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So who is bummed about the lockout?

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Old
09-04-2012, 09:15 PM
  #176
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i have a breaking video clip of a raged fan entering the NHL offices from earlier today. Awesome stuff.







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09-04-2012, 10:49 PM
  #177
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09-05-2012, 07:31 AM
  #178
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Originally Posted by squidz View Post
Not at all. Player salary is directly and exactly linked to HRR. It makes no difference whether every team spends to the cap or they spend to the floor, the players receive the exact same amount of money to the cent. If salaries exceed 57% of HRR, the owners receive back the difference from escrow. If salaries are short of the 57% HRR, the owners have to issue an excess payment to make up the shortfall. A 13 year, $98MM dollar contract has no effect except redirect who exactly receives that money.




Not at all because this isn't a normal market. For every extra dollar owners bring in, salaries rise by 57 cents. The owners only see 43 cents of that dollar. With that they have to pay increased taxes because of their increased salary payments. They have to pay for increasing insurance costs (as salaries rise, insurance costs rise as well). So, of that extra dollar of revenue, owners might end up seeing 30 cents if they're extremely lucky (although it's probably closer to 25 cents). With that money, they have to pay for increased staffing, rising travel costs, rising cost of living adjustments for their non-player staff, rising advertising rates, and all the other major expenses that come with running a business. On top of all that, they owners who are struggling aren't the same owners who are seeing increased revenues. Atlanta's relocation to Winnipeg cost the rest of the league several million dollars a year in rising salary costs, even though they hardly saw a cent (a one time relocation fee didn't come close to covering the long term expense increase).
But the NHL agreed (or even set up, maybe) to the business model that allows for X amount of percentage to be tied to salary, and agreed on the cap floor and ceiling numbers as a percentage. The way it kept going up every year, it is hard to believe anything but "these guys are paying way too much in player salaries to continue at this pace." Besides, no team was forced to spend to the cap ceiling.

I see much of the issue as the players being paid far too much of a percentage of overall revenue to continue operating the business. I won't fault either side for the past, but I can fault them now for not seeing that the salaries and percentages being paid are far too much to continue business at those rates. They can b!t@h and moan all about it, but the fact is, if your employer is losing money consistently because his employees are making too much, something drastic has to happen. They can both come to an agreement and reap profits, or have a falling out and screw everything up, or fix minor things and have another lockout next time, which is what they did 7 years ago.

Either way, it's neither the owners nor the players nor even us fans who will truly be hurting when the lockout comes to fruition. It's all the employees who have absolutely no say in the matter that get the shaft.

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09-05-2012, 08:45 AM
  #179
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Originally Posted by Dudicles View Post
But the NHL agreed (or even set up, maybe) to the business model that allows for X amount of percentage to be tied to salary, and agreed on the cap floor and ceiling numbers as a percentage. The way it kept going up every year, it is hard to believe anything but "these guys are paying way too much in player salaries to continue at this pace." Besides, no team was forced to spend to the cap ceiling.

I see much of the issue as the players being paid far too much of a percentage of overall revenue to continue operating the business. I won't fault either side for the past, but I can fault them now for not seeing that the salaries and percentages being paid are far too much to continue business at those rates. They can b!t@h and moan all about it, but the fact is, if your employer is losing money consistently because his employees are making too much, something drastic has to happen. They can both come to an agreement and reap profits, or have a falling out and screw everything up, or fix minor things and have another lockout next time, which is what they did 7 years ago.

Either way, it's neither the owners nor the players nor even us fans who will truly be hurting when the lockout comes to fruition. It's all the employees who have absolutely no say in the matter that get the shaft.
well the employer told the players that this deal was going to solve their issues, and now the employer is the one saying well this deal is unacceptable.

i highly doubt that the NHL as a whole is losing money, why would you pay Gary more money up to his now $8 million a year if he is losing money for you? what both sides need to do is agree to their share.

owners pony up more for revenue sharing, players take a pay cut, but the player pay cut somes in terms of 1-1.5% per year for a few years, maybe the first year its something like 2% (bring player share to 55) then a 1.5% (53.5) then a 1.5 (52), from there we see how revenues are doing and the NHL is still growing and healthy with revenue sharing it would stop there.

cap wise it goes down by about 1.4 million this year,


so that over a course of several years player share goes down to say a 50-50 split.


i had another sort of crazy ideal tho. and that would be moving to a hybrid cap system.

i don't know if i will explain this right, but the general idea is you have two caps, one is a hard cap, the other is a earned bonus cap. so essentially contracts would be composed of two parts, one part you pay which is guaranteed pay and the 2nd portion being performance bonuses you can ear. so say on a $5 million contract, you have a 2.4 hard pay, with 3.6 a player can earn in bonus money.

so a cap based on revenues is something like say 70 million, guaranteed portion would be 60% so the cap would be 42,000,000 with floor being something lower, but you would have the other 27 million to spend on bonuses that could or couldn't be reached so the real money pay out is less.

of course in this system the money for the cap is still paid in full by the owners, but not all of it will go to players, the remainder is used for things like revenue sharing.

sort of a rough idea but its a way to keep costs down and at the same time allow players to earn more with performance bonuses.

this system would have to be phased in so that teams have a chance to make cap room, next year players wold start signing contracts that are hybrid in nature, it's also a perfect solution for guys like Gui.

in addition both the players and owners need to agree on the the earning scale. but that would add a bit of spice on negotiations, players would have harder choices to make rather then just one of 10 offers for x million dollars.

anywho it might just be all blabber talk.

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09-05-2012, 09:09 AM
  #180
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I still think if they do a linear equation with an added constant, it would help things out quite a bit. It wouldn't de-link salaries and revenues, but it would minimize the amount of sway up or down.

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09-05-2012, 11:07 AM
  #181
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Interesting Article I just stumbled upon...

Slightly dated, but a good read.

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09-05-2012, 01:17 PM
  #182
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Quote:
With risk of lockout, #nhl canceling media tour where they bring top players to NY to meet with big media outlets
http://twitter.com/Russostrib/status/243412199140388866

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09-05-2012, 01:36 PM
  #183
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Originally Posted by Dudicles View Post
But the NHL agreed (or even set up, maybe) to the business model that allows for X amount of percentage to be tied to salary, and agreed on the cap floor and ceiling numbers as a percentage. The way it kept going up every year, it is hard to believe anything but "these guys are paying way too much in player salaries to continue at this pace." Besides, no team was forced to spend to the cap ceiling.

I see much of the issue as the players being paid far too much of a percentage of overall revenue to continue operating the business. I won't fault either side for the past, but I can fault them now for not seeing that the salaries and percentages being paid are far too much to continue business at those rates. They can b!t@h and moan all about it, but the fact is, if your employer is losing money consistently because his employees are making too much, something drastic has to happen. They can both come to an agreement and reap profits, or have a falling out and screw everything up, or fix minor things and have another lockout next time, which is what they did 7 years ago.

Either way, it's neither the owners nor the players nor even us fans who will truly be hurting when the lockout comes to fruition. It's all the employees who have absolutely no say in the matter that get the shaft.
The deal the owners set up would have worked perfectly fine if league revenues didn't skyrocket due to unprecedented growth and a 20% adjustment in the exchange rate between US and Canada. Meanwhile, the deal led players to record profits. The tweaks the owners want to make will still leave player salaries well above those 2005 levels. Using a 50/50 split (which is near what this will end up as anyway) players will receive 85% more per season than they did in 05-06. The average salary has gone from $1.28MM a year to $2.37MM a year.

Also again, it doesn't matter whether teams spend to the ceiling or the floor, total salary expense is dead linked to HRR and is exactly the same no matter what they do.

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09-05-2012, 01:48 PM
  #184
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Originally Posted by forthewild View Post
well the employer told the players that this deal was going to solve their issues, and now the employer is the one saying well this deal is unacceptable.

i highly doubt that the NHL as a whole is losing money, why would you pay Gary more money up to his now $8 million a year if he is losing money for you? what both sides need to do is agree to their share.
Business finance is far more complicated than making money versus losing money. Teams have been losing money but as long as those losses are low, the ownership groups can earn greater profits from ancillary holdings. Furthermore, since most NHL owners end up selling the team eventually, there's also the investment factor of franchise values. If you lose $1MM in a year but your franchise value increases by $2MM, then you've really made $1MM on your investment.

Quote:
Originally Posted by forthewild View Post
owners pony up more for revenue sharing, players take a pay cut, but the player pay cut somes in terms of 1-1.5% per year for a few years, maybe the first year its something like 2% (bring player share to 55) then a 1.5% (53.5) then a 1.5 (52), from there we see how revenues are doing and the NHL is still growing and healthy with revenue sharing it would stop there.

cap wise it goes down by about 1.4 million this year,


so that over a course of several years player share goes down to say a 50-50 split.


i had another sort of crazy ideal tho. and that would be moving to a hybrid cap system.
Teams are losing money now, and want to fix it now. That stepping wouldn't even counteract expected salary growth. Revenue sharing isn't something that just magically appears. It needs to be paid by someone, and good luck getting the payer to agree to it.

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Originally Posted by forthewild View Post
i don't know if i will explain this right, but the general idea is you have two caps, one is a hard cap, the other is a earned bonus cap. so essentially contracts would be composed of two parts, one part you pay which is guaranteed pay and the 2nd portion being performance bonuses you can ear. so say on a $5 million contract, you have a 2.4 hard pay, with 3.6 a player can earn in bonus money.

so a cap based on revenues is something like say 70 million, guaranteed portion would be 60% so the cap would be 42,000,000 with floor being something lower, but you would have the other 27 million to spend on bonuses that could or couldn't be reached so the real money pay out is less.

of course in this system the money for the cap is still paid in full by the owners, but not all of it will go to players, the remainder is used for things like revenue sharing.

sort of a rough idea but its a way to keep costs down and at the same time allow players to earn more with performance bonuses.

this system would have to be phased in so that teams have a chance to make cap room, next year players wold start signing contracts that are hybrid in nature, it's also a perfect solution for guys like Gui.

in addition both the players and owners need to agree on the the earning scale. but that would add a bit of spice on negotiations, players would have harder choices to make rather then just one of 10 offers for x million dollars.

anywho it might just be all blabber talk.
Bonuses are almost completely verboten in the NHL (with the exception of ELCs and exceptional injury situations). This is for good reason too. There's far too many situations for those bonuses to do harm and create ill will between players, coaches, and owners. Oh Tampa's going to miss the playoffs and Stamkos is 1 goal away from earning a $3MM bonus? Bet he doesn't score if I play him with just AHL callups. The banning of bonuses from NHL contracts is an incredibly important thing at this point, and it shouldn't be taken back.

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09-05-2012, 04:13 PM
  #185
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Originally Posted by squidz View Post
The deal the owners set up would have worked perfectly fine if league revenues didn't skyrocket due to unprecedented growth and a 20% adjustment in the exchange rate between US and Canada. Meanwhile, the deal led players to record profits. The tweaks the owners want to make will still leave player salaries well above those 2005 levels. Using a 50/50 split (which is near what this will end up as anyway) players will receive 85% more per season than they did in 05-06. The average salary has gone from $1.28MM a year to $2.37MM a year.

Also again, it doesn't matter whether teams spend to the ceiling or the floor, total salary expense is dead linked to HRR and is exactly the same no matter what they do.
This isn't quite making sense to me: how would salary expenses be the same if a team spent the cap floor as opposed to the ceiling? If it's the same, there is no point to a min/max cap, as the number is worthless.

Also, that's a mighty big if involved to say the deal would have worked fine.

Regardless, I'm not arguing for the players, but I think the owners showed poor vision and finance management if the league is really losing as much money as they say.

Additional regardless--thanks for the reasoned and non-argumentative responses. Hopefully I haven't been coming off with any hostility as I haven't been trying to do that.

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09-05-2012, 04:49 PM
  #186
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NHLPA gives players lockout preparation memo

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09-05-2012, 04:58 PM
  #187
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With possible lockout approaching, NHL exec Bill Daly talks to Star Tribune

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09-05-2012, 09:42 PM
  #188
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I can't honestly believe it's come to this again, i should have known better though with Bettman and especially Fehr in charge, you can't honestly see less hope or be less depressed as a fan of hockey then seeing these worthless pieces of **** continue to ruin our league.

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09-06-2012, 02:36 AM
  #189
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Originally Posted by Dudicles View Post
This isn't quite making sense to me: how would salary expenses be the same if a team spent the cap floor as opposed to the ceiling? If it's the same, there is no point to a min/max cap, as the number is worthless.

Also, that's a mighty big if involved to say the deal would have worked fine.

Regardless, I'm not arguing for the players, but I think the owners showed poor vision and finance management if the league is really losing as much money as they say.

Additional regardless--thanks for the reasoned and non-argumentative responses. Hopefully I haven't been coming off with any hostility as I haven't been trying to do that.
There is some small impact from spending to the floor versus the cap for individual teams, but for the league as a whole there's no difference. Total player salaries are equal to exactly 57% of HRR. The salary cap is determined by taking 57% of estimated HRR for the season and adding $8MM to it. The floor is established as $8MM under it. When players are paid, some percentage of their check is held in escrow (it's usually around 25%). After financials are done for the year, actual HRR is calculated and if players were paid more than 57%, the difference is taken back from the amount held in escrow. If they were paid less than 57% the escrow money is fully released and each team provides players with a supplementary check for the difference.

Therefore, if all teams spend to the ceiling, players will be paid too much, and the money will be taken back out of escrow and given back to the teams. If all teams spend to the floor, players will be paid too little and the teams will have to issue additional payments. If all teams spend normally, but one team reduces their salary to the floor, that team will save some money. However, if multiple teams start doing it there's no savings effect.

As for the purpose of the cap, there's a couple. First, it limits the extent to which players salary goes to escrow. If there was no cap, escrow rates would need to be around 50% to ensure players don't end up being paid too much. Second, it prevents individual teams from "buying" talent. Pre-cap there were severe issues with smaller market teams simply being "feeders." The cap eliminated that. Third, the floor ensures that every team at least ices something that could be called an NHL team. While NYI desperately tries to avoid that, they've still failed to net a second top 3 pick recently.

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09-06-2012, 07:21 AM
  #190
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Originally Posted by squidz View Post
There is some small impact from spending to the floor versus the cap for individual teams, but for the league as a whole there's no difference. Total player salaries are equal to exactly 57% of HRR. The salary cap is determined by taking 57% of estimated HRR for the season and adding $8MM to it. The floor is established as $8MM under it. When players are paid, some percentage of their check is held in escrow (it's usually around 25%). After financials are done for the year, actual HRR is calculated and if players were paid more than 57%, the difference is taken back from the amount held in escrow. If they were paid less than 57% the escrow money is fully released and each team provides players with a supplementary check for the difference.

Therefore, if all teams spend to the ceiling, players will be paid too much, and the money will be taken back out of escrow and given back to the teams. If all teams spend to the floor, players will be paid too little and the teams will have to issue additional payments. If all teams spend normally, but one team reduces their salary to the floor, that team will save some money. However, if multiple teams start doing it there's no savings effect.

As for the purpose of the cap, there's a couple. First, it limits the extent to which players salary goes to escrow. If there was no cap, escrow rates would need to be around 50% to ensure players don't end up being paid too much. Second, it prevents individual teams from "buying" talent. Pre-cap there were severe issues with smaller market teams simply being "feeders." The cap eliminated that. Third, the floor ensures that every team at least ices something that could be called an NHL team. While NYI desperately tries to avoid that, they've still failed to net a second top 3 pick recently.
Ok, that actually makes sense. I wasn't thinking about it on that wavelength. Thanks!

Were I an owner, that would seem like a poor deal to me, as the players do not have to pay for travel, lodging, all the other employees, general business infrastructure, etc... It seems odd that they would receive so much of the percentage of revenue.

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09-06-2012, 07:30 AM
  #191
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Ok, that actually makes sense. I wasn't thinking about it on that wavelength. Thanks!

Were I an owner, that would seem like a poor deal to me, as the players do not have to pay for travel, lodging, all the other employees, general business infrastructure, etc... It seems odd that they would receive so much of the percentage of revenue.
the players used to receive way more, 24% more i believe before the owners locked them out and argued it down to 57%.

in any case, reading the strib article, it's interesting to see the point from NHL and what they are doing. i still hope we get to get a deal done by the 16th, i just want to watch the NHL.

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09-06-2012, 08:41 AM
  #192
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So did the league simply not expect to make as much money as they have since the last CBA? I mean, the cap went from ~$35mil to ~$70mil in 8 yrs. Rising salary cap obviously means rising costs so if ticket prices remained roughly the same, then profits go down as more money goes toward costs. Also, when it's broken down, that $2b/10 yr TV deal with NBC doesn't sound like much, especially for owners. $200m/yr divided by 30 teams = ~$6.7m/yr, and each team owner(s) gets 43% of that $6.7m. That's peanuts for a team. I don't know if I'm doing it right but that's what it looks like.

What would make sense to me is to set a cash cap determined by a percentage of the projected year's revenues, say around %48, but have the cap stop increasing once it hits a particular point, like around $55-60m. That way it might prevent player salaries from far exceeding the costs. NHL revenues are by and large gate-driven, but if revenues continue to shoot up without corresponding increases in ticket prices, then teams will continue to lose money, especially the smaller market teams. However, fans don't really want to see their ticket prices continue to shoot up either, particularly when their teams continue to suck or if they're in non-traditional markets. Setting a limit in salary cap increases might help to slow that down.

squidz, thoughts? Your explanations of the business side of the negotiations have been very helpful.

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09-06-2012, 09:05 AM
  #193
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09-06-2012, 09:16 AM
  #194
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Total league revenues increased, but it wasn't a static increase among all teams. A big chunk of it came from TV deals and the large teams at the top who were already profitable. But those revenues raised the salary floor, which raised costs for the little teams.

So maybe of the say 80% increase in revenues, Toronto's revenue might have gone up 80% or more, but Phoenix revenue did not. Yet their costs went up by maybe 50% or more due to rising salary floor.

That's why breaking the link between salaries and revenues is a good idea (or at least a soft de-link like I have proposed), as is a rollback (maybe at the 15% escrow levels), increased revenue sharing, and a lower salary floor from the new calculations.

Theoretically, the owners could have colluded to keep salaries artificially low. Teams didn't have to spend to the cap but could have all spent at the floor, keeping salaries 20% lower. But they didn't. This is why many of us say the owners are punishing the players for their own bad behavior. They gave out the huge overpayment long term contracts and are now crying foul.

Granted it wasn't the small market teams causing problems, but many of the smaller teams were unable to compete for high end free agents. Minnesota never did a long term contract before this past summer. I don't think places like Florida, Phoenix, Atlanta, Carolina, etc were giving out 10+ year $80+M contracts, but they were getting hurt because of it.

Imagine if contracts are capped at 6 years and say $8M. How many more teams could get in on the bidding? A lot.

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09-06-2012, 09:30 AM
  #195
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Also, underagers who played NHL last season as 18 yr olds, and still eligible this season for jr (i.e. Nugent-Hopkins), COULD play in AHL.
http://twitter.com/TSNBobMcKenzie/st...16858635759616

Well, that's interesting.

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09-06-2012, 09:35 AM
  #196
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Revenues are not profits.

Revenues - cost = profits.

If profits are negative, that is bad, even if revenues are high. Profits are the only thing that matters when keeping a business open.

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09-06-2012, 10:27 AM
  #197
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Revenues are not profits.

Revenues - cost = profits.

If profits are negative, that is bad, even if revenues are high. Profits are the only thing that matters when keeping a business open.
Exactly why i am slowly sliding to siding with the owners...

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09-06-2012, 10:57 AM
  #198
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What the owners need to do is implement an actual revenue sharing agreement and then take those numbers to the players, and I think the players will be a little more sympathetic.

Right now all this posturing is doing no one any good.

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09-06-2012, 11:52 AM
  #199
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I still need to see some real hard numbers as to why a solid revenue sharing plan won't go toward fixing most of the problems. in now way am i saying players should get out of this CBA with out a reduction, but i want to see what say a 5-7% reduction with a solid revenue sharing plan would do for the league..

i'm getting tired of these he said she said they are wrong pissing matches.

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09-06-2012, 01:53 PM
  #200
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Originally Posted by lostpuppysyndrome View Post
So did the league simply not expect to make as much money as they have since the last CBA? I mean, the cap went from ~$35mil to ~$70mil in 8 yrs. Rising salary cap obviously means rising costs so if ticket prices remained roughly the same, then profits go down as more money goes toward costs. Also, when it's broken down, that $2b/10 yr TV deal with NBC doesn't sound like much, especially for owners. $200m/yr divided by 30 teams = ~$6.7m/yr, and each team owner(s) gets 43% of that $6.7m. That's peanuts for a team. I don't know if I'm doing it right but that's what it looks like.

What would make sense to me is to set a cash cap determined by a percentage of the projected year's revenues, say around %48, but have the cap stop increasing once it hits a particular point, like around $55-60m. That way it might prevent player salaries from far exceeding the costs. NHL revenues are by and large gate-driven, but if revenues continue to shoot up without corresponding increases in ticket prices, then teams will continue to lose money, especially the smaller market teams. However, fans don't really want to see their ticket prices continue to shoot up either, particularly when their teams continue to suck or if they're in non-traditional markets. Setting a limit in salary cap increases might help to slow that down.

squidz, thoughts? Your explanations of the business side of the negotiations have been very helpful.
Jarick touched on one of the issues (distribution of revenues). Mostly, the reason things spiraled out of control so much is that the league honestly never expected anything near the success they had. In fact, the 2005 CBA had expectations that league revenues would stay down in the $2BN range judging from the stepping that was done. In fact, the 57% itself was only because the league grew so much. After the 2005-2006 season the floor and the cap rose at different rates because revenues triggered a caveat in the CBA.

Another extremely major factor is currency rates. In the NHL, all player expense transactions must be done in USD. At the start of the NHL year in 2005, 1CAD = 0.85USD. As of my typing, 1CAD = 1.02USD. That's a 20% increase in the Loonie. If we assume for a moment that every team in 2005-2006 was making an equal amount of revenue (they weren't, this is just demonstration, we're also going to ignore Winnipeg), and we assume HRR = $1.8BN (which is somewhat close): Each Canadian team made $60MM so the 6 together made $360MM. Even without other changes in revenue, the currency change would have increased that to 1.2 * $360MM = $432MM. That's a $72MM increase, spread amongst 30 teams, so each other team (making the same amount of money) has $2.4MM * 57% = $1.37MM in additional salary costs to them solely because exchange rates adjusted.




As for solutions to the issues, that's far more complicated because the easy options for the league won't be accepted by the players, and the players generally don't care about and don't understand the situation the league is in. They keep trying to pitch things that no league would ever accept, and often that wouldn't have much of an effect upon the issue at hand. Ultimately, I'd be surprised by a work stoppage that caused missed games. The players are just stalling because they believe the later they get a deal done, the less "extra" over the ultimate 50/50 split the league will be able to negotiate. On September 15, the league will likely be willing to accept a 50/50 split, and most of the other details have already been worked out. The players have to know that the owners will "win" any work stoppage, they're just putting up their token resistance to try alleviate the leverage the league has over them.

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