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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.

Players and Owners reach an agreement (MOD: circa 5am ET 1/6/13)

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01-07-2013, 12:26 PM
  #376
Luck 6
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Originally Posted by Crease View Post
If the salary retention clause follows that of which the owners proposed in the October offer, then the team trading the player away will be on hook for the same proportion of cap hit as they are for actual salary paid.

In other words, if the Rangers trade Brad Richards to Phoenix and agree to retain 30% of his salary per year, the Rangers will take a cap hit per year equal to 30% of Brad Richards AAV and reimburse Phoenix for 30% of Brad Richards remaining actual compensation.
When I first read about salary retention, I thought it went more like this...

If a team trades a player to another team, the team trading the player can agree to pay up to 3mil of the traded players salary. Therefore, there are zero cap hit ramifications.

For example, if NYR trade Brad Richards to PHX, they could agree to keep 3mil worth of salary. PHX still has to account for Richard's full cap hit of 6.67mil, but 3mil of the salary figure would be retained by NYR. In this specific case, PHX would then need to pay Richards only 6mil this season instead of 9mil with the NYR picking up the additional 3mil.

In this scenario, both high budget and low budget teams benefit in different ways. A low budget team has another tool to reach the cap floor easier without spending as much money, it's almost like a form of revenue sharing between a high and low budget team. In return, the high budget team will likely get a better return for a player. It's nice that they put a cap of 5mil on it though, because I could see rich clubs taking advantage of this otherwise.

It also encourages more movement around the league. Take Keith Ballard for example, I bet you he'd have much higher value to a team needing a defenseman (NYI maybe?) if his actual salary was only 1.2mil (with a 4.2mil cap hit).

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01-07-2013, 12:31 PM
  #377
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I have no idea what the answer to this is, but what percentage of players actually will benefit financially from the lockout?

-they lost money by not playing;
-if they just signed a lucrative contract they lost presumably the most $/game salary by not playing;
-older guys who are on their last or next to last contract will never have first half 2012-13 earning power again;
-older guys could have potentially lost a half step not just due to age but by not playing competitively further reducing their career;
-new contracts or players entering 'elite' status will presumably make less

Will players actually make this up elsewhere?
They could never win anything financially - their only aim was to minimze losses and damages.

If the NHL had gotten everything they wanted the CBA would look a great deal different but the players managed to get some small victories (ie. 50/50 instead of 57/43 as first offered or 7 /8 year deals instead of 5-not much but better than the alternative.)

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01-07-2013, 12:37 PM
  #378
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They could never win anything financially - their only aim was to minimze losses and damages.

If the NHL had gotten everything they wanted the CBA would look a great deal different but the players managed to get some small victories (ie. 50/50 instead of 57/43 as first offered or 7 /8 year deals instead of 5-not much but better than the alternative.)
The NHL moved a long way from that in their Nov offer that still allowed for an 82 game schedule.

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01-07-2013, 12:45 PM
  #379
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Konroyd was on the radio this morning and said Bettman threw a hissy fit in early November during a meeting and turned it into a war.

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01-07-2013, 01:24 PM
  #380
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so.. min spread stays at 16M, whereas max spread between cap and floor would be 28M, which would happen for a cap of more than 93M. Is that correct?

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01-07-2013, 01:39 PM
  #381
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Originally Posted by helicecopter View Post
so.. min spread stays at 16M, whereas max spread between cap and floor would be 28M, which would happen for a cap of more than 93M. Is that correct?
By that formula it would be a midpoint of $93m, making the cap ceiling $93m+$14m = $107m, and floor $79m.

That would require $5.6B of HRR to get there though, a 70% increase from last season's HRR.

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01-07-2013, 01:59 PM
  #382
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Originally Posted by Luck 6 View Post
When I first read about salary retention, I thought it went more like this...

If a team trades a player to another team, the team trading the player can agree to pay up to 3mil of the traded players salary. Therefore, there are zero cap hit ramifications.

For example, if NYR trade Brad Richards to PHX, they could agree to keep 3mil worth of salary. PHX still has to account for Richard's full cap hit of 6.67mil, but 3mil of the salary figure would be retained by NYR. In this specific case, PHX would then need to pay Richards only 6mil this season instead of 9mil with the NYR picking up the additional 3mil.

In this scenario, both high budget and low budget teams benefit in different ways. A low budget team has another tool to reach the cap floor easier without spending as much money, it's almost like a form of revenue sharing between a high and low budget team. In return, the high budget team will likely get a better return for a player. It's nice that they put a cap of 5mil on it though, because I could see rich clubs taking advantage of this otherwise.

It also encourages more movement around the league. Take Keith Ballard for example, I bet you he'd have much higher value to a team needing a defenseman (NYI maybe?) if his actual salary was only 1.2mil (with a 4.2mil cap hit).
You may be right but I haven't come across any literature like this. Source?

In the NHL's October proposal, where they first introduced this idea, the Assigning Club is permitted to retain up to 50% (or $3M) of a single player's Cap charge per year, along with the obligation to reimburse the Assigned Club for an equal % (or amount) of that player's actual salary obligation per year.

Quote:
Originally Posted by Clause
In the context of Player Trades, participating Clubs will be permitted to allocate Cap charges and related salary payment obligations between them, subject to specified parameters. Specifically, Clubs may agree to retain, for each of the remaining years of the Player's SPC, no more than the lesser of: (i) $3 million of a particular SPC's Cap charge or (ii) 50 percent of the SPC's AAV ("Retained Salary Transaction"). In any Retained Salary Transaction, salary obligations as between Clubs would be allocated on the same percentage basis as Cap charges are being allocated. So, for instance, if an assigning Club agrees to retain 30% of an SPC's Cap charge over the balance of its term, it will also retain an obligation to reimburse the acquiring Club 30% of the Player's contractual compensation in each of the remaining years of the contract. A Club may not have more than two (2) contracts as to which Cap charges have been allocated between Clubs in a Player Trade, and no more than $5 million in allocated Cap charges in the aggregate in any one season.
http://www.nhl.com/ice/news.htm?id=643570

Quote:
Originally Posted by Explanation
Finally, we propose that to facilitate more trades and create increased flexibility in managing Cap Room, Clubs be allowed to allocate portions of a contract's Cap charge (and related salary obligations) in the context of a Player Trade. This will facilitate additional Player movement and trades between teams as they manage their respective Caps and Payroll Range obligations.
http://www.nhl.com/ice/news.htm?id=643572

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01-07-2013, 02:03 PM
  #383
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Originally Posted by helicecopter View Post
so.. min spread stays at 16M, whereas max spread between cap and floor would be 28M, which would happen for a cap of more than 93M. Is that correct?
Based on Mirtle's article (http://www.theglobeandmail.com/sport...rticle6976187/) but updated with %:
YearSeasonRevenuePlayers’ share*Salary cap(+8m)Salary floor(-8m)Salary Cap (+15%)Salary floor (-15%)Diff +/-
12012-13$2,275$1,13870.244.0N/AN/A0
22013-14$3,303$1,65264.344.0N/AN/A0
32014-15$3,468$1,73462.746.762.946.5.02
42015-16$3,642$1,82165.549.566.148.9.06
52016-17$3,824$1,91268.652.669.751.51.1
62017-18$4,015$2,00771.855.873.454.21.6
72018-19$4,216$2,10875.159.177.257.02.1
82019-20$4,426$2,21378.662.681.260.02.6
92020-21$4,648$2,32482.366.385.463.23.1
102021-22$4,880$2,44086.270.289.966.53.7

It make the floor grow slower year over year but it still goes up.


Last edited by gmyx: 01-07-2013 at 02:06 PM. Reason: typo
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01-07-2013, 03:22 PM
  #384
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Another emerging detail from new CBA: The floor will be at 15% below the midpoint, not exactly $16-million below the cap. A good change.
Wow. A necessary change - but not one I expected.

The players did well in this. As did the big clubs. Will be interesting to see what happens with the small clubs, as the 50% split still looks problematic unless they up their own (fiscal) game.

 
Old
01-07-2013, 03:29 PM
  #385
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50% HRR, Floor pegged anywhere between 8M and 14M below Midpoint (instead of 8M below) and a $200M+ RS pool all benefit the smaller market teams IMO. I think this deal has a little bit for everyone. One thing I'm interested in knowing more about is how the RS qualifications are changed. That's going to have as big of an impact as anything else on the little guys.

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01-07-2013, 03:30 PM
  #386
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I think this deal has a little bit for everyone .
No argument with that.

 
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01-07-2013, 05:27 PM
  #387
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Not sure I like the cap trading thing and I could see it becoming a nuisance down the road. But I'm sure every single team wouldn't mind it. It lets lower teams trade more and get to the floor easier through those 3 contracts and lets higher spending teams get a little more value and pay for it.

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01-07-2013, 06:31 PM
  #388
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Not sure I like the cap trading thing and I could see it becoming a nuisance down the road. But I'm sure every single team wouldn't mind it. It lets lower teams trade more and get to the floor easier through those 3 contracts and lets higher spending teams get a little more value and pay for it.
I can see lots of potentially ugly cases - hopefully they put some thought into how to handle things like:

- What happens if a player is sent down? put on LTIR? Suspended? Released? Do both teams get cap relief or only his current one?

- What happens if the player is traded again? Can his salary/cap hit then be split over 3 (or more) teams? Is the 50% limit then based on the players original salary/cap hit or the teams share?

- What happens if the player is later bought out?

- Do subsequent waiver claims have any effect on the split?

- If the player has Performance Bonuses, are their cap hits split for the purpose of the Performance Bonus Cushion?

The cleanest way to handle it would be to put the original team on the hook for the salary and cap hit committed to in the trade regardless of the later disposition of the player.

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01-07-2013, 06:37 PM
  #389
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I can see lots of potentially ugly cases...
You couldn't have waited to post that until *after* they signed the damn CBA?!



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Old
01-07-2013, 06:38 PM
  #390
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Originally Posted by kdb209 View Post
I can see lots of potentially ugly cases - hopefully they put some thought into how to handle things like:

- What happens if a player is sent down? put on LTIR? Suspended? Released? Do both teams get cap relief or only his current one?

- What happens if the player is traded again? Can his salary/cap hit then be split over 3 (or more) teams? Is the 50% limit then based on the players original salary/cap hit or the teams share?

- What happens if the player is later bought out?

- Do subsequent waiver claims have any effect on the split?

- If the player has Performance Bonuses, are their cap hits split for the purpose of the Performance Bonus Cushion?

The cleanest way to handle it would be to put the original team on the hook for the salary and cap hit committed to in the trade regardless of the later disposition of the player.
Indeed a lot of interesting scenarios-I suspect this could become very "loophole" worthy for teams who CBA experts work the system the right way. If unchecked, a couple of years down the road we could see an NHL rife with various parts of various player contracts amounts just kind of floating around among different teams. As you said, it could get very ugly!


BTW, was there anyone on these boards when the last CBA was signed where someone speculated "what if a team signs a player for 12 years for multiple dollars and lessening as a way of loophole"?-only to be laughed out and called "that's nonsense"-shortly thereafter the Dipetro contract (among others) were signed. Just wondering if we have any budding nostradmus' here on the board (maybe you kdb? )


Last edited by Tinalera: 01-07-2013 at 06:45 PM.
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01-07-2013, 06:41 PM
  #391
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Is there a full in-depth explanation of salary retention/cap trades? I see that it's only 3 contracts at one time (for each, or?), but does it have to be for the duration of the contract, certain years/one year.

Also, on the buyout <$2.75M provision, is that the guys like Patrick Eaves who get traded specifically to be bought out?

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01-07-2013, 07:05 PM
  #392
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You may be right but I haven't come across any literature like this. Source?

In the NHL's October proposal, where they first introduced this idea, the Assigning Club is permitted to retain up to 50% (or $3M) of a single player's Cap charge per year, along with the obligation to reimburse the Assigned Club for an equal % (or amount) of that player's actual salary obligation per year.



http://www.nhl.com/ice/news.htm?id=643570



http://www.nhl.com/ice/news.htm?id=643572
I have no source, as I am merely speculating based on the way TSN had it written up in their initial explanation. They were very vague, and they certainly don't have all of the details. It's just as likely, perhaps moreso, that you're right and I'm completely off in left field here.

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01-07-2013, 07:16 PM
  #393
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I can see lots of potentially ugly cases - hopefully they put some thought into how to handle things like:

- What happens if a player is sent down? put on LTIR? Suspended? Released? Do both teams get cap relief or only his current one?

- What happens if the player is traded again? Can his salary/cap hit then be split over 3 (or more) teams? Is the 50% limit then based on the players original salary/cap hit or the teams share?

- What happens if the player is later bought out?

- Do subsequent waiver claims have any effect on the split?

- If the player has Performance Bonuses, are their cap hits split for the purpose of the Performance Bonus Cushion?

The cleanest way to handle it would be to put the original team on the hook for the salary and cap hit committed to in the trade regardless of the later disposition of the player.
I don't even want to imagine what kind of headaches can occur and loopholes they will be setting themselves up for with this.

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01-07-2013, 11:05 PM
  #394
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Anyone else have the feeling there is a good chance this wont get ratified at the bog meeting?

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01-08-2013, 12:12 AM
  #395
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Anyone else have the feeling there is a good chance this wont get ratified at the bog meeting?
Zero chance of this happening. Same with the NHLPA.

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01-08-2013, 04:36 AM
  #396
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Anyone else have the feeling there is a good chance this wont get ratified at the bog meeting?
Why would it not? the deal might not be perfect for both sides but it would be a PR nightmare if it wasn't and effectively cancels the season.

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01-08-2013, 10:34 AM
  #397
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Why would it not? the deal might not be perfect for both sides but it would be a PR nightmare if it wasn't and effectively cancels the season.
Agreed. And really... how much better is either side going to get in a deal? The NHL can't try to win too much in any CBA. Simply chip away a bit here and there.

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01-08-2013, 12:05 PM
  #398
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Originally Posted by kdb209 View Post
I can see lots of potentially ugly cases - hopefully they put some thought into how to handle things like:

- What happens if a player is sent down? put on LTIR? Suspended? Released? Do both teams get cap relief or only his current one?

- What happens if the player is traded again? Can his salary/cap hit then be split over 3 (or more) teams? Is the 50% limit then based on the players original salary/cap hit or the teams share?

- What happens if the player is later bought out?

- Do subsequent waiver claims have any effect on the split?

- If the player has Performance Bonuses, are their cap hits split for the purpose of the Performance Bonus Cushion?

The cleanest way to handle it would be to put the original team on the hook for the salary and cap hit committed to in the trade regardless of the later disposition of the player.
I don't see this as any different than under the previous CBA when a player was taken on re-entry waivers. Avery was plit 50-50 between the Rangers and The Stars. There was speculation he might be taken again on re-entry and the split would be halfed again Rangers 25, new team 25, Stars 50.

While the concept of retaining salary and cap space ina trade is new, the concept of two teams splitting the cap and salary is not.

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01-08-2013, 12:09 PM
  #399
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Have a question or questions guys:

The CBA is for 10 years but with an option to out at 8 years. Could there be a lockout or strike potential at the 8-year mark or thereafter if one side wishes to have the CBA changed at that time but the other would be against the potential changes? Or is that not possible or that base has been covered so that that possibility doesn't exist?

Following from the above... If a lockout or strike can't be done during that 8 to 10 year period, does that early CBA termination option then mean that there could be as much as a 2-year period within which a new CBA could be negotiated before the 10-year ultimate termination point?


If you're getting my drift, this 8-10 year CBA could either have negative or positive lockout/strike potential, depending on whether this CBA is taking those possibilities into consideration.

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01-08-2013, 12:17 PM
  #400
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Have a question or questions guys:

The CBA is for 10 years but with an option to out at 8 years. Could there be a lockout or strike potential at the 8-year mark or thereafter if one side wishes to have the CBA changed at that time but the other would be against the potential changes? Or is that not possible or that base has been covered so that that possibility doesn't exist?

Following from the above... If a lockout or strike can't be done during that 8 to 10 year period, does that early CBA termination option then mean that there could be as much as a 2-year period within which a new CBA could be negotiated before the 10-year ultimate termination point?


If you're getting my drift, this 8-10 year CBA could either have negative or positive lockout/strike potential, depending on whether this CBA is taking those possibilities into consideration.
If either side chooses to opt out after year 8 (and I believe there needs to be notification a fair bit before the actual opt-out) then the CBA would end at the 8 year mark and they would need to negotiate a new CBA just like at the end of the any CBA.

I'm also pretty sure that one side or the other would actually have to decide the end the CBA at the ten year mark; otherwise, it would just continue. That was the case with the 2005 CBA which actually ended in 2011 but was extended until 2012 because neither side decided to end it in 2011.

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