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Thank God It's Over (The Official Offseason Talk Thread) III

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08-15-2012, 02:28 PM
  #376
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The other side of the cap floor is the revenue sharing. More league revenue means more money going to the individual teams.

While the cap floor does force teams to spend money that they rather not, they generally get some on-ice value, and that value will bring in more fans and more revenue.

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08-15-2012, 02:33 PM
  #377
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They do, and it's healthy, and they do need revenue sharing for that so the small market teams can be competitive. But they need a better balance.

Really, I don't think either side thought the league would be so successful. Just look at the structure for the salary cap and floor calculations as well as the players escrow. They were much more afraid of shrinking revenues than the potential of increasing them, and revenues must have nearly doubled since the lockout.

So they need to recalculate the salary cap/floor, escrow, and revenue sharing, then hammer out a few details about contracts and the Olympics, and let's go.

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08-15-2012, 02:35 PM
  #378
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Originally Posted by DANOZ28 View Post
man thats confusing, your saying move a non profitable team (like dallas, phx or florida) to to a good market is bad??? is this clear to anybody else?
Absolutely. Player salaries are calculated as exactly 57% of league HRR (hockey related revenues). Say every team remains exactly how it is at the moment except Phoenix is relocated to Houston and Columbus is relocated to QC. HRR is currently $3.3 billion which means player salaries are $1.881 billion. This sets the salary midpoint at $62.2MM with the floor at $54.2MM and ceiling at $70.2MM. Now those two teams leave terrible markets where they were making next to nothing (let's say a combined $80MM in revenue, just a made up number for demonstration). Put into their new, stronger markets, they're making a combined $380MM, which is $300MM more than before. This pushes league revenues up to $3.6 billion and ultimately moves the cap midpoint to $67.9MM with the floor at $59.9MM and cap at $75.9MM.

Now, those teams who were struggling but getting by at the cap floor need to spend $5.7MM more because of salary linkage. They're still making the same amount of money, but suddenly have to spend almost $6MM more just to meet the league's minimum salary expense. If teams choose not to spend right to the cap, the money they "save" by spending less is clawed right back out of them via escrow, hurting those at the bottom even more. All those teams that were just getting by are suddenly losing money. Some of those teams that were making a small profit are now just getting by.

Relocation fixes one problem, but causes new ones that are generally larger.

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08-15-2012, 02:38 PM
  #379
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Relocation doesn't "cause" other problems. It merely sheds light on already existing problems. If seats aren't in the stands, they aren't in the stands.

But yes, the profit sharing, cap floor, and revenue sharing need to be tinkered with.

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08-15-2012, 02:39 PM
  #380
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i need people to k.i.s.s. (keep it simple stupid) so i can understand how this works, i feel like your saying lets keep losing money because its working. man thats like saying i don't want to make anymore money because i'll have to pay more taxes. UGH! thx everybody for trying but i don't get it. lose money or make money hmmm.

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08-15-2012, 02:41 PM
  #381
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Originally Posted by Jarick View Post
If you really want to get groovy, you roll back the salaries some by eliminating the 15% escrow, and then you are lowering costs more.

Then you can also go another step and make the salary floor say $10M below the midpoint and the cap $5M above the midpoint, but then have a softer cap (with penalties) that float to $10M above but with a penalty that goes to the revenue sharing pool. Or make a franchise exception that can be used for one player only that allows that player's salary to not count towards the cap. Etc, etc.
The biggest change I'd like to see, that both the league and players should love, is to change the cap ceiling/floor calculation. Since more teams spend above the midpoint (and by a larger margin) than below, there will always be an escrow clawback. Why not make the midpoint not a midpoint at all (as you suggested with the +5/-10 range) and make the floor farther below than the ceiling is above. That would reduce the amount of escrow (possibly to the point where the owners are paying in at the end of the season instead of the players paying back) and reduce the strain on lower revenue teams by reducing their salary expense.

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08-15-2012, 02:44 PM
  #382
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Originally Posted by nickschultzfan View Post
Relocation doesn't "cause" other problems. It merely sheds light on already existing problems. If seats aren't in the stands, they aren't in the stands.

But yes, the profit sharing, cap floor, and revenue sharing need to be tinkered with.
It doesn't "cause" the problem in a strict legalese sense, but it does exacerbate an existing issue. What really happens is it takes something that is a "concern" but not a real problem for low revenue teams, and it enlarges it to the point where it's no longer just a concern, but is a major issue. The point is, the fallout from relocation is more relocation, which provides for more negatives than positives.

My largest concern is that things are merely "tinkered with" and not "wholesale changed" as the framework largely works well. It's just the specifics where it breaks down.

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08-15-2012, 02:53 PM
  #383
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im not an accountant, estate planner or tax attorney but imo the nhl talent is spread to thin, dallas cant even 1/2 fill their stadium, & approx 10 teams are receiving revenue share or bailout from the nhl tells me somethings wrong that needs to be fixed.

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08-15-2012, 02:54 PM
  #384
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Relocations will eventually result in full arenas. When that happens, you won't have the same concerns about failing franchises.

There will be increased revenue sharing and overhead as a percentage of total expenses will decrease.

More fans in seats means more food bought and more merchandise sold.

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08-15-2012, 03:00 PM
  #385
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Originally Posted by nickschultzfan View Post
More fans in seats means more food bought and more merchandise sold.
I don't know how many other clubs have the same sort of back handed deal that Leipold has with the food/beverage providers at the X.

His wife owns the company which he pays to run the concessions, which, in turn, when we buy a food/drink, it goes to his wife's company, not the Wild.

At least as far as I can remember specifics... But that was basically how it was explained to me as to how it works for the Wild and the company that his wife owns which run the food and beverage at the X.

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08-15-2012, 03:38 PM
  #386
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Quote:
Originally Posted by DANOZ28 View Post
i need people to k.i.s.s. (keep it simple stupid) so i can understand how this works, i feel like your saying lets keep losing money because its working. man thats like saying i don't want to make anymore money because i'll have to pay more taxes. UGH! thx everybody for trying but i don't get it. lose money or make money hmmm.
I'll try.


Let's say the worst team in the league generates $100M in revenue yet has $150M in costs. They are losing $50M a year.

Okay, let's move them to Canada, and let's say they generate $200M a year with $150M in costs. Now they are making $50M a year. It's better for the team because they are now profitable.

But, salaries are tied to revenues, so now player salaries just went up by $57M league-wide (57% of the increased profits). That's an average of $1.9M per team.

Profits = Revenues - Costs. Salaries are a cost, so that additional $1.9M cuts into the profits of the other 29 teams. Why? Because only that one new market gained revenue from the relocation. They pushed the costs up for everyone else.

So let's say the teams like Dallas, Florida, New York...who were struggling before, now their costs go up nearly $2M without any additional revenue. They are worse off than they were before the relocation.



This is why we're saying they need to fix the calculation. If salaries aren't directly tied to revenues, maybe average salaries only go up by $500k. That's a lot more manageable.

Does that make more sense?



Moving teams from low profile markets that routinely lose money to high profile markets that generate cash are very good for the league overall because it boosts TV ratings and generates additional revenue for the league, boosts the salaries of the players, and increases the value of the franchises for the owners.

But they've got to change the salary calculations, because as it is rising salaries are killing these smaller market teams.

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08-15-2012, 03:58 PM
  #387
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Originally Posted by bozak911 View Post
I don't know how many other clubs have the same sort of back handed deal that Leipold has with the food/beverage providers at the X.

His wife owns the company which he pays to run the concessions, which, in turn, when we buy a food/drink, it goes to his wife's company, not the Wild.

At least as far as I can remember specifics... But that was basically how it was explained to me as to how it works for the Wild and the company that his wife owns which run the food and beverage at the X.
I don't know if any others own the concessions company, but all the teams do sell the concessions out. There's similar situations with other teams where they own the stadium. The Florida Panthers might show a loss for the hockey team, but their rent payments go to an arena owned by the same company, and the arena might not be solvent without the team as an anchor tenant so they make their profit on that end.

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08-15-2012, 04:06 PM
  #388
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Originally Posted by nickschultzfan View Post
Relocations will eventually result in full arenas. When that happens, you won't have the same concerns about failing franchises.

There will be increased revenue sharing and overhead as a percentage of total expenses will decrease.

More fans in seats means more food bought and more merchandise sold.
Not necessarily, in fact beyond about 2-3 situations that wouldn't be true at all. Furthermore, full arenas in and of themselves aren't necessarily a positive sign. Also, you have to consider that the league as a whole may have goals other than just a direct profit.

As for an example of how full arenas aren't a sufficient condition for profitability, the Chicago Blackhawks are allegedly still losing money, even though they sell out one of the league's largest arenas every night. But it's simple to show that full arenas wouldn't necessarily equal profits, and that losses don't necessarily mean it's a bad market. The Wild could sell out regularly, but if every other market managed to sell tickets at prices like Toronto and Montreal do, eventually the salary floor would catch up to Minnesota, even though it's undoubtedly a good market. Currency fluctuations could easily make Edmonton, Calgary, Winnipeg, and Ottawa failing franchises as well. If the loonie were to fall back to the levels it experienced in the 1990s for an extended period of time, those teams would all certainly fail unless the league underwent serious changes to its revenue sharing and currency protection programs.

The fact of the matter is that the success of the league is far more complicated than butts in seats, TV contracts, or even on paper profit/loss.

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08-15-2012, 04:11 PM
  #389
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thx jarick! how the heck did you guys figure that out? my heads still spinning. ps if you were in charge how would you fix the nhl? (bettman for a day)

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08-15-2012, 04:33 PM
  #390
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Full arenas don't mean profitability.

But they help a lot.

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08-15-2012, 04:35 PM
  #391
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I majored in economics and work in finance. My brain works that way. Ask me about art, literature, or chemistry and I've got nothing.


The NHL can't fix anything on its own because there is a collective bargaining agreement (CBA) between the NHL (owners) and the NHLPA (players). But I would:
- eliminate escrows
- roll back salaries 15-20%
- loosen the ties between revenues and salaries as I described above
- max out contracts at 7 years
- raise the UFA age 1 year
- lower the salary floor and cap relative to the midpoint
- allow teams to pay a fee to go over the cap by up to $5M per year (which goes to revenue sharing pool)
- expand the NHL by two teams to move into Southern Ontario and Quebec
- fix the alignment of the NHL in the process to reduce travel
- shorten the preseason
- shorten the season by 2-6 games
- shorten the first round of playoffs to 5 games
- potentially add a second team per conference to the playoffs and allow the conference winners to bypass the first round
- much more drug testing
- a council for suspensions rather than a czar (and enforce the rules, including intent to injure)
- allow UFA's to meet with teams one week prior to UFA

And probably a lot of other things that would be horrifically unpopular.

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08-15-2012, 05:20 PM
  #392
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I'll take your list and attempt to show how this can get disagreeable.
- eliminate escrows Done.
- roll back salaries 15-20% No thanks, I would prefer a 7% roll back
- loosen the ties between revenues and salaries as I described above I'd have to have my lawyers look at that.
- max out contracts at 7 years Why? If an owner/GM wants me to be an albatross when I'm 42, okay by me.
- raise the UFA age 1 year Done
- lower the salary floor and cap relative to the midpoint Lowering the spread downwards is fine.
- allow teams to pay a fee to go over the cap by up to $5M per year (which goes to revenue sharing pool) Let's raise that to 10 million per, and then we'll talk.
- expand the NHL by two teams to move into Southern Ontario and Quebec What about Seattle?
- fix the alignment of the NHL in the process to reduce travel Done
- shorten the preseason Done
- shorten the season by 2-6 games Done
- shorten the first round of playoffs to 5 games Done
- potentially add a second team per conference to the playoffs and allow the conference winners to bypass the first round WTF you talkin' about Willis?
- much more drug testing No thanks. *coughs*gotohell*coughs*
- a council for suspensions rather than a czar (and enforce the rules, including intent to injure) Done
- allow UFA's to meet with teams one week prior to UFA *whispers*Our Agents do this already, but months in advance... *whispers* Oh, that sounds like a good idea...

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08-15-2012, 05:53 PM
  #393
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Taking the Bozak adjusted list for some comments:
- eliminate escrows Done.
- lower the salary floor and cap relative to the midpoint Lowering the spread downwards is fine.
These have to go together, but the issue is that escrow's not just a useless figure. It has a discrete purpose that's not going to just disappear. The only way to completely eliminate escrow is to either eliminate solid ties to HRR (that is to say, not force salary to exactly equal certain amounts, but allow total salary to be ranged which opens a whole new can of worms with the cap floor/ceiling) or to set the salary "midpoint" to such an offset that it guarantees "clawback" on salaries always work in the players' favor, which the owners might not take kindly to at all.
- roll back salaries 15-20% No thanks, I would prefer a 7% roll back
- loosen the ties between revenues and salaries as I described above I'd have to have my lawyers look at that.
Rather than roll back salaries, how about we just step changes in linkage calculations and add limited amnesty buyouts/single year salary exemptions to interim years. Continued league revenue growth should absolve anything else without rollbacks.
- max out contracts at 7 years Why? If an owner/GM wants me to be an albatross when I'm 42, okay by me.
- raise the UFA age 1 year Done
Personally not a fan of either but the only comment I can make is that most players would support contract length maximums (only a very select few players receive these contracts and it can screw up free agency for those not receiving them). Also, salaries exceeding cap hits cause increased salary clawbacks under the current escrow system. If that were fixed (as previously desired) they would likely be neutral on this point.
- allow teams to pay a fee to go over the cap by up to $5M per year (which goes to revenue sharing pool) Let's raise that to 10 million per, and then we'll talk.
Luxury taxes are a plague upon professional sports leagues and such a system has contributed to league stagnation in the NBA.
- expand the NHL by two teams to move into Southern Ontario and Quebec What about Seattle?
- fix the alignment of the NHL in the process to reduce travel Done
Players likely support this as it causes additional jobs. Owners probably support it as it means expansion fee checks. The league itself might not like it as expansion would eliminate their "safety net" markets for possible relocation necessities.
- shorten the preseason Done
- shorten the season by 2-6 games Done
- shorten the first round of playoffs to 5 games Done
- potentially add a second team per conference to the playoffs and allow the conference winners to bypass the first round WTF you talkin' about Willis?
All of these are non-starters for ownership. Preseason is code for "games where I don't have to pay players, but can still charge admission/parking/concessions/etc." If the season were shortened by just 2 games, owners might tolerate it (as they can probably absorb the lost revenues into increased ticket prices) but more than that is just too much lost revenue.

While shortened playoff series sound great to me as a fan, that's a lot of revenue the owners would lose (to the degree where players would start to feel the sting of lower salaries so they'd dislike it as well). That goes double for missing a round of playoffs. Your team is "rewarded" for winning the conference by not having as much earning potential in the real gravy train of the season? No thanks.
- much more drug testing No thanks. *coughs*gotohell*coughs*
Not sure either side wants this. Fans might go crazy for it though.
- a council for suspensions rather than a czar (and enforce the rules, including intent to injure) Done
Not quite the solution I'd go for here, but both sides would absolutely love this at this point while the league offices themselves would be strongly opposed.
- allow UFA's to meet with teams one week prior to UFA *whispers*Our Agents do this already, but months in advance... *whispers* Oh, that sounds like a good idea...
While agents and teams certainly tamper this way currently, making it an open and accepted practice would level the playing field and just make things better for everyone. I'd make it based upon the draft date, say the period starts two days after the draft (that is to say, draft is 22nd-23rd, starts at noon on 25th).

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08-15-2012, 06:26 PM
  #394
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Originally Posted by bozak911 View Post
I don't know how many other clubs have the same sort of back handed deal that Leipold has with the food/beverage providers at the X.

His wife owns the company which he pays to run the concessions, which, in turn, when we buy a food/drink, it goes to his wife's company, not the Wild.

At least as far as I can remember specifics... But that was basically how it was explained to me as to how it works for the Wild and the company that his wife owns which run the food and beverage at the X.
I think Levy pays for the privilege of running concessions, but doesn't pay as much as other companies while getting a bigger cut of the concession profits than in the past. They run concessions in arena's and stadiums all over the place, including Bell Centre, i think. They probably got a sweatheart deal, but it isn't like they're not in the game in a major way already.

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08-15-2012, 10:40 PM
  #395
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If this potential lockout cancels ANY regular season games, I will be looking to get rid of my Jets season tickets. There's no way I want to support a bush league like the NHL. 3 work stoppages in how many years? Unacceptable.

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08-16-2012, 08:10 AM
  #396
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thx everybody, that gives me alot of good info to chew on. i'll re-read these posts a couple times and hopefully it will all make sense. cheers! about your pre-season comment, should people have to pay full price for practice?

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08-16-2012, 09:44 AM
  #397
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If this potential lockout cancels ANY regular season games, I will be looking to get rid of my Jets season tickets. There's no way I want to support a bush league like the NHL. 3 work stoppages in how many years? Unacceptable.
All sports leagues are bush league. They have to do what they have to do.

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08-16-2012, 11:33 AM
  #398
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Taking the Bozak adjusted list for some comments:
I agree with most of your points from a personal opinion point of view rather than throwing out a snarky response as if I were a player.

Although, to me, the matter of discipline is a bit more complex.

If I were a player, I would want it handled by a three person committee.
If I were the league, I would want it handled by the league.
If I were an owner, I would be so biased that any arguments I make would be suspect anyway. If the infraction is against my player, I want leniency. If the infraction is against any 29 other teams, throw the effin book. If the infraction INJURED one of my players... just too biased.

I think a compromise is two fold;
First, leave the current incarnation of the department of player safety intact. They are the primary point of review of any incidents. Most of the time, a DoPS judgment is reasonable enough to not warrant an appeal. Out of all of the suspensions last season, I think the the only two that went to appeal were Bouchard's and Torres.
Which leads to the second point; On appeal, the matter is put in front of a three person committee with one NHLPA member, one non-Shanahan/Bettman NHL member, and an independent 3rd party from a pool or parties previously agreed upon in the CBA.

The current appeals process is a bigger issue than the Department of Player Safety. When you appeal and it goes to Bettman who appointed Shanahan, that part of the system is flawed.

I have had issues with Shanahan, but for the most part, I approve of his approach, but not his consistency. Also, when he ignores the rules outlined in the old CBA, I would call him a ******.

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08-16-2012, 11:48 AM
  #399
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I think Levy pays for the privilege of running concessions, but doesn't pay as much as other companies while getting a bigger cut of the concession profits than in the past. They run concessions in arena's and stadiums all over the place, including Bell Centre, i think. They probably got a sweatheart deal, but it isn't like they're not in the game in a major way already.
Wait... I thought the X concessions changed from Levy the summer after Leipold bought the Wild? The new company was a "write off" for the S.C. Johnson company or something.

If Levy still runs the concessions, then my question is completely invalid, as I don't think that the Johnson Financial Group has jack squat of a controlling interest in Levy.

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08-16-2012, 11:49 AM
  #400
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Fans should just kidnap Bettman, the owners, and the players union reps, take them to Omaha, lock them in a hotel, and then not let them out until they get CBA signed.

We'd get this over with in a weekend.

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