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Interesting CBA Discussion [incl. audio link]

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Old
12-30-2011, 08:48 PM
  #1
habscout
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Interesting CBA Discussion [incl. audio link]

http://pmd.fan590.com/audio_on_deman...v-20111229.mp3

I found this very interesting discussion with Mike Liut on the FAN 590 website, on the upcoming CBA, with some reflections on the NHL history with these negotiatons. To start it off, there's a clip from an interview with Mark Cuban where he basically explains why he didn't buy the Dallas Stars, but he added some personal reflections on the flaws of the current CBA based on his discussions with current owners. Marty McSorley was in the studio for this article, and he seemed candid about his opinions. It was a insightful that both he and Liut were on the NHLPA in the past and were part of previous CBA negotiations. Liut's comments were good but a little guarded since he is now part of the Octagon agency, and I'm sure he has to appear to show some distance between his employer and the NHLPA clients he represents.

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12-30-2011, 11:12 PM
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Thank you for posting this. I haven't listened to it yet, but am interested in hearing Cuban's comments especially.

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12-31-2011, 10:25 AM
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Listening to Cuban he basically states the obvious by observing the issue with the revenue gap and how it affects the current CBA. He also said that the league is basically in total denial over this.

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12-31-2011, 02:43 PM
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Originally Posted by Fehr Time View Post
Listening to Cuban he basically states the obvious by observing the issue with the revenue gap and how it affects the current CBA. He also said that the league is basically in total denial over this.

Oh oh. Must be the IU connection.

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01-01-2012, 11:27 AM
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Cuban said he spoke to NHL insiders who said they like their CBA and there's nothing wrong with it. His problem with it, from the point of view of looking at the Stars, is that cap growth is driven by the teams with very high revenues. He points out that the growth in the cap from Yr 1 to today is "more than 100% of the Stars local revenue".

"Even with revenue sharing that's tough to overcome."

************************

--> Pointed out that he has an ownership stake in the arena; Cuban may not be the 'team player' the NHL wants

--> Suggestions from the panel that this CBA is more friendly to big market teams than small markets. The big market teams received a windfall by the cap and rollback. The small revenue teams must come up to a salary cap floor/range. MLB was cited for having had a great labor-management relationship and the perhaps Fehr managed to convince the big and small market owners there that neither gets what they want from a cap system. Big teams don't want to be restrained and small market owners don't want to be forced to spend more than they are able.


I personally think we're stuck with the cap, but the economic fundamentals for the NHL should not be overlooked given the actual growth we've seen in the cap and how challenging that level is to a good portion of teams whose local revenues are well below the cap point.

************************

Tom Benjamin offers his two cents, always a great read:

http://canuckscorner.com/tombenjamin...2-cba/#respond


I agree with his conclusion that the players never had and never will have much leverage against the owners. Where I think the smart money places its bet is in convincing the owners that they really aren't that well-served by a cap range as they've concluded. Sports owners, like Cuban, who can buy a team but choose not to do so due to economics, inclusive of the CBA. In my opinion, the recent erosion in franchise values isn't just due to the capital markets retreating but also directly with the bottom lines of these teams. This has happened IN SPITE OF THE CAP and the revenue transfer/sharing system. If new owners will only buy in at 50% of the original asking price right after the lockout ended, that really should be sending a message to the BOG and Gary about their system.

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01-01-2012, 01:09 PM
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^^^

Ya I read Tom's blog earlier this morning as well. I like his stuff too. The first shot across the bow from Fehr should be the revenue sharing angle, and more specifically the lack thereof. The small revenue teams want more revenue sharing and the big markets likely want less. This would be a good way for Fehr to put the focus on Bettman and make him sweat. Obviously the best end result of this would be a luxury tax system of sorts.

I agree with Benjamin that the players are in a tough spot when it comes to bargaining. They may have to play the decertification card I think and see how things play out. If the owners know that the players will not do that then they will not negotiate in good faith and the NHLPA becomes nothing more than a tool of ownership to enforce collusion IMO.

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01-01-2012, 02:59 PM
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The cap shouldn't fluctuate as wildly as it does. The floor should be much lower. Still, the hard cap is good for the league but they should re-work how it's calculated by counting team revenues alone as opposed to league wide ones.

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01-01-2012, 03:24 PM
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Quote:
Originally Posted by chasespace View Post
The cap shouldn't fluctuate as wildly as it does. The floor should be much lower. Still, the hard cap is good for the league but they should re-work how it's calculated by counting team revenues alone as opposed to league wide ones.
Why not?

The cap fluctuates because when you total up all the revenues from the Leafs, Rangers, Habs, Wings, Hawks, etc., revenue has grown.

The league wanted linkage, so you get cap growth if you get revenue growth. You can't just say here's a cap that never changes regardless of revenue changes (positive or negative). That pretty much derails the entire foundation of the cap range system with linkage.

Some of us just outlined why a hard cap range is bad for the league, and you counter with saying it's good for the league? In which way exactly?


Then you say the cap floor should be lower, so you want a wider range between what can be spent? Doesn't that favor the rich teams again? Isn't a smaller cap range supposed to be better? (That's what Bettman said, right?)


Finally, how do you set up a cap system based on team revenues? Each team can only spend 50% of its HRR? That overlooks the fact that teams compete for player talent on a national level (against each other), so if you have more revenue, you can pay more for players, correct?

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01-01-2012, 04:16 PM
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Really interesting interview. Nice find.

I don't see the NHL backtracking on the hard cap. But I have felt for quite a while that the biggest fight the owners may have will be amongst themselves.

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01-01-2012, 04:19 PM
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Quote:
Originally Posted by Fehr Time View Post
^^^

Ya I read Tom's blog earlier this morning as well. I like his stuff too. The first shot across the bow from Fehr should be the revenue sharing angle, and more specifically the lack thereof. The small revenue teams want more revenue sharing and the big markets likely want less. This would be a good way for Fehr to put the focus on Bettman and make him sweat. Obviously the best end result of this would be a luxury tax system of sorts.

I agree with Benjamin that the players are in a tough spot when it comes to bargaining. They may have to play the decertification card I think and see how things play out. If the owners know that the players will not do that then they will not negotiate in good faith and the NHLPA becomes nothing more than a tool of ownership to enforce collusion IMO.
I agree that pushing the revenue sharing angle is a very good strategy for the players. But I do suspect that the players share of the revenue pie is going to drop.

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01-01-2012, 04:42 PM
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Really interesting interview. Nice find.

I don't see the NHL backtracking on the hard cap. But I have felt for quite a while that the biggest fight the owners may have will be amongst themselves.
You don't see Bettman and the small markets backing down. NY and Toronto make more money under the new CBA but a providing welfare as well. I agree that this will be a big issue for the owners.

I'd rather no cap. If your city cannot compete they should not have a team. Sports is not for welfare.

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01-01-2012, 05:15 PM
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Quote:
Originally Posted by Fugu View Post
Cuban said he spoke to NHL insiders who said they like their CBA and there's nothing wrong with it. His problem with it, from the point of view of looking at the Stars, is that cap growth is driven by the teams with very high revenues. He points out that the growth in the cap from Yr 1 to today is "more than 100% of the Stars local revenue".

"Even with revenue sharing that's tough to overcome."
It's a little hard to see Cubans statement as meant to be enlightening for fans. Cap growth of $25 mil exceeds their local revenues? And why is it tough to overcome with revenue sharing that was designed to be good enough.

But has the statement ever been challenged that high revenue teams are driving the growth. It may very well be true, i have no real idea, but it might be an interesting exercise to try and work through. This $25 mil in growth of the cap over the life of the cba, what were the major factors driving that? Just ticket price increases in large markets? Just large market local tv deals?

If so, seems an easy problem to fix.

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01-01-2012, 05:35 PM
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Quote:
Originally Posted by thinkwild View Post
It's a little hard to see Cubans statement as meant to be enlightening for fans. Cap growth of $25 mil exceeds their local revenues? And why is it tough to overcome with revenue sharing that was designed to be good enough.

But has the statement ever been challenged that high revenue teams are driving the growth. It may very well be true, i have no real idea, but it might be an interesting exercise to try and work through. This $25 mil in growth of the cap over the life of the cba, what were the major factors driving that? Just ticket price increases in large markets? Just large market local tv deals?

If so, seems an easy problem to fix.
Most claim 30 percent of Rev is the 6 now 7 canadian teams. While I have never seen otherwise, I don't necessairly believe it since last year the Oilers owner claim they lost money, I believe there is a lot we don't know thinkwild and the informantion will be leaked this summer.

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01-01-2012, 06:16 PM
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Originally Posted by Melrose Munch View Post
You don't see Bettman and the small markets backing down. NY and Toronto make more money under the new CBA but a providing welfare as well. I agree that this will be a big issue for the owners.

I'd rather no cap. If your city cannot compete they should not have a team. Sports is not for welfare.
+1000

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01-01-2012, 06:24 PM
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Quote:
Originally Posted by thinkwild View Post
It's a little hard to see Cubans statement as meant to be enlightening for fans. Cap growth of $25 mil exceeds their local revenues? And why is it tough to overcome with revenue sharing that was designed to be good enough.

But has the statement ever been challenged that high revenue teams are driving the growth. It may very well be true, i have no real idea, but it might be an interesting exercise to try and work through. This $25 mil in growth of the cap over the life of the cba, what were the major factors driving that? Just ticket price increases in large markets? Just large market local tv deals?

If so, seems an easy problem to fix.
Let's make sure we speak in real terms and not percentage growth, first of all. You'll have someone point out that team X grew at 5% whilst the league average was 2-3%. It's not truly meaningful unless you know if team X if Toronto and its $160-170 million (or whatever the real figure is right now), or Phoenix's $56 million before revenue transfer.

Fourier did the exercise for us once, as far as the organic growth for the NHL and then the effect of the CAD's increase (from pre-lockout figures) on the Canadian portion. Keep in mind that the Canadian portion includes the CBC, TSN.ca, Sportsnet, RSD plus all the local team deals for the Canadian teams and then the individual teams. They all earn Canadian dollars (the exact figure has never come out), but that all gets thrown into one pot at the end of the year and the average annual rate is applied to get an USD amount to use for HRR.

(Tom did an exercise once where he backed it out and reported league revenues in the CAD. Interesting.)


One thing we can say is that several teams have not grown--- Dallas, Atlanta, Phoenix. Not sure where St Louis, Florida, Carolina and Columbus stand. Nashville has improved however.

Chicago, Washington, and Pittsburgh are definitely on the growth side. I'm sure Boston and Vancouver had spectacular years. Philadelphia, NYR, Detroit, and Montreal have done very well too.

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01-01-2012, 06:26 PM
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+1000

Welcome to the business board (and HFBoards), kward.

We don't like 'quoted for truth' posts, and as Killion mentioned, we don't lol on the business board either.

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01-01-2012, 07:42 PM
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Quote:
Originally Posted by Fugu View Post
Why not?

The cap fluctuates because when you total up all the revenues from the Leafs, Rangers, Habs, Wings, Hawks, etc., revenue has grown.

The league wanted linkage, so you get cap growth if you get revenue growth. You can't just say here's a cap that never changes regardless of revenue changes (positive or negative). That pretty much derails the entire foundation of the cap range system with linkage.

Some of us just outlined why a hard cap range is bad for the league, and you counter with saying it's good for the league? In which way exactly?


Then you say the cap floor should be lower, so you want a wider range between what can be spent? Doesn't that favor the rich teams again? Isn't a smaller cap range supposed to be better? (That's what Bettman said, right?)


Finally, how do you set up a cap system based on team revenues? Each team can only spend 50% of its HRR? That overlooks the fact that teams compete for player talent on a national level (against each other), so if you have more revenue, you can pay more for players, correct?
The linkage is fine just the way it's used to alter the cap should be looked at. The Cap has risen roughly $25million since it was instituted, while saying this is showing the growth of the league as a whole is a valid statement it is artificially inflating teams that cannot afford it.

HRR, when used to calculate the cap, should be the profit/loss of 28 teams(throw out the outliers, the highest and lowest) then add them up and divide by 28 so you have what could be a league-wide average. That should keep the salary cap from growing at a torrid pace and allow teams that have less money to be able to work without having to hand out outrageous contracts that virtually inflate the free agency market as well.

As for the ceiling-floor gap I prefer a larger one. The floor should be changed from $16million lower than the cap to 55%-65% of the cap ceiling. This would also help with teams that originally struggled to reach the salary floor and cut down on the artificial inflation of contracts as well.

Pertaining to salaries though, the max a player can receive(% of cap) should be raised to say 25% and don't allow bonuses for performance or signing to count against the cap.

I am prepared to be blasted for this.

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01-01-2012, 07:55 PM
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+1000
I'm sick of hearing about so and so and having a relocation saga every year since about 2006, it's disgusting and no way to run business.

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01-01-2012, 08:55 PM
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Quote:
Originally Posted by thinkwild View Post
It's a little hard to see Cubans statement as meant to be enlightening for fans. Cap growth of $25 mil exceeds their local revenues? And why is it tough to overcome with revenue sharing that was designed to be good enough.

But has the statement ever been challenged that high revenue teams are driving the growth. It may very well be true, i have no real idea, but it might be an interesting exercise to try and work through. This $25 mil in growth of the cap over the life of the cba, what were the major factors driving that? Just ticket price increases in large markets? Just large market local tv deals?

If so, seems an easy problem to fix.
I would say that there are really three major sources of most growth.

1) Substantial organic growth in a most of of the high revenue markets plus the smaller Canadian markets.

2) The impact of the $CDN.

3) Increases in National TV monies and other shared revenue.

If I get some time I will try to estimate how much each of these three may be responsible for.

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01-01-2012, 11:10 PM
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A possible compromise would involve
  • a cut in the players' share to 52%
  • part of that cut goes to increased revenue sharing

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01-02-2012, 01:53 AM
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Originally Posted by kward View Post
+1000
Quote:
Originally Posted by Fugu View Post
Welcome to the business board (and HFBoards), kward.
We don't like 'quoted for truth' posts, and as Killion mentioned, we don't lol on the business board either.
Brevities of anykind are unacceptable,
though we are partial to the use of the odd Anagram
provided its served on a Carrs with a nice cheese underlay...
oh, and Capers, dont forget the Capers whatever you do.

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01-02-2012, 05:23 AM
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I think they really could have done without the 5% kicker in the CBA. There simply was no good reason for it. It artificially increased the cap by more than it should have increased and forced the players to put more money into escrow.

No kicker and you end up with a more natural increase of the cap, which is easier to cope for the teams, and you hear far less complains from players about the amount of money they have to hold back because of escrow.

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01-02-2012, 07:24 AM
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I think they really could have done without the 5% kicker in the CBA. There simply was no good reason for it. It artificially increased the cap by more than it should have increased and forced the players to put more money into escrow.

No kicker and you end up with a more natural increase of the cap, which is easier to cope for the teams, and you hear far less complains from players about the amount of money they have to hold back because of escrow.
The kicker was not intended to artificially increase the cap nor does it automatically increase escrow.

The cap is set for season X+1 based on the actual revenue of season X. But the cap for season X+1 should really be based on the (unknown) revenues of season X+1. The kicker is used to factor in a reasonable amount of growth into the equation when using revenues of season X to estimate those of season X+1. To me this is a perfectly reasonable tool.

The kicker itself is not the reason for additional escrow, though it does contribute to it indirectly. The system is based around the premise that average spending should be at the cap midpoint. The large amount of escrow results from the fact that so many teams have been spending towards the cap ceiling.

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01-02-2012, 08:06 AM
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I'd rather no cap. If your city cannot compete they should not have a team. Sports is not for welfare.
Welcome to a 24 team NHL.

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01-02-2012, 08:31 AM
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The Toronto Maple Leafs are worth $0,000,000 if they don't have other teams to play against.

The NHL is the business, competing against the other sports. What's good for the Stars and Ducks is good for the Leafs and Habs ... anything that grows the sport.

Personally, I think 50% or so of local revenue should go into revenue sharing then split equally.

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