptions to the NBA's soft cap.
The midpoint +/- 20% is great little change that will minimize the squeeze on the middle class.. enables better for spenders to spend and give floor teams a little more give.
Old CBA:
62.2 mil mp = 70.2 cap, 54.2 floor
New CBA:
62.2 mil mp = 74.6 cap, 49.8 floor
I'm not sure about how great of a change that is. Project that out a few years. At 5% growth (and ignoring the damage done by the lockout/missed games) it would look something like this:
How does having 25-40m difference between the highest spenders and the lowest spenders help parity in the league? What would that do to the on-ice product of the cap floor teams? And how would that impact the revenue of those teams?
I don't think it's an easy question. They don't want teams in the red if they don't need to be, but neither do they want teams to suck which would mess with the perceived parity that we currently have.
__________________ "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."
Loopholes, exceptions, ways to circumvent, and all that,... that's a big part of what caused most of the problem the League had coming out of the last CBA. The League needs to use a magnifying glass and find as many potentials of such things and plug those holes in this CBA before it all leads to more problems down the road.
I hate loopholes of all kinds in any situation; they're just ways to get around the rules and they always basically corrupt the whole system.
I'm not sure about how great of a change that is. Project that out a few years. At 5% growth (and ignoring the damage done by the lockout/missed games) it would look something like this:
How does having 25-40m difference between the highest spenders and the lowest spenders help parity in the league? What would that do to the on-ice product of the cap floor teams? And how would that impact the revenue of those teams?
I don't think it's an easy question. They don't want teams in the red if they don't need to be, but neither do they want teams to suck which would mess with the perceived parity that we currently have.
A few things
- I don't think you've adjusted for 50% of HRR for the player's share (wouldn't the new MP be around 55mm? I could be wrong though) and adjusted revenue sharing will certainly help some of the weaker teams.
- Is growth going to continue indefinitely, or will it eventually hit a ceiling and stop? I have to think there's only so much "sports entertainment money" in the average household, and the NHL will still be #4 of the major sports leagues in North America. The 2019 scenario (assuming 30 teams) puts NHL revenues at $6.46 billion, which just seems abnormally high for a gate driven league.
Interesting article discussing some of the things that's important but hasn't been discussed much.
* NHLPA has dropped their demand that player salary in absolute terms can never be lower than the year before
* NHLPA suggested "the cap and floor be plus and minus 20 percent of the midpoint. That would widen the payroll range, allowing rich teams to spend more and poor teams to spend less.". NHL likes the idea of percentage but wants a smaller range to maintain parity.
* NHLPA wants mid-level cap exemption, unclear how. NHL don't want this since it acts as an inflationary mechanic.
Regarding #1 - I don't have to much of an issue with a players actual salary fluxuating as long as the % is nothing significant. Since they have never been 100% of the contracted number since the last lockout, I don't think that's much of an issue.
Regarding #2 - there's never ever going to be league wide pairity. Under any capped system in the NHL, there are going to be teams that can spend to the cap and teams that cannot and thus cannot compete for that high profile UFA. If there's going to be a stop to teams circumventing the cap by exceeding it artifically, there as to be that same mandate that teams cannot spend to the floor artifically as well and that is going to pose a real problem as teams were having issues hitting 48 million in real dollars. If the cap is scaled back to 60 million, those same teams will find it TOUGHER to reach the the $52M floor.
Regarding #3 - I can see the benefit of some form of exception but only as the league proposed it in terms of contract Length. However, my twist to this would be to tie it to players either drafted by the team or do something similar to what MLB does to 5 and 10 players. A player should be in the league 8 years, the last 5 with the same team. Allow that team to sign that player and have a % assessed (75%)against the cap. This would help both Large and Small market teams.
- I don't think you've adjusted for 50% of HRR for the player's share (wouldn't the new MP be around 55mm? I could be wrong though) and adjusted revenue sharing will certainly help some of the weaker teams.
- Is growth going to continue indefinitely, or will it eventually hit a ceiling and stop? I have to think there's only so much "sports entertainment money" in the average household, and the NHL will still be #4 of the major sports leagues in North America. The 2019 scenario (assuming 30 teams) puts NHL revenues at $6.46 billion, which just seems abnormally high for a gate driven league.
I was being lazy, and didn't bother to remove the make whole payments (and was pulling it from the PA's table), so those first 3 years have an extra ~380m in there. So yeah they're off slightly in that regard. But the point I was getting at was the split, and how there's that separation there.
As for revenues growing indefinitely... I honestly was surprised that they grew like they have over the last 7 years. Do I think they can keep it up... I don't know. You would think that at some point it'll have to taper off, however I don't ever think it'll be flat.
Loopholes, exceptions, ways to circumvent, and all that,... that's a big part of what caused most of the problem the League had coming out of the last CBA. The League needs to use a magnifying glass and find as many potentials of such things and plug those holes in this CBA before it all leads to more problems down the road.
I hate loopholes of all kinds in any situation; they're just ways to get around the rules and they always basically corrupt the whole system.
exactly... loopholes are for cheaters, even when my own team is using them i still feel a little dirty because of it... close all the loopholes and have everybody on an even playing field (and i say this as a fan of the oilers, who make money and have an exceptionally rich owner who is willing to spend to win)... it's just not fair, and i like my sports to be as fair as possible, otherwise, what honor is there in winning within a corrupt system?
I'm not sure about how great of a change that is. Project that out a few years. At 5% growth (and ignoring the damage done by the lockout/missed games) it would look something like this:
How does having 25-40m difference between the highest spenders and the lowest spenders help parity in the league? What would that do to the on-ice product of the cap floor teams? And how would that impact the revenue of those teams?
I don't think it's an easy question. They don't want teams in the red if they don't need to be, but neither do they want teams to suck which would mess with the perceived parity that we currently have.
At the end of the day, you have to just look at the % difference... and that stays constant which should keep the general quality differences between the teams constant despite the growing $ amount difference.
by percentage.. in yr 1 post lockout, a 31 mil mp had a range of 39mil to 23 mil. That was a huge difference based on %.
But nothing compared to 50-60 mil differences we were seeing pre-cap.
At the end of the day, you have to just look at the % difference... and that stays constant which should keep the general quality differences between the teams constant despite the growing $ amount difference.
by percentage.. in yr 1 post lockout, a 31 mil mp had a range of 39mil to 23 mil. That was a huge difference based on %.
But nothing compared to 50-60 mil differences we were seeing pre-cap.
It was immaterial since that difference was being spent on 35 yr old geezers cashing in on their primes of ten years earlier.
It's also a carrot for the big market teams, to try to drive a wedge between teams in the NHL. NHL does their wedge driving by trying to appeal to the lower levels of players, who also have shorter careers. There are more of these types of players than any other if you take a snapshot at any given time. In three years, the makeup of this group will be vastly different. If you consider the guys who will have tenure, or currently have it, they probably have a greater vested interest and more say, perhaps.
I think the NHL is having a hard time finding a wedge issue because different aspects of the CBC impact players differently.
Contracting rights is very important to guys who are about to become RFA or UFA - they don't want 1 or 2 years or other conditions added to FA eligibility.
The next generation of stars are hurt by extension of FA eligibility - owners really want to put the clamps on the 2nd contract windfall that so many players have cashed in on. This would be at the expense of your up and coming star players.
Older players, particularly the upper echelon ones, won't want to see limitations on contract terms. Even though there are relatively few really long contracts, longer contract mean security.
Lowering the players share of HRR (basically the cap) probably hurts the veteran 4th line and depth defense players the most. Teams are going to spend what they need to on their star players and divide what's left among the depth players. Veteran role players take the hit here, because they are not waiver eligible (assuming this doesn't change) so can be replaced by a young guy from the farm who can be sent down without cap implications.
The make whole component is most important to the guys with the biggest contract. Those who signed big contracts this summer have got to be pissed at the owners offering these contracts knowing they would claw it back through the CBA negotiations.
It is designed if you are over the cap, for example Ray Allen signed in Miami this year with the Exemption because the Heat were over the cap.
If you are under the cap, you just use cap space. This is why I am confused with how it would work in the NHL.
Heat had the mini mid level exception as opposed to the full mid level exception. It's how a team over the cap fills out it's roster.
Boston offered a much higher contract since they were under the cap thanks to several expiring contracts. Of course Boston burned that bridge with Ray Allen when they tried trading him 50 times over the past two years.
Ohhh, i got it slightly wrong. Teams can use the mid level exception if they are over the cap, but not in luxury tax territory.
I think the NHL is having a hard time finding a wedge issue because different aspects of the CBC impact players differently.
Contracting rights is very important to guys who are about to become RFA or UFA - they don't want 1 or 2 years or other conditions added to FA eligibility.
The next generation of stars are hurt by extension of FA eligibility - owners really want to put the clamps on the 2nd contract windfall that so many players have cashed in on. This would be at the expense of your up and coming star players.
Older players, particularly the upper echelon ones, won't want to see limitations on contract terms. Even though there are relatively few really long contracts, longer contract mean security.
Lowering the players share of HRR (basically the cap) probably hurts the veteran 4th line and depth defense players the most. Teams are going to spend what they need to on their star players and divide what's left among the depth players. Veteran role players take the hit here, because they are not waiver eligible (assuming this doesn't change) so can be replaced by a young guy from the farm who can be sent down without cap implications.
That's been off the table for a while now. The only contract issues is contract length and variance.
The lower share will squish everyone - especially those that need new deals in the next 2 years. After that it'll level out a bit.
As for the contract limits, no one was getting deals longer than 5 years before the cap. Yashin had one, and that's it - currently 89 players have a deal longer than 5 years. So security clearly wasn't a big deal a decade ago... why has it suddenly popped up now?
