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Solution to Cap Circumvention

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Old
12-19-2012, 11:19 PM
  #1
Ziggy Stardust
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Solution to Cap Circumvention

So the league and the players have discussed ways to eliminate contracts that circumvent the salary cap. Two ideas have been lobbied thus far:

a) A cap on salary variance. The league proposed a 5% variance from year-to-year. The players countered with 25%.


b) A term limit on contract lengths. The NHL is proposing a 5-year limits, with 7-year limits for teams re-signing their respective free agents. The players are proposing an 8-year term limit.

SOURCE: http://www.mlive.com/redwings/index....n_wednesd.html

Quote:
The league wants a five-year limit on contracts (seven years for a club's own free agents), a five-percent maximum salary variance in contracts and a 10-year CBA (with an opt-out clause after eight years). Owners also oppose a cap on escrow payments and an amnesty clause, which would enable teams to buy out a player without a salary-cap penalty.

Players have proposed an eight-year limit on contracts, a 25-percent salary variance in contracts and a eight-year CBA (with an opt-out clause after six years). They also want a cap on escrow payments (money taken out of players' checks to assure both sides receive their agreed upon share of revenues) and favor the amnesty buyout.
My suggestions:

a) Eliminate year-to-year salary variance. By doing so, cap circumventing contracts are eliminated and the league would no longer have to pursue a term limit.

b) Tiered term limits on contracts. Players signing their 2nd contract (after their ELC) will have a 5-year term limit, whether they sign with their current club or another hockey club. A player signing his 3rd contract will have a 7-year term limit, or a 9-year term limit if re-signing with his current hockey club.

Using Steven Stamkos as an example. After completing his ELC, he signs a 5-year contract (which is exactly what he did). His 2nd contract will expire when he is 27 and he will be eligible to become a UFA. He can stay in Tampa Bay and sign a 9-year deal that will keep him there until he is 36, or he can test free agency, sign a 7-year deal, and have another go at free agency when he is 34. He could still earn a favorable contract as a free agent whether he is 34 or 36, as have many other older stars in past years.

The multi-tiered system would have to come with cap variance, which I would set at 10-percent. There term limits with 10-percent cap variance will prevent teams from front loading.


I can't fathom why both sides are refusing to give-and-take on cap variance and term limits. The fact that the players have proposed their own numbers on these issues opens the door for acceptance for these two new mechanisms to SPCs. There is wiggle room for the NHL to negotiate a fair and sensible number on term limits and cap variance. It does not have to be a hill for Bill Daly to die on.

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12-19-2012, 11:30 PM
  #2
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The owners want the 5-year term because they say it is the maximum contract on which they can get insurance. Again, they are protecting themselves from each other. Once on one owner is willing to take the risk of offering a contract that cannot be insured others will follow.

If nothing else the last CBA proved that the GMs will convince their owners to bend the rules when it benefits their franchise on the ice.

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12-19-2012, 11:44 PM
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Insurance is an issue for the owners. For players, they are fighting for the little guys.

Let's use an example, and to simplify, take the last CBA and change what you proposed.
Crosby signs:
Under old CBA: 12 years, 104m contract > Caphit = 8.7m
Under your rule:9 year, 90m contract > Caphit = 10m

What makes you think the players would be ok with this?

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12-19-2012, 11:57 PM
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Quote:
Originally Posted by HavlatMach9 View Post
Insurance is an issue for the owners. For players, they are fighting for the little guys.

Let's use an example, and to simplify, take the last CBA and change what you proposed.
Crosby signs:
Under old CBA: 12 years, 104m contract > Caphit = 8.7m
Under your rule:9 year, 90m contract > Caphit = 10m

What makes you think the players would be ok with this?
The option to trade for cap space gives clubs more flexibility and wiggle room compared to the expired CBA.

If they are so concerned for the little guys, then the top stars would command a little less so that money can be distributed to lesser players.

The league minimum for players' salaries has gone up every other year and will be going up again when the next CBA is signed (as it has already been agreed upon).

The lower level guys will be just fine. The top players will always find a way to earn their money, whether it's through their NHL salary or endorsements and what not. If the players are so concerned about what the average player earns, then how about they distribute their earnings to their fellow players just as the players are requesting the owners do with their fellow partners in the NHL?

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12-20-2012, 12:31 AM
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Quote:
Originally Posted by Ziggy Stardust View Post
then how about they distribute their earnings to their fellow players just as the players are requesting the owners do with their fellow partners in the NHL?
The players themselves say that back diving contract means more for the average players. I only stated what players seem to be parroting all the time. They want their cake and eat it too.

The keep saying we keep giving in, and an issue like constant salary is something the players would also be against heavily, but your idea of tired limit is something the players would consider. The NHL would probably love constant salary, but the limit seems to be influenced by insurance.

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12-20-2012, 01:09 AM
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Quote:
Originally Posted by HavlatMach9 View Post
Insurance is an issue for the owners. For players, they are fighting for the little guys.

Let's use an example, and to simplify, take the last CBA and change what you proposed.
Crosby signs:
Under old CBA: 12 years, 104m contract > Caphit = 8.7m
Under your rule:9 year, 90m contract > Caphit = 10m

What makes you think the players would be ok with this?
Maybe it's the wine, but who exactly is the little guy in your example?

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12-20-2012, 01:56 AM
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Originally Posted by craigcaulks View Post
Maybe it's the wine, but who exactly is the little guy in your example?
Sorry wasn't clear. Anyone less than a star player. Star players will continue to get the same money. Crosby has a 8.7m caphit, but gets almost 12m for many many years. In the new system, Crosby would look to get near max, except the length limit would mean his cap hit would rise.

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12-20-2012, 02:26 AM
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Another great thoughtful and interesting post ziggy.

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12-20-2012, 02:51 AM
  #9
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Which Insurance company's are they using? I've heard that Lloyd's of London underwrites anything.
Magic Finger
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Keith Richards, the guitarist for the hit rock band, The Rolling Stones, has his middle guitar finger insured for more than $1.5 million dollars. Not the whole hand, either, just a single finger.
http://usinsurancenet.com/general/un...ance-policies/

http://money.howstuffworks.com/perso...don.htm#page=6

The lockout was planned well in advance unless you think the NHL called up the insurance company on Sept 15th.

http://usatoday30.usatoday.com/sport...nce/57802688/1


Last edited by rockinghorse: 12-20-2012 at 03:02 AM.
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12-20-2012, 03:01 AM
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Add in that multiple year contracts must conclude on or one year prior at age 36. And max length after age 35 can only be a maximum of 4years. And as an owner it would sound fair to me.

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12-20-2012, 03:42 AM
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Continuing on the insurance trail.

From what I am understanding is that insurance has exclusions for previous injuries. This could mean that Sidney Crosby's new contract may not be insurance claimable if his career is ended due to concussion.

Also:

http://www.ctvnews.ca/insurance-firm...sions-1.762964

Quote:
With the number of concussions growing in the National Hockey League, insurance companies are considering throwing the financial burden back on the league's teams.
More than 60 NHL players are sidelined with head injuries this season including Pittsburgh Penguin captain Sidney Crosby.
Quote:
The spike in concussions can be traced to a couple factors. Players are bigger and the game is faster, equipment is lighter and harder, and new rules like curbing interference and obstruction and eliminating the centre line for two-line off sides have sped up the game.
The NHL is responsible for more head and other injuries so by shortening the contract lengths they mitigate their financial liability.

This is the real reason for "THE HILL TO DIE ON". Plus it is easier to discard players if they do get injured and replace them with shiny new unbroken ones.

NHL has 60 concussions in one year. Does anyone have the concussion stats for the NBA, MLB and NFL?

I'm starting to think that the players deserve more than 50/50 if they are playing in a sport with higher chances to lose brain function.


Last edited by rockinghorse: 12-20-2012 at 03:47 AM.
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12-20-2012, 03:53 AM
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Quote:
Originally Posted by rockinghorse View Post
Continuing on the insurance trail.

From what I am understanding is that insurance has exclusions for previous injuries. This could mean that Sidney Crosby's new contract may not be insurance claimable if his career is ended due to concussion.

Also:

http://www.ctvnews.ca/insurance-firm...sions-1.762964





The NHL is responsible for more head and other injuries so by shortening the contract lengths they mitigate their financial liability.

This is the real reason for "THE HILL TO DIE ON". Plus it is easier to discard players if they do get injured and replace them with shiny new unbroken ones.

NHL has 60 concussions in one year. Does anyone have the concussion stats for the NBA, MLB and NFL?

I'm starting to think that the players deserve more than 50/50 if they are playing in a sport with higher chances to lose brain function.
Supposedly, the NFL had 162 reported head injuries in 2011 from what I found on this ambulance chasers website, http://www.hagen-law.com/nfl-concussion-statistics/

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12-20-2012, 05:50 AM
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Originally Posted by HavlatMach9 View Post
The players themselves say that back diving contract means more for the average players. I only stated what players seem to be parroting all the time. They want their cake and eat it too.
While the owners are abusing the cap Crosby with his back diving contract, and his friends with BDCs are basically abusing the systems to short change millions from their fellow players via escrow.

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12-20-2012, 08:36 AM
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Why do they need a solution for something that doesnt exist? The league is protected by escrow payments against any of the long term deals. Ignore it, it's not a problem.

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12-20-2012, 08:55 AM
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Originally Posted by Halibut View Post
Why do they need a solution for something that doesnt exist? The league is protected by escrow payments against any of the long term deals. Ignore it, it's not a problem.
It's about leveling the playing field and insurrance, it definitely is a problem.

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12-20-2012, 10:14 AM
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Originally Posted by Halibut View Post
Why do they need a solution for something that doesnt exist? The league is protected by escrow payments against any of the long term deals. Ignore it, it's not a problem.
Escrow doesn't protect against cap circumventing contracts, nor address the contract insurability concern.

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12-20-2012, 11:54 AM
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Quote:
Originally Posted by Ziggy Stardust View Post
So the league and the players have discussed ways to eliminate contracts that circumvent the salary cap. Two ideas have been lobbied thus far:

a) A cap on salary variance. The league proposed a 5% variance from year-to-year. The players countered with 25%.


b) A term limit on contract lengths. The NHL is proposing a 5-year limits, with 7-year limits for teams re-signing their respective free agents. The players are proposing an 8-year term limit.

SOURCE: http://www.mlive.com/redwings/index....n_wednesd.html



My suggestions:

a) Eliminate year-to-year salary variance. By doing so, cap circumventing contracts are eliminated and the league would no longer have to pursue a term limit.

b) Tiered term limits on contracts. Players signing their 2nd contract (after their ELC) will have a 5-year term limit, whether they sign with their current club or another hockey club. A player signing his 3rd contract will have a 7-year term limit, or a 9-year term limit if re-signing with his current hockey club.

Using Steven Stamkos as an example. After completing his ELC, he signs a 5-year contract (which is exactly what he did). His 2nd contract will expire when he is 27 and he will be eligible to become a UFA. He can stay in Tampa Bay and sign a 9-year deal that will keep him there until he is 36, or he can test free agency, sign a 7-year deal, and have another go at free agency when he is 34. He could still earn a favorable contract as a free agent whether he is 34 or 36, as have many other older stars in past years.

The multi-tiered system would have to come with cap variance, which I would set at 10-percent. There term limits with 10-percent cap variance will prevent teams from front loading.


I can't fathom why both sides are refusing to give-and-take on cap variance and term limits. The fact that the players have proposed their own numbers on these issues opens the door for acceptance for these two new mechanisms to SPCs. There is wiggle room for the NHL to negotiate a fair and sensible number on term limits and cap variance. It does not have to be a hill for Bill Daly to die on.
Simple- whatever is paid out that year is the cap hit. A front loaded contract has a big cap hit early on.

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12-20-2012, 01:17 PM
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To throw a previous idea into the ring, my idea was this.

For any contract 6 years or longer, divide the number of years in half (or minus one then in half, for odd numbers). Take the highest salary years that match that, and the average there is the individual cap hit.

To use the Christian Ehrhoff contract as an example, it's a 10-year contract for $40 million; the cap hit is $4 million. In this case, the five highest-paid years would be calculated, then divided by that number of years. That comes out to $30 million, divided by 5 years, and make it a $6 million/year cap hit.

Luongo's 12-year deal would take the six highest years, which totals $43,572,000. His cap hit would go from $5,333,333 to $7,262,000. Jeff Carter's 11-year deal would take the five highest, which is $33,750,000...cap hit goes from $5,272,727 to $6,750,000. Mike Richards' 12 years would be $42,000,000 over six years, for a $7,000,000 cap hit rather than $5,750,000.

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12-20-2012, 01:55 PM
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Even if we call these "cap circumventing" contracts, they arent really causing such devastation that would warrant the leagues current actions. No owner is losing money because some other teams chose to offer these long contracts to one or two of their elite players.

The NFL currently has many front loaded contracts and signing bonuses such that some teams are way over the cap hit cap.

One of the reasons often put forth against front loaded contracts is that it violates the spirit of 30 equal teams. But c'mon, is that fairy tale ideal serious? It has never existed. It will never exist. And its silly to want it to exist. The 30 teams are all at various stages in the team building life cycle. Ottawa was an aging cap team. Now its getting annoying that we are forced to spend to the floor cause many of us would rather develop this year with piles of prospects and think that spending way below the floor is a wiser long term team building decision.

Forcing this financial spending parity thinking this brings some competitive nobility or to mollify the cantankerous fans of poor teams or assuage a rich teams guilt, is artificial, abnormal, and a phony fairness.

The front loading allows the timing of success with your team building cycle. It doesnt hurt the owners bottom line. It doesnt hurt the players. Its the fans that are always looking for this advantage of how can we get our own players cheaper some how to win a Cup. As long as teams are punished if they try to get out of the back half, you can pay me now, or you can pay me later, why are so fans so upset with this idea of variance in contracts.

In fact i still remember when this cba was first being revealed in dribs and drabs and someone posted about the 50% rule, and it wasnt but a few hours until a thread had started about back diving contracts. Of course it wouldnt be fair to have expected the army of cba lawyers to have foreseen and accounted for those i guess. But fans wanted this, thought it was a great idea. Why now is this now such a hill for fans to want to plant a flag on too?

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12-20-2012, 01:55 PM
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Quote:
Originally Posted by Mayor Bee View Post
To throw a previous idea into the ring, my idea was this.
There are probably a million ways to ideally fix cap circumvention, but players would be against them all.

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12-20-2012, 04:20 PM
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Originally Posted by thinkwild View Post
Even if we call these "cap circumventing" contracts, they arent really causing such devastation that would warrant the leagues current actions. No owner is losing money because some other teams chose to offer these long contracts to one or two of their elite players.

The NFL currently has many front loaded contracts and signing bonuses such that some teams are way over the cap hit cap.

One of the reasons often put forth against front loaded contracts is that it violates the spirit of 30 equal teams. But c'mon, is that fairy tale ideal serious? It has never existed. It will never exist. And its silly to want it to exist. The 30 teams are all at various stages in the team building life cycle. Ottawa was an aging cap team. Now its getting annoying that we are forced to spend to the floor cause many of us would rather develop this year with piles of prospects and think that spending way below the floor is a wiser long term team building decision.

Forcing this financial spending parity thinking this brings some competitive nobility or to mollify the cantankerous fans of poor teams or assuage a rich teams guilt, is artificial, abnormal, and a phony fairness.

The front loading allows the timing of success with your team building cycle. It doesnt hurt the owners bottom line. It doesnt hurt the players. Its the fans that are always looking for this advantage of how can we get our own players cheaper some how to win a Cup. As long as teams are punished if they try to get out of the back half, you can pay me now, or you can pay me later, why are so fans so upset with this idea of variance in contracts.

In fact i still remember when this cba was first being revealed in dribs and drabs and someone posted about the 50% rule, and it wasnt but a few hours until a thread had started about back diving contracts. Of course it wouldnt be fair to have expected the army of cba lawyers to have foreseen and accounted for those i guess. But fans wanted this, thought it was a great idea. Why now is this now such a hill for fans to want to plant a flag on too?

You should google the words "Shea Weber"

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12-20-2012, 04:28 PM
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something which had been thrown around by both sides earlier in the CBA but not brought up lately- any chance we see something along the likes of a franchise tag?

A team can designate one player as the franchise player each year with such player getting a cap exemption. That would at least spread out the star power.

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12-20-2012, 04:37 PM
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Quote:
Originally Posted by Ziggy Stardust View Post
So the league and the players have discussed ways to eliminate contracts that circumvent the salary cap. Two ideas have been lobbied thus far:

a) A cap on salary variance. The league proposed a 5% variance from year-to-year. The players countered with 25%.


b) A term limit on contract lengths. The NHL is proposing a 5-year limits, with 7-year limits for teams re-signing their respective free agents. The players are proposing an 8-year term limit.

SOURCE: http://www.mlive.com/redwings/index....n_wednesd.html



My suggestions:

a) Eliminate year-to-year salary variance. By doing so, cap circumventing contracts are eliminated and the league would no longer have to pursue a term limit.

b) Tiered term limits on contracts. Players signing their 2nd contract (after their ELC) will have a 5-year term limit, whether they sign with their current club or another hockey club. A player signing his 3rd contract will have a 7-year term limit, or a 9-year term limit if re-signing with his current hockey club.

Using Steven Stamkos as an example. After completing his ELC, he signs a 5-year contract (which is exactly what he did). His 2nd contract will expire when he is 27 and he will be eligible to become a UFA. He can stay in Tampa Bay and sign a 9-year deal that will keep him there until he is 36, or he can test free agency, sign a 7-year deal, and have another go at free agency when he is 34. He could still earn a favorable contract as a free agent whether he is 34 or 36, as have many other older stars in past years.

The multi-tiered system would have to come with cap variance, which I would set at 10-percent. There term limits with 10-percent cap variance will prevent teams from front loading.


I can't fathom why both sides are refusing to give-and-take on cap variance and term limits. The fact that the players have proposed their own numbers on these issues opens the door for acceptance for these two new mechanisms to SPCs. There is wiggle room for the NHL to negotiate a fair and sensible number on term limits and cap variance. It does not have to be a hill for Bill Daly to die on.
People keep quoting this incorrect info. The owners want no more than a 5% variance, the players want a 75% variance (not 25%).

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12-20-2012, 04:53 PM
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Ziggy Stardust
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Quote:
Originally Posted by Ron C. View Post
People keep quoting this incorrect info. The owners want no more than a 5% variance, the players want a 75% variance (not 25%).
Can you quote this correct information then? That's quite a significant gap.

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12-20-2012, 08:33 PM
  #25
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Originally Posted by leeaf83 View Post
something which had been thrown around by both sides earlier in the CBA but not brought up lately- any chance we see something along the likes of a franchise tag?

A team can designate one player as the franchise player each year with such player getting a cap exemption. That would at least spread out the star power.
Why would it "spread out the star power"? It would only help teams that are already at the cap upper limit, most of whom already have some number of star players on their roster.

I would argue a rule like that would have the opposite effect of concentrating star power--allowing the top spending teams to sign more of the best free agent talent than the cap currently allows them to do.

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