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The Business of Hockey Discuss the financial and business aspects of the NHL. Topics may include the CBA, work stoppages, broadcast contracts, franchise sales, NHL revenues, relocation and expansion.

The Cap: Locality Adjustments

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06-22-2013, 10:19 AM
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Synergy27
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The Cap: Locality Adjustments

I'm a federal employee currently living in the NYC area and thinking about relocating to the PNW. This move is almost definitely going to entail a significant pay-cut for me, but it should all come out in the wash given the lower cost of living out there. This got me thinking about the Cap this morning, though, and how it's unfair to the big market teams on yet another level - not only do they make the most money for the league, but the big bucks that their players get don't go nearly as far in a place like Toronto as they would in say, Columbus.

Would it make sense to add a locality modifier onto each team's Cap number, or is this ridiculous to consider because once you start making high 6-figure salaries an extra 15-20% starts to become far less tangible?

OPM locality scales are here if anyone is interested.


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06-22-2013, 10:37 AM
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Finnish your Czech
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I think most cities with higher cost of living are in general better for a rich athlete than a city with a low cost of living.

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06-22-2013, 10:51 AM
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Fugu
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Quote:
Originally Posted by Synergy27 View Post
I'm a federal employee currently living in the NYC area and thinking about relocating to the PNW. This move is almost definitely going to entail a significant pay-cut for me, but it should all come out in the wash given the lower cost of living out there. This got me thinking about the Cap this morning, though, and how it's unfair to the big market teams on yet another level - not only do they make the most money for the league, but the big bucks that their players get don't go nearly as far in a place like Toronto as they would in say, Columbus.

Would it make sense to add a locality modifier onto each team's Cap number, or is this ridiculous to consider because once you start making high 6-figure salaries and extra 15-20% starts to become far less tangible?

OPM locality scales are here if anyone is interested.
Depends on where out here you will try to move to, but Seattle-Bellevue-Redmond isn't exactly cheap. Housing prices (the current reality) are similar to Boston, plus these guys didn't see as much of downturn as the rest of the country.

Washington also has no state income tax.

In terms of your question, I think it simply becomes an issue for the players to consider if they have several options. California, for example, is much more expensive than the official calculators suggest, but the pay difference never really makes up the difference-- for normal people. You end up deciding if the 'sun dollars' are worth it for you.

I don't believe it would be worth it to adjust the cap however.

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06-22-2013, 01:37 PM
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While there are some set differences in cost of living, most importantly taxes, subjective differences throw a wrench into the whole idea.

If NY teams get a 10% increase, does Boston get 5%, Montreal? If players "want" to play in those cities more than others, how much does that compensate for extra costs?



unless there is a fair way to measure those subjective variables, i think its much too contentious an idea.

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06-22-2013, 04:55 PM
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Synergy27
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Originally Posted by Fugu View Post
Depends on where out here you will try to move to, but Seattle-Bellevue-Redmond isn't exactly cheap. Housing prices (the current reality) are similar to Boston, plus these guys didn't see as much of downturn as the rest of the country.

Washington also has no state income tax.

In terms of your question, I think it simply becomes an issue for the players to consider if they have several options. California, for example, is much more expensive than the official calculators suggest, but the pay difference never really makes up the difference-- for normal people. You end up deciding if the 'sun dollars' are worth it for you.

I don't believe it would be worth it to adjust the cap however.
I'm looking at Portland by the way. Also not exactly cheap, but certainly a bargain when compared to where I am currently living.

I never really put much thought into how the US government goes about calculating their locality adjustments, but it has to be based on a reasonable amount of data. I agree that it would be contentious at best for the NHL to implement, and it may end up being redundant or tipping the scales too far in the other direction because the expensive markets are expensive because they are "desirable" to more people. I'd also like to think that cost of living is a factor to consider for anyone when deciding whether or not to sign a contract, but I'm sure there is some threshold salary where that becomes almost negligible.

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