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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.

A thought

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Old
09-16-2004, 11:48 AM
  #1
DownFromNJ
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A thought

Why do both sides need to wait for a season or half a season to resolve this?

Both sides know what each other will lose in the given time period. The NHLPA knows its in trouble if this lasts for a full year. There are about 2 billion in revenues at stake. In addition, the NHL could be badly weakened by an extended lockout. And I refuse to think that both sides don't feel guilty for alienating the fans.

Why not just walk into the negociating room as if it was January or next September? I don't know much about union negociations, but why is a lockout neccessary?

The NHLPA knows that the owners have the upper hand here. It's survival as an organization, and the income of it's members, is at stake. Why not propose a real luxery tax? Why are they pretty much accepting a lockout?

And why don't the owners propose a real luxery tax? They can save face by calling it a "soft cap", and the NHLPA can call it a damn luxery tax. The owners are looking for about a 20-25 percent decrease in salaries. They can get more than a 10% decrease simply through the proposed paycut and entry level cuts. A luxery tax should be able to cut spending about as much, if its a strong one.

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09-16-2004, 12:02 PM
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fan mao rong
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A luxury tax doesn't do anything of consequence. Especially tripe like the union's 2 proposals. A 10% tax on payrolls over 50 million is a joke. If a team overspends the 50 million guideline by 10 million dollars it will pay an extra 1 million in a tax. A real luxury tax that would get into ownership stated objectives would start at 20 million and tax dollar for dollar over the limit. Then the bigger teams would pay out maybe 40 million total while only 30 million going to the players. But even at that lower revenue teams would be pressured to match to keep their players.. And if a team wants to be competetive it has to keep its players. The assets of a team are its players. A luxury tax would curtail the spending, somewhat , of higher revenue teams. This is not about curtailing the payroll of higher revenue teams. It is about enabling lower revenue teams to keep their players.

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09-16-2004, 12:20 PM
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Quote:
Originally Posted by fan mao rong
A luxury tax doesn't do anything of consequence. Especially tripe like the union's 2 proposals. A 10% tax on payrolls over 50 million is a joke.
After running the figured based on the NHLPA's calculations, it's a 20% tax on payrolls over 45M.

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09-16-2004, 12:23 PM
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DownFromNJ
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I understand how weak the NHLPA's luxery tax was. It was a ridiculous proposal. However, the NHL could have fired back with a real 2:1 style luxery tax, which would accomplish their goal.

My real point is, the NHL is doing pretty well. However, the healthy league is threatened by this lockout.

Don't believe the league is doing well? The league is doing great! Heres an article.

http://www.eagletribune.com/news/sto...509/SP_006.htm

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09-17-2004, 10:08 AM
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fan mao rong
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Yeah, a 2-for-1 tax probably would do something to curb salaries. The union would call that a tax that has the effect of a cap. It would currently call that unacceptable, and they will for some time. And if the tax point is 40 million or so it is an increase over current salary levels, and does not help the lower revenue teams keep their players. The Eagle News thing, you must have only read the 1st part, because the 2nd half says there is a need for a new CBA because of the outflow of revenue to players and others. Every one knows they take in alot of revenue. Alot more goes out than comes in.

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09-17-2004, 10:15 AM
  #6
EJsens1
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Quote:
Originally Posted by DownFromNJ
I understand how weak the NHLPA's luxery tax was. It was a ridiculous proposal. However, the NHL could have fired back with a real 2:1 style luxery tax, which would accomplish their goal.

My real point is, the NHL is doing pretty well. However, the healthy league is threatened by this lockout.

Don't believe the league is doing well? The league is doing great! Heres an article.

http://www.eagletribune.com/news/sto...509/SP_006.htm
That article really had nothing substantitve in it. It discusses a few large salaries like Jagr's and Yashin's, plus discusses some attendance figures, then assumes everything is alright. Garbage article that offers nothing IMO.

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09-17-2004, 04:50 PM
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thinkwild
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Quote:
Originally Posted by fan mao rong
A luxury tax doesn't do anything of consequence. Especially tripe like the union's 2 proposals. A 10% tax on payrolls over 50 million is a joke. If a team overspends the 50 million guideline by 10 million dollars it will pay an extra 1 million in a tax. A real luxury tax that would get into ownership stated objectives would start at 20 million and tax dollar for dollar over the limit.

It is about enabling lower revenue teams to keep their players.
I think the reason you are suggesting it does little of consequence is because you are looking at it as a punitive deterring action. But if only 25% of the current losses can fairly be attributed as CBA related, and thats if, then there is $60mil or so in losses. The purpose of the luxury tax is to raise those funds, not discourage spending which isnt needed if the funds are returned.

This CBA doesnt grant players under 31 the leverage to negotiate their market value. Its tricky though, because market value in this system is probably different than market value in a free market. But still, the ability to sign your players under 31, (the ones you should be signing if you are trying to develop a team to its first cup), to less than market value seems a far more valuable tool than a cap to enable lower revenue teams to keep their young players long enough to contend. If that market value is a bit high, tweak it.

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09-17-2004, 06:03 PM
  #8
Tom_Benjamin
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Quote:
Originally Posted by DownFromNJ
Why not just walk into the negociating room as if it was January or next September? I don't know much about union negociations, but why is a lockout neccessary?
I don't think a work stoppage is necessary, but it is not hard to see why the parties expect to be out to January.

Because the different sides have different pressure points. Right now the NHL is at the peak leverage. The players start losing millions next month. By January, they will have punted away about $700 million. The owners lose revenues, but the beginning of the season is the least profitable time of the year. Interest and attendance is lowest now and highest as the playoffs approach.

By January, the pressure shifts. The second half of the season is when all the profits are made. Once the season is cancelled, it shifts again, but with wild cards like new leagues, court fights, imposed systems, strike rather than lockout and possible decertification of the union.

Tom

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Old
09-17-2004, 06:27 PM
  #9
thinkwild
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It would seem to be the 3rd pressure point they are trying to convince they are aiming for this time. As bettman said, fans want him to do it right. And it appears most fans think that is right. That ugliness cant be a good thing for franchise values though

Its hard to believe all the owners would be willing to go that far, but like Ford setting the way for GM and Chrysler, maybe this is setting the tone for NBA and NFL.

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