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Tiered Salary Systems

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09-27-2004, 01:17 PM
  #1
guitaraholic*
 
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Tiered Salary Systems

Based on some more reading where wage control legislation and practices are concerned I've come up with some very preliminary 'rules' regarding salary levels and how they should be determined. I'm suggesting that some of these rules, along with a true luxury tax and revenue sharing systems, be enacted as part of the next CBA to help stem the rise of player salaries. These are preliminary ideas, please feel free to comment and alter as you see fit.

-- ALL contracts are guaranteed and must be honored by both parties. Any hold outs by players under contract automatically results in the forfeiture of remaining funds of the contract plus interest and a fine of $250,000.00 (us dollars) per year for each year not honored. Furthermore the player holding out is barred from playing in any professional hockey league associated with or recognized by the NHL. The term 'hold out' refers ONLY to players who are UNDER CONTRACT but desire to renegotiate their salaries or terms. Players whose rights are 'owned' by an NHL team but are not under contract are not bound by these terms.

-- A maximum 'expenditure cap' on all players on their first contract in the NHL or UNDER 23 years of age AND having played less than 200 games at the NHL level is set at 950,000.00/year. An expenditure cap is base salary and all possible clauses for individual achievement that a player can attain in one year. This means a base salary of 500,000.00 plus a bonus of 450,000.00 for winning the Calder is an acceptable agreement under these terms, as is a base salary of 950,000.00/year w/no other fees paid to the player of ANY kind. The minimum entry length contract must be 2 years for all players. The maximum entry level contract governed by these terms is 4 years.

-- A 'Framework' for salaries is as follows: No player with less than 300 games professional NHL experience can make more than 15% of their previous contract. No player with less than 500 NHL games can make more than 25% increase in their previous annual base salary, no player with less than 800 games can make more than an increase of 40% of their previous base salary.

-- Players that are under the age of 30 and whose rights are 'owned' by an NHL franchise are classified as Restricted Free Agents. As such these players are free to negotiate contracts with other teams under the following terms:

* Players under the age of 25 having played 250 or more games at the NHL level are classified as Group I RFAs and are compensated at the level of 3 first round picks taken at any point over the next 5 years at the team who lost the players behest. Furthermore a compensational signing fee of $250,000.00 per year of contract will be paid to the team losing the player.

* Players over 26 and having played over 400 games at the NHL level but under the UFA age as of July 1 are classifed as Group II RFA. Compensation for signing a Group II UFA is 5 first round draft picks taken at any point over the next 10 year period at the losing teams behest as well as a compensation signing fee of 500,000.00, a one time lump fee to be paid at any point during the duration of the contract at the losing teams behest.

-- No player that is not an Unrestricted free agent shall be eligible for a salary increase of any greater percentage than 50% of their previous contract under any circumstances. This includes players being signed as RFAs from other teams.

-- Unrestricted free agents are under no restrictions in terms of teams they may sign with, salaries earned (see previous clause, however) and length of contract or compensation due for their signing.

-- All teams must have a minimum total base payroll of 35 million dollars. Any team under that limit will be taxed at a rate that brings the teams base salary expenditures to the minimum.

-- At the 42.5 million dollar level and beyond a team must pay a luxury tax. This tax is distributed among the lower revenue teams in the league. This is a gradient taxing systems that works as follows:

* teams exceeding 50 million pay 30 cents on the dollar to the revenue pool plus forfeit one 3rd round draft pick to the lowest salaried team in their division.

* teams exceeding 55 million pay 40 cents on the dollar to the revenue pool plus forfeit one 2nd round draft pick to the lowest salaried team (regardless of divisional standings) in their division.

* teams exceeding the 60 million payroll will be taxed at 50 cents on the dollar (for every dollar over the 45 million mark) and will owe one first round draft pick to the lowest base salaried team in their division.

* teams exceeding 65 million dollars will be taxed at 65 cents on the dollar for every dollar beyond the 45 million level, they will forfeit their first and second round draft picks to the lowest base salaried teams in their division (if base salary levels are equal the team with the fewest points is awarded the compensation)


I have to iron out some details, obviously, and it's a bit complicated but it's based on the principles of other collective bargaining agreements which have some form of compensation/salary limits written into them. It's a first draft and I'd appreciate your feedback.


Last edited by guitaraholic*: 09-27-2004 at 01:22 PM.
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Old
09-27-2004, 02:22 PM
  #2
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Guaranteed contracts by both parties:
I completely agree with this, because players should not have the right to hold out while under contract. There would be a great deal of legal dispute however to prevent a hold-out player from playing in foreign leagues. It would have to be a part of every contract signed by the player stating he agrees and will pay a certain fine for doing so.

Young player contracts:
I agree again here that entry level contracts are a huge reason why contracts are out of control. M-A Fleury could've made $5mil and at the end of his current contract he agent would expect him to get around $5mil a season again on his next contract even though the previous sum would be due to bonus money.

I don't think there should be room for negotiation on entry level contract lengths. Make it either a universal length of how many every years both sides agree to. Preferably 4, but the 2 yrs available in your proposal is too small and would lead to faster raises.

Framework for salaries:
It just won't fly at all. One reason is the amount of games cited. It is not fair for the players. If I understand your idea correctly, consider this scenario

Think of players like Kovalchuk or Nash under this system. They would enter the league with a $950,000 salary and by the end of their fourth season when their contracts run out they will have played less than 300 games. That means come re-signing time their new maximum salary would be $1,092,500.
On their 3rd contract if they are below 500 games they'd be allowed up to only $1,365,625.
On their 4th contract still likely under 800 games or roughly 10 seasons, their maximum salary would still be under $2,000,000 a year. This is not a fair price for the leagues top talent. I think all my math is right, but correct me if I'm wrong.

A raise cap based on games played also punishes players who have missed games due to injury.

Restricted free Agency:
Pretty close to the system in place now but adding monetary fees to teams. Which is fair enough.

Unrestricted FA:
Under your contract raise system would still not come anywhere near their value.

Luxury Tax:
Team salary minimums should definitely be set. The exact number is arguable but I believe it should be close to what the owners feel the hard cap should be. The owners said at $31 million teams would stand to make a profit. So force them to spend about that. In my opinion a $29m minimum would be fiitting.

The maximum threshold is also very arguable. I think your number is about right. I believe that the avg. team salary now is around that number of $42.5m and of course all taxation should be evenly distributed to teams under the threshold.

Price of Taxation:
Overall I believe your taxes or too low. (Wow I would never imagine saying that, taxes too low???) Anyway this is a different kind of tax, it is a penalty. The rates must start at a dollar to dollar and go up from there.

The idea I agree with most is penalizing threshold offenders with something other then just money. If teams are going over the cap then money is something they have plenty of right? So they need to be hit in an area that will hurt them more.

Your system has some flaws though. First off teams shouldn't lose their picks to other teams. The picks shouldn't be given to teams just because they are the cheapest in their division.

Further complications arise too. What if that draft pick has already been traded away? Moving the pick to ahead a year (or two or three) is unfair because the team could be under the cap for the respective future season the draft pick is in.

The best I can think of is religate that round of pick to the end of the draft. But again this is a problem for picks that have been traded to other teams. Ex. If the Flyers traded away their first in 2006 to EDM and were not over the cap at the time of trade, then later in the season made transactions that pushed them over, EDM would end up with a 9th rounder instead.

But your general idea is very good that teams should be punished in a manor other than money.

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09-27-2004, 02:39 PM
  #3
DownFromNJ
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Quote:
-- All teams must have a minimum total base payroll of 35 million dollars. Any team under that limit will be taxed at a rate that brings the teams base salary expenditures to the minimum.
Idea:

Any team under 35 million dollars pays the difference to the NHLPA .


For example:

Team has a 32 million dollar payroll. They pay the NHLPA 3 million.



Quote:
* teams exceeding 65 million dollars will be taxed at 65 cents on the dollar for every dollar beyond the 45 million level, they will forfeit their first and second round draft picks to the lowest base salaried teams in their division (if base salary levels are equal the team with the fewest points is awarded the compensation)
I like.

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09-27-2004, 03:16 PM
  #4
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Quote:
Originally Posted by DownFromNJ
Idea:

Any team under 35 million dollars pays the difference to the NHLPA .


For example:

Team has a 32 million dollar payroll. They pay the NHLPA 3 million.





I like.
I like that idea as well. I think they need to develop some kind of salary floor as well, because if teams can't even come close to keeping up with the rest of the league, further measures need to be considered. Of course revenue sharing would be nice as well, but that probably won't happen either.

The picks to lowest division rivals part of exceeding the cap doesn't really work as some of the divisions are far more competitive and even the lowest end of the division is still very competitive and receiving such a bonus would not be equal at all. I think conceding draft picks period would suffice, rather than conceding them to other teams.

If you state that players can only gain so much percentage from one contract to the next, you would have a harder time to get a player to sign a longer term contract. They'd prefer to just go year by year, increasing their likelihood of an increased possible income.

The ideas you suggested for Group I and II free agency do little more than the previous CBA did, and there was virtually no movement resulting from that. To further complicate the process doesn't seem necessary unless you envision it becoming a very real problem in the future.

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09-28-2004, 12:50 AM
  #5
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I think this is a very good proposal. The only part that I did not like was where the player gets a fized salary increase based on their experience. That means that good player's salary over his RFA years is mostly determined by his first contract, i.e. his draft position. This is not right. I think it should be replaced by a salary ceiling based on experience.

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09-28-2004, 01:21 AM
  #6
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Quote:
Originally Posted by DownFromNJ
Idea:

Any team under 35 million dollars pays the difference to the NHLPA .


For example:

Team has a 32 million dollar payroll. They pay the NHLPA 3 million.





I like.





Good call right there....Get Bettman on the phone.

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09-28-2004, 03:07 AM
  #7
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35 is too high. Teams with payrolls less than that were still losing money. In my opinion the PA would never go for this because it would hold salaries down more than a salary cap.

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09-28-2004, 11:52 AM
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Exactly, and the only way for those teams to truely survive is revenue sharing. The small teams might end up better off in the end, but if you are losing money now and have a payroll under $35 million, you'll still lose money after the CBA is resolved even if the cap is $35 million. Many people understand, but many people don't as well.

The only way to help the teams who are modestly spending and are still in the red is to generate income, and the only quick fix for that is a luxury tax with the funds going to these teams or a revenue sharing program. The luxury tax system would be a bandaid, while the revenue sharing would be a solution.

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09-28-2004, 12:02 PM
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Right now, the salaries of players are kreeping to levels only the richer NHL teams can afford. Hence the small revenue teams are suffering. This is not fair to the owners. If the hard cap is in place, it only makes sense if it is at a level affordable to the poorest team, and the players' salaries would be at a level of the poorest team. That's not fair to the players.

The only way to work something out that's fair to both sides, is either *both* the cap and the revenue sharing (this would mean a "communist" league of 30 equal teams), or *neither* (this is the current system of rich and poor). But try running the idea of revenue sharing by the owners, I dare you

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