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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.

How much can the salary cap grow?

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Old
07-06-2017, 12:29 PM
  #26
madhi19
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For the next three years... Guess what happen in three years? Who know maybe they just change the whole system after the next lockout. It's not working out for anybody. The teams who make all the money can spend as much as they want. The teams that are at the bottom of the food chain have to reach the floor with money they don't have. Everybody is cheating one way or another anyway. It's a mess that does not need to exist.

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07-06-2017, 01:08 PM
  #27
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Quote:
Originally Posted by Ernie View Post
Hard to see how the league increases revenues greatly from here without growing the game internationally.

And the league shows very little interest in that.
The NHL is playing games in Europe this coming up season. How does that show little interest?

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07-06-2017, 01:09 PM
  #28
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Originally Posted by tony d View Post
I think we'll see it hit 80 million by the end of the decade. Expansion/relocation could help things as well.
I dont believe the expansion money is part of the HRR calc, but having another team with fans in the seats adds to it.

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07-06-2017, 04:07 PM
  #29
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If the Canadian dollar were to get back to par with the American dollar, how much impact would that likely have on the cap?

Asking because some people are much more financially knowledgeable than me!

The Canadian dollar could impact the fluctuations in the cap the most; moreso than a TV deal in 5 years, or overseas promotion.

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07-06-2017, 04:25 PM
  #30
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So what happens to the Escrow amount after the new CBA?

Will it get set back to zero or will it grow indefinitely.

I think I heard the real cap is only like 69 million. In ten years the salary cap could be completely out of wack of the true 50% revenue mark.

When do players like Crosby say enough is enough? His salary is getting watered down.

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07-06-2017, 04:26 PM
  #31
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Originally Posted by Cawz View Post
I dont believe the expansion money is part of the HRR calc, but having another team with fans in the seats adds to it.
Only if they bring in more than the league average.

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07-06-2017, 05:19 PM
  #32
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The league would be better served by better management. That aside, the NHL needs to come to grips with franchises that are just not making a go of it financially. Arizona, without a new arena, Miami, NJ Devils are the third team in a saturated market. Carolina is losing bucks yearly. Relocation is not a great move so maybe Bettmans pride should give way to better solutions.

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07-07-2017, 02:24 AM
  #33
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Originally Posted by chethejet View Post
The league would be better served by better management. That aside, the NHL needs to come to grips with franchises that are just not making a go of it financially. Arizona, without a new arena, Miami, NJ Devils are the third team in a saturated market. Carolina is losing bucks yearly. Relocation is not a great move so maybe Bettmans pride should give way to better solutions.
Interesting idea. How could it boost the league value, if the teams will be relocated to hockey-friendly markets?

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07-07-2017, 02:34 AM
  #34
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What are the chances the cap starts to really flatline, then we start seeing jersey ads like the nba is implementing

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07-07-2017, 03:09 AM
  #35
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Quote:
Originally Posted by Ernie View Post
Hard to see how the league increases revenues greatly from here without growing the game internationally.

And the league shows very little interest in that.
Agree.

Can't believe how poor the NHL is at trying to make it more European (and Asian for that matter) friendly.

In Norway it is ridiculously expensive to see games and you get nothing "extra" or tailored for the European market. So unless you are willing to sit up until 4am in the morning on weekdays you won't really be able to see many games. I will watch third periods from the west coast before going to work.

From a purely financial point of view they are in my opinion missing out. That said - for example moving games to make it more Euro-friendly obviously comes with a cost as well. Not necessarily as popular among the local fans - so if they are reluctant to move too many games to keep the local fans happy I can respect that. Doesn't mean they couldn't make like a "morning show" specifically for Europe to show highlights from last nights games etc. - even better if you could choose your team (which should be possible in 2017) and get only the highlights you want to see etc.

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07-07-2017, 05:57 AM
  #36
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Originally Posted by Havre View Post
Doesn't mean they couldn't make like a "morning show" specifically for Europe to show highlights from last nights games etc.
Partly that's the foreign TV stations sleeping at the wheel too (unless TV rights for these markets are expensive, in which case, yeah it's completely the NHL's fault). German media is going to try feet over ass to make the NHL happen two hours before Draisaitl hoists the cup. And then everyone will just be like: Who???

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07-07-2017, 07:28 PM
  #37
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Their TV revenues got that big push early on but now the contract isn't exactly good value so yeah you would think that they'd try to do a better job of squeezing out some cash from the European or Asian market. I think Gary Bettman is overrated as a negotiator tbh, that TV deal looked shiny when it was signed but we all knew that it wouldn't be great down the road and the potential damage it would do to the game's viewership.

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07-07-2017, 07:38 PM
  #38
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Quote:
Originally Posted by Nalens Oga View Post
Their TV revenues got that big push early on but now the contract isn't exactly good value so yeah you would think that they'd try to do a better job of squeezing out some cash from the European or Asian market. I think Gary Bettman is overrated as a negotiator tbh, that TV deal looked shiny when it was signed but we all knew that it wouldn't be great down the road and the potential damage it would do to the game's viewership.
I think we're in a period where everything seems terrible US TV contract-wise because of when it was signed and when it comes up again.

If the US TV deal came up at the same time as the NBA deal, I'm sure the annual US TV payouts would be significantly higher than they are. Unfortunately, it was signed a while ago and doesn't come up again for another 4(?) years. It just is what it is.

The league signed a deal a few years before TV sports broadcast rights went really crazy and will likely sign the next one after things settle down. It doesn't make the deal bad, it just means they have cruddy timing. If people keep moving to time shifting and on demand entertainment and TV networks are still in the business of selling ads and sponsorships I'm sure the next deal will have a significant bump in value. There's a lot of "ifs" there, though.

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07-07-2017, 10:47 PM
  #39
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Originally Posted by BattleBorn View Post
I think we're in a period where everything seems terrible US TV contract-wise because of when it was signed and when it comes up again.

If the US TV deal came up at the same time as the NBA deal, I'm sure the annual US TV payouts would be significantly higher than they are. Unfortunately, it was signed a while ago and doesn't come up again for another 4(?) years. It just is what it is.

The league signed a deal a few years before TV sports broadcast rights went really crazy and will likely sign the next one after things settle down. It doesn't make the deal bad, it just means they have cruddy timing. If people keep moving to time shifting and on demand entertainment and TV networks are still in the business of selling ads and sponsorships I'm sure the next deal will have a significant bump in value. There's a lot of "ifs" there, though.
A lot will depend on how ESPN and TNT do with regards to their NBA package. Did it benefit them or not? If ESPN and TNT overpaid, then you wouldn't expect the NHL rights when they are due to be nenewed get a big bump.

As for the separation of the haves and have nots, if the NHL is going to be at 31 teams (soon 32), you can't have teams that will never have a shot at winning. If the NHL was a 20 team league with the biggest 20 revenue generators, then they wouldn't need a hard cap. But, if they are going to keep the 11 bottom revenue teams, those teams have to have some chance to compete.

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07-07-2017, 11:13 PM
  #40
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Quote:
Originally Posted by my name is Bob View Post
If the Canadian dollar were to get back to par with the American dollar, how much impact would that likely have on the cap?

Asking because some people are much more financially knowledgeable than me!

The Canadian dollar could impact the fluctuations in the cap the most; moreso than a TV deal in 5 years, or overseas promotion.
My guess would be that the cap would be $7-8M higher if the dollar was at par last year.

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07-07-2017, 11:23 PM
  #41
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Quote:
Originally Posted by DJJones View Post
So what happens to the Escrow amount after the new CBA?

Will it get set back to zero or will it grow indefinitely.

I think I heard the real cap is only like 69 million. In ten years the salary cap could be completely out of wack of the true 50% revenue mark.

When do players like Crosby say enough is enough? His salary is getting watered down.
I think you may have a misunderstanding on how escrow and the escalator works.

The escalator is not like compounded interest. Every year the NHL tallies up the last season's revenue and the PA/NHL agree on the escalator for the next season. Whether or not the PA agreed to the escalator in any previous seasons has no impact on the next season's salary cap.

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07-08-2017, 09:23 AM
  #42
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Originally Posted by Mork View Post
No, the owners salary-related expenses won't go up or down based on the cap.

If the cap goes down to the point that owners paid less than 50% of HRR, they have to make up the difference. It's the opposite of escrow.

If they pay more, the players refund the difference.

Either way, it's driven by 50% of HRR, no matter where the cap is -- the owners as a group pay the exact same amount with a high cap as with a low one.

There will almost always be a payment by either the owners or the players, as it would be very unexpected that the total player contracts in a given year would come to exactly the players' share of HRR.
I meant lowering the cap in that the owners got 65% of the HRR. The next CBA, the owners will try to grab even more.. 60-40% and then it will end up 55%-45% after negotiations.

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07-08-2017, 10:26 AM
  #43
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I think for the next few seasons things are going to be pretty flat. Assuming the TV rights market doesn't implode (and it might) I would think the next American TV deal should result in a decent bump. The NHL should be able to at least double the value of the current deal, perhaps even triple it.

So if the NHL gets $400 million/year on their next TV deal it would mean a $3+ million bump in the cap. If they somehow manage to get a network, or networks, to blow their brains out and spend $600 million/year it would mean a $6+ million cap bump.

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07-08-2017, 02:21 PM
  #44
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Originally Posted by TorstenFrings View Post
Partly that's the foreign TV stations sleeping at the wheel too (unless TV rights for these markets are expensive, in which case, yeah it's completely the NHL's fault). German media is going to try feet over ass to make the NHL happen two hours before Draisaitl hoists the cup. And then everyone will just be like: Who???
I can´t say how much they are paying for the rights. In any case they could require certain things when they are selling the rights in the first place. It might mean less money in the short term (as having for example a morning show would obviously cost money) for the rights, but something has to be done if they want the NHL to become more popular outside of NA. Seems like they don´t care.

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07-09-2017, 10:01 PM
  #45
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Originally Posted by ForumNamePending View Post
I think for the next few seasons things are going to be pretty flat. Assuming the TV rights market doesn't implode (and it might) I would think the next American TV deal should result in a decent bump. The NHL should be able to at least double the value of the current deal, perhaps even triple it.

So if the NHL gets $400 million/year on their next TV deal it would mean a $3+ million bump in the cap. If they somehow manage to get a network, or networks, to blow their brains out and spend $600 million/year it would mean a $6+ million cap bump.
You know the NHL will screw it up somehow. I'm willing to bet Fox Sports 1 would be willing to pay a huge sum of money to put on more nightly live coverage and if "they" were smart, they would spread the wealth and offer packages to 2 different networks like every other league does.

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07-09-2017, 11:06 PM
  #46
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Do local TV deals affect HRR? If so, the Habs just signed a new TV, I haven't paid attention to the numbers, but one has to assume it was at a decent increase. I think that combined with the new adidas jerseys and Vegas merch being available, I think it will push the cap to over $80 million for 2018-19

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07-09-2017, 11:24 PM
  #47
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umm er the "Cap" has nothing to do with league revenue .... The "Cap" this "Cap" is merely a tool to ensure competitiveness among teams and to keep owners from creating undue competition and contract inflation...Unless i am incorrect the "Cap" is completely controlled by the nhlpa .... Unless i am incorrect a signed contract does not guarantee the amount stated ...All contracts get prorated by revenue ...So if the revenues any year misses the agreed terms any contract gets shaved by whatever % What i am unsure about if revenue exceeds agreed terms do the players get more....Mostly likely the contract is simply fulfilled ...
Understand its a plot of league revenue there is no way for that to be determined in terms of payment until all revenue is counted ....
The word whining ..... well the players themselves expect x amount of dollars open the envelope and its short 5 or 10% ..than they think how is this possible.. the owners when they didn't meet projections think why i am paying this guy ....whoever ... the fans well when they want someone else and the team has to honor terms...
really in terms of monetary value the "Cap" is a shell game pyramid scheme .... that serves everyone .... contracts would be far less if the owners simple dictated the terms ...thingsa like injury or retirement would get ugly Occasionally some player would get free money that greatly impacts bottom lines ....The value of the "CAP" is purely about competitiveness

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07-10-2017, 12:52 AM
  #48
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Quote:
Originally Posted by Method Man View Post
Do local TV deals affect HRR? If so, the Habs just signed a new TV, I haven't paid attention to the numbers, but one has to assume it was at a decent increase. I think that combined with the new adidas jerseys and Vegas merch being available, I think it will push the cap to over $80 million for 2018-19
Any revenue related to NHL hockey is counted as HRR, so yes, the Habs new TV deal counts. Now, while there will be more revenue due to a team being added, that revenue will probably be lower than the NHL average - at least initially - and divided by 31 teams, not 30.

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07-10-2017, 12:59 AM
  #49
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umm er the "Cap" has nothing to do with league revenue .... The "Cap" this "Cap" is merely a tool to ensure competitiveness among teams and to keep owners from creating undue competition and contract inflation...
The cap has everything to do with league revenue (the total of all teams plus all national contracts/income). You take the audited figure of hockey related revenue as the basis for setting the following year's cap. The league and PA have the option of adding a growth factor (or escalator) or even reducing this figure.

What the owners wanted was cost certainty.

Quote:
Unless i am incorrect the "Cap" is completely controlled by the nhlpa .... Unless i am incorrect a signed contract does not guarantee the amount stated ...All contracts get prorated by revenue ...So if the revenues any year misses the agreed terms any contract gets shaved by whatever % What i am unsure about if revenue exceeds agreed terms do the players get more....Mostly likely the contract is simply fulfilled ...
I think there are a few points to correct. The PA can set an escalator to the audited HRR figure, but the NHL also has to accept their figure. Neither side can just pull some number out of thin air and stick it to the cap calculation. They must agree.

The players will get 50% of HRR. If the number is greater than expected for growth AND teams underpaid players overall, then they must give the players that difference. If teams overpaid players, the players have to give money back to get to 50%. Thus both sides are vulnerable to revenue change.

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07-10-2017, 06:54 AM
  #50
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Do you believe that the League and the NHLPA could change the cap formula (for example from midpoint to two thirds) in an attempt to limit the escrow or would such a change be (i) too technical, (ii) affect the current UFA class too much, and (iii) affect the big market teams proportionally more and thus never be accepted?

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