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HNIC: What Players Stand to Lose Under NHL's Offer

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Old
10-25-2012, 03:31 PM
  #1
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HNIC: What Players Stand to Lose Under NHL's Offer

HNIC has crunched the numbers on what a 13% pay cut means to various players under their current contracts.

http://www.cbc.ca/sports/hockey/opin...gue-offer.html

Quote:
Ovechkin

He has nine seasons and $88 million US, including 2012-13, remaining on his current contract, for an average salary of $9.78 million per year. That means his earnings would be reduced to $76.56 million, or $8.5 million a season. That's a loss of $1.28 million per year.

Sidney Crosby

The 12-year, $104-million extension that Sid the Kid signed in the summer doesn't begin until next season. With this season's salary, $7.5 million, added in, his $111.5-million - making for an average salary of $8.58 million - would be reduced to $97 million and $7.46 million, or $1.12 million per year.

Zach Parise and Ryan Suter

The friends inked identical $98-million, 13-year free-agent contracts with the Minnesota Wild in July. Each already has received a $10-million signing bonus, and is due $10 million up front next season and $5 million more in 2014-15. That leaves $83 million on their deals, which if slashed by 13 per cent would be reduced to $72.21 million.


Last edited by mouser: 10-25-2012 at 06:46 PM. Reason: don't quote entire articles
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10-25-2012, 03:35 PM
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Quote:
Originally Posted by UsernameWasTaken View Post
HNIC has crunched the numbers on what a 13% pay cut means to various players under their current contracts.

http://www.cbc.ca/sports/hockey/opin...gue-offer.html
that's an awful lot of money per player per year.

I would be livid if someone told me I was going to lose 1.28 million.

But that's just me.

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10-25-2012, 03:39 PM
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The author of this article does not have a strong grasp of NHL economics.

This just doesn't make sense.

This is NOT a rollback. Salaries are not being reduced.

What happens is that if the players share exceeds 50% under than NHL's last offer, it's that percent the players are giving back via escrow. It's not a straight rollback of 13% going forward.

In a year or two when salaries have normalized back to the new standard, the players will be once again earning the the same amount of money as contracts (at least so much as in when the salaries are 50% of the that year's revenue, with escrow making the evening out), same as with the 57%. Their salaries are not being reduced for the length of the deal.


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10-25-2012, 03:43 PM
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Originally Posted by UsernameWasTaken View Post
HNIC has crunched the numbers on what a 13% pay cut means to various players under their current contracts.

http://www.cbc.ca/sports/hockey/opin...gue-offer.html
They're looking at losses of big contracts under the NHL's offer, yet they incorrectly applied the percentage as a rollback that will affect each remaining year on their contract. Unless we think that the NHL will remain stagnant at 3.3B or continually lose money for at least the next 12 years, these calculations are incorrect, lol.

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10-25-2012, 03:43 PM
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Quote:
Originally Posted by pld459666 View Post
that's an awful lot of money per player per year.

I would be livid if someone told me I was going to lose 1.28 million.

But that's just me.
Indeed, but if a season passes by Ovechkin stands to lose $9.78 million instead. Were the owner's proposal to go through he loses 10.24 million over eight years, but $18.74 million after a year goes by should the players then cave.

In short, they end up losing substantially more unless the owners are suddenly willing to move up from 50%

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10-25-2012, 03:47 PM
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Quote:
Originally Posted by HockeyCrazed101 View Post
They're looking at losses of big contracts under the NHL's offer, yet they incorrectly applied the percentage as a rollback that will affect each remaining year on their contract. Unless we think that the NHL will remain stagnant at 3.3B or continually lose money for at leas the next 12 years, these calculations are incorrect, lol.
And here is the kicker. If the league reaches say, four billion flat, within a three to four year period. At 50% the player's share is two billion, thus up from what it is correctly. I suppose, they missed that part.

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10-25-2012, 03:48 PM
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That article is complete nonsense. Ovechekin wouldn't lose 12% of his salary every year of his contract. He would only be getting less than his contract while the 50% share of HRR is less than the current 57%. At 5% growth he would be back to his salary in 3 years. This is ofcourse ignoring the whole make whole offer which would return most if not all of the missed salary back to him.

Shame on me for reading hte title of the thread thinking that a reporter would actually be able to understand the economics of the deal and write a meaningful article about it.

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10-25-2012, 03:52 PM
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Quote:
Originally Posted by HockeyCrazed101 View Post
They're looking at losses of big contracts under the NHL's offer, yet they incorrectly applied the percentage as a rollback that will affect each remaining year on their contract. Unless we think that the NHL will remain stagnant at 3.3B or continually lose money for at least the next 12 years, these calculations are incorrect, lol.
Even this is not correct.

Even if the revenue stays flat, the teams will be cutting salary(resigning guys cheaper) over the next few years to get under cap and the overall player percentage will drop down to the 50% range...and therefore players with signed contracts will be getting their full amount (depending on how the player share is every year versus revenue, corrected slightly via escrow).

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10-25-2012, 03:52 PM
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Quote:
Originally Posted by Bourne Endeavor View Post
And here is the kicker. If the league reaches say, four billion flat, within a three to four year period. At 50% the player's share is two billion, thus up from what it is correctly. I suppose, they missed that part.
With new contracts needing to be signed every year, once the players share reaches 1.8B and goes beyond that, any loss to a contract will be via escrow (which the players know because they've had 7 years under that system).

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10-25-2012, 03:54 PM
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Quote:
Originally Posted by Holden Caulfield View Post
Even this is not correct.

Even if the revenue stays flat, the teams will be cutting salary(resigning guys cheaper) over the next few years to get under cap and the overall player percentage will drop down to the 50% range...and therefore players with signed contracts will be getting their full amount (depending on how the player share is every year versus revenue, corrected slightly via escrow).
I was thinking of players share in total so I completely forgot about the implication of the salary cap for each team. Thanks for the correction.

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10-25-2012, 03:55 PM
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Quote:
Originally Posted by cheswick View Post
That article is complete nonsense. Ovechekin wouldn't lose 12% of his salary every year of his contract. He would only be getting less than his contract while the 50% share of HRR is less than the current 57%. At 5% growth he would be back to his salary in 3 years. This is ofcourse ignoring the whole make whole offer which would return most if not all of the missed salary back to him.

Shame on me for reading hte title of the thread thinking that a reporter would actually be able to understand the economics of the deal and write a meaningful article about it.
But that's not even 100% true under the owners last proposal. Firstly there is the "make whole" part which would simply defer a certain amount of his contract in the first year to other years. Secondly is that when contracts expire it (which I think 50%ish expire within the next two years) it will be much easier to bring overall salaries down to 50%.

I know about the make whole part being bs with the share coming from the players but that's not relevant to the effect of the proposal on current contracts.

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10-25-2012, 03:56 PM
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There is so much wrong in that article that people should point at it and laugh at it.

Let's just say the "Pay Whole" thing-a-ma-jig isn't there. The players only loose money on their current contracts when 50% * revenues are less than 2011-2012 revenues. That's correct right.

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10-25-2012, 04:01 PM
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Should also point out that Tim Stapleton signed with the KHL before the lockout. He wasn't coming to the NHL this upcoming season regardless.

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10-25-2012, 04:02 PM
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Quote:
Originally Posted by UsernameWasTaken View Post
HNIC has crunched the numbers on what a 13% pay cut means to various players under their current contracts.

http://www.cbc.ca/sports/hockey/opin...gue-offer.html
This also assumes the make whole process totally fails, this is a worst case, people should keep that in mind.

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10-25-2012, 04:05 PM
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Quote:
Originally Posted by Bourne Endeavor View Post
Indeed, but if a season passes by Ovechkin stands to lose $9.78 million instead. Were the owner's proposal to go through he loses 10.24 million over eight years, but $18.74 million after a year goes by should the players then cave.

In short, they end up losing substantially more unless the owners are suddenly willing to move up from 50%
Bingo we have a winner. Part of why I cannot understand what they players are doing.

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10-25-2012, 04:11 PM
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Originally Posted by pld459666 View Post
that's an awful lot of money per player per year.

I would be livid if someone told me I was going to lose 1.28 million.

But that's just me.
I'd be livid if I had to play overseas FOR 1.28M

I know Ovie is making more that in the KHL.... but most Canadian or American NHL guys heading over to Europe are lucky to make 1.28M

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10-25-2012, 04:21 PM
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Originally Posted by JMT21 View Post
I'd be livid if I had to play overseas FOR 1.28M

I know Ovie is making more that in the KHL.... but most Canadian or American NHL guys heading over to Europe are lucky to make 1.28M
The KHL has a rule in the percentage they pay. But considering the tax rules on these guys in NA, they are really getting their NHL salaries final take in some cases. Especially the high priced Russians that are probably picking up endorsements on top of that because they are playing at home right now.

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10-25-2012, 04:27 PM
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In addition to the errors pointed out already, it obviously doesn't say anything about the projected salary increases, which would negate the reduced share in a few years and go back to growing once again.

And let's not touch on the opportunity cost of losing a season for 95%+ of the players, where if they played elsewhere would be likely making a fraction of what they'd do in the NHL.

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10-25-2012, 04:30 PM
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Well when the NHL cancels the first 20 games of the season, everyone will get a actual 25% pay cut.

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10-25-2012, 04:35 PM
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The author of the article is a joke because anyone could have compiled those numbers with a scientific calculator in 5 minutes. However, I am pretty damn sure that many players aren't the smartest of the bunch and misinterpret things the same way. Losing one year of hockey means the players will end up being worse off which is why the owners will win this time.

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10-25-2012, 05:16 PM
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Quote:
Originally Posted by Bourne Endeavor View Post
Indeed, but if a season passes by Ovechkin stands to lose $9.78 million instead. Were the owner's proposal to go through he loses 10.24 million over eight years, but $18.74 million after a year goes by should the players then cave.

In short, they end up losing substantially more unless the owners are suddenly willing to move up from 50%
He will not lose 10.24m if they PA signed the deal. He'd lose something like 13% year 1, 5-8% year 2, and 3% year 3. The rest would be subject to regular escrow (which averaged 3% under the old CBA). So he'd lose maybe 2-3m... a far cry from 10.24m.

Use CBC's feedback to complain about their ****** reporting.

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10-25-2012, 05:23 PM
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Originally Posted by dcv2002 View Post
There is so much wrong in that article that people should point at it and laugh at it.

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10-25-2012, 06:05 PM
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Quote:
Originally Posted by Holden Caulfield View Post
The author of this article does not have a strong grasp of NHL economics.

This just doesn't make sense.

This is NOT a rollback. Salaries are not being reduced.

What happens is that if the players share exceeds 50% under than NHL's last offer, it's that percent the players are giving back via escrow. It's not a straight rollback of 13% going forward.

In a year or two when salaries have normalized back to the new standard, the players will be once again earning the the same amount of money as contracts (at least so much as in when the salaries are 50% of the that year's revenue, with escrow making the evening out), same as with the 57%. Their salaries are not being reduced for the length of the deal.
That's not really true. With the cap dropping as much as it would, I suspect the first season after the transition year would see more teams above the mid point than we normally see. With the players' share rolling back but with their cap numbers staying the same it'd create a climate of a bunch of teams with barely any space relative to the number of players on the market.

We saw something similar in 09-10 when the cap increased by only $100K and there was a leaguewide shortage of cap space. That led to 20 of the 30 teams spending more than $5 million above the mid point which led to 13% of player salary being kept at the end of the season.

Barring some other provisions, existing contracts would definitely lose more to escrow even if revenues increased back up. It's not a simple matter of assuming that once the players' share of revenues hit their current level again that they'd be back where they were last season. Once that happens there will likely just be more expensive contracts to dilute Ovechkin et al's contracts in the players' share thus reducing their take home pay.

I agree it's stupid to calculate it as a straight 13% over the life of the contracts, but it's also wrong to suggest that it won't have a long term effect regardless of what revenues do in the future.

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10-25-2012, 06:06 PM
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Isn't someone supposed to check articles before they're published for huge errors?

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10-25-2012, 07:01 PM
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Originally Posted by CN_paladin View Post
The author of the article is a joke because anyone could have compiled those numbers with a scientific calculator in 5 minutes. However, I am pretty damn sure that many players aren't the smartest of the bunch and misinterpret things the same way. Losing one year of hockey means the players will end up being worse off which is why the owners will win this time.
problem with that thought is not anticipating players taking a moral stand even if it means losing money in the short and long run.........otherwise EVERY top player would never resign in their last year and go for the big payday...SOMETIMES PLAYERS MAKE A STAND AND SIGN FOR LESS TO STAY WHERE THEY ARE.


flip side is owners could take the moral road and agree to cover the existing contracts
if the ywere really intrested in playing hockey over more profit

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