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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.

NHL Created new cap problems by fixing old ones

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Old
08-10-2006, 06:39 AM
  #1
kummelweck
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NHL Created new cap problems by fixing old ones

article


Yes, the Rangers overspent on pasttheir-prime free agents. But their spending never had any impact on the salaries of under-31 players.Instead, it was smallmarket teams like the Calgary Flames and Tampa Bay Lightning that would alter the pay scales for rising stars.

In the summer of 2002, the Flames rewarded 25-year-old Jarome Iginla with a two-year contract worth $13 million, significantly raising the bar for comparable forwards. The next summer, when the Lightning broke the bank for Brad Richards while the player held no leverage, it raised the cost of doing business for the Ottawa Senators (Martin Havlat) and the Minnesota Wild (Marion Gaborik).

...

By holding their ground with regard to Dumont, the Sabres actually did both the NHL and the NHLPA a great service. For if there are too many overpaid players amongst the union's membership, dissension amongst the ranks would likely increase. But by walking away and making Dumont an unrestricted free agent, it means that the market and not a flawed arbitration system will ultimately determine the level of his compensation. In the end, Dumont will probably end up accepting less from another team than the Sabres would have given him in a pre-arbitration settlement.


The author makes some interesting points.

http://www.nysun.com/article/37648

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08-10-2006, 10:24 AM
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DeathFromAbove
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I think so far its mainly been the arbitrators fault for overpaying players after some of the ridiculous contracts they've been awarding.

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08-10-2006, 10:47 AM
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I think so far its mainly been the arbitrators fault for overpaying players after some of the ridiculous contracts they've been awarding.

Hardly. It's like dominoes. Signings like Havlat's or Richard's set a precedent, and there are more examples. Once set, a GM trying to avoid arbitration with a key player will look to these types of signings and use them as a benchmark. An arbiter will do the same, however the problem is that the arbitration system has even greater flaws, in essence amplifying the weaknesses even further.

What many who liked the new CBA will have a hard time admitting is that by lowering the age of free agency, the NHL has removed the greatest protection teams, large and small, had... a guaranteed period of control over assets still in their prime.


Last edited by Fugu: 08-10-2006 at 11:42 AM.
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08-10-2006, 01:16 PM
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Hardly. It's like dominoes. Signings like Havlat's or Richard's set a precedent, and there are more examples. Once set, a GM trying to avoid arbitration with a key player will look to these types of signings and use them as a benchmark. An arbiter will do the same, however the problem is that the arbitration system has even greater flaws, in essence amplifying the weaknesses even further.

What many who liked the new CBA will have a hard time admitting is that by lowering the age of free agency, the NHL has removed the greatest protection teams, large and small, had... a guaranteed period of control over assets still in their prime.
Although this is the initial effect of the CBA, IMHO the magnet effect will also come into play and eventually temper the movement we are now seeing. I also believe that it is going to pressure older, less than elite players to accept lower salaries or face early retirement from the NHL as teams use younger players to subsidize the large salaries of the elite players.

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08-10-2006, 01:46 PM
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when the flames signed iginla, he was coming off a 50 goal season and was arguably one of the top three players in hockey.the flames can't be blamed. in fact it can be argued they signed iginla for less than his market value compared to kariya's $ 10 million.

the author should point the finger at teams like anaheim (kariya $ 8.5 million for '99, $ 10.0 million per for '00-'03) for inflating RFA salaries.

and chicago offering tkachuk $ 17m over 5 years in '95.
philly offering chris gratton $ 10m or something for three years. (can't remember exact figure)
the rangers offering Sakic $ 21 million over 3 years.
and carolina offering fedorov that crazy contract with the $ 20 million bonus if the team won their conference (which the red wings were forced to pay).


and unless i'm missing something, how did the lightning break the bank by signing richards in '03 ? it wasn't until '06 he signed the huge deal.

big market teams like chicago, rangers and philly are just as much to blame if not more for the high RFA contracts.


Last edited by Hawker14: 08-10-2006 at 01:57 PM.
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08-10-2006, 03:49 PM
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Originally Posted by RyanDFA View Post
I think so far its mainly been the arbitrators fault for overpaying players after some of the ridiculous contracts they've been awarding.
The arbitrators award based on similar player's salaries so don't blame them, blame the GM's.

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08-10-2006, 04:31 PM
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54%. That's the only number that matters. Teams just have to plan their portion of the 54% better if they want to avoid arbitration losses.

CBA is working fine.

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08-10-2006, 04:36 PM
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If your team has some stupid contracts blame your GM, not the league, or the arbitrators. Everyone knows the rules, not everyone is smart enough how to work under them.

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08-12-2006, 09:05 AM
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and unless i'm missing something, how did the lightning break the bank by signing richards in '03 ? it wasn't until '06 he signed the huge deal.
People (well, mostly Sens fans) *****ed and moaned endlessly over this deal, which was Richards' 2nd contract:

Brad Richards (signed 8/27/03)
3-year contract through 2005-2006
'05-'06 salary: $4,475,000 - 24% rollback = $3,401,000
'04-'05 salary: $2,625,000
'03-'04 salary: $2,400,000

No one's eaten their crow over it yet either. Even without the rollback it was a good deal.

As for the article, that guy sounds like Larry "Blame the Small Markets" Brooks' long lost brother.

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08-12-2006, 10:28 AM
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Originally Posted by SJeasy View Post
Although this is the initial effect of the CBA, IMHO the magnet effect will also come into play and eventually temper the movement we are now seeing. I also believe that it is going to pressure older, less than elite players to accept lower salaries or face early retirement from the NHL as teams use younger players to subsidize the large salaries of the elite players.
I agree. The transition is still being made, with a lot of teams still carrying pre-lockout contracts. Each year you double up on the UFA's too since the age is declining by 1+ years each time. Then it will stop. I think you will see players in their prime getting the big dollars, as it should be, and RFA's will have leverage earlier by several years.

However the point is that teams lose one of the cornerstones of smaller market protection. This all started in football, many decades ago when the weakest got top draft picks first, and then eventually teams instituted rights' to the players they did have practically forever. We know that was eventually fought by player's associations with free agency becoming the greatest victory players ever got over owners. That had to be tempered too so teams got some protection by having rights to players for some period after they were drafted. If I am not mistaken, the NHL still had the latest age of free agency than any of the other sports, the NFL's being 25 (someone can correct me here).

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08-12-2006, 12:06 PM
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What a joke of an article. A New York writer claiming that teams like Calgary and Tampa were the ones responsible for ballooning salaries. They signed BOBBY F&*%#$@ HOLIK for millions more than Iginla went to Calgary or Richards went to Tampa.

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08-12-2006, 01:03 PM
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What a joke of an article. A New York writer claiming that teams like Calgary and Tampa were the ones responsible for ballooning salaries. They signed BOBBY F&*%#$@ HOLIK for millions more than Iginla went to Calgary or Richards went to Tampa.
well said

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08-12-2006, 05:50 PM
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What a joke of an article. A New York writer claiming that teams like Calgary and Tampa were the ones responsible for ballooning salaries. They signed BOBBY F&*%#$@ HOLIK for millions more than Iginla went to Calgary or Richards went to Tampa.
Who is they?

The NY Sun is not even a major newspaper.It's a piece of garbage

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08-12-2006, 06:19 PM
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Who is they?

The NY Sun is not even a major newspaper.It's a piece of garbage
I'll give you 3 guesses as to the team I was refering to, but I bet you will only need 1.

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08-12-2006, 07:34 PM
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Quote:
Originally Posted by Fugu View Post
Hardly. It's like dominoes. Signings like Havlat's or Richard's set a precedent, and there are more examples. Once set, a GM trying to avoid arbitration with a key player will look to these types of signings and use them as a benchmark. An arbiter will do the same, however the problem is that the arbitration system has even greater flaws, in essence amplifying the weaknesses even further.

What many who liked the new CBA will have a hard time admitting is that by lowering the age of free agency, the NHL has removed the greatest protection teams, large and small, had... a guaranteed period of control over assets still in their prime.
I agree the Richard's contract and especially the Havlat one really caused the problem.

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08-12-2006, 07:53 PM
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I'll give you 3 guesses as to the team I was refering to, but I bet you will only need 1.
Freaking Islanders!!!!

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08-12-2006, 08:00 PM
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Hunter Gathers
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Quote:
Originally Posted by ryz View Post
What a joke of an article. A New York writer claiming that teams like Calgary and Tampa were the ones responsible for ballooning salaries. They signed BOBBY F&*%#$@ HOLIK for millions more than Iginla went to Calgary or Richards went to Tampa.
That was a UFA signing which has absolutely NO bearing whatsoever on RFA signings.

Sorry.

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08-12-2006, 09:31 PM
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Originally Posted by Fugu View Post
What many who liked the new CBA will have a hard time admitting is that by lowering the age of free agency, the NHL has removed the greatest protection teams, large and small, had... a guaranteed period of control over assets still in their prime.


Exactly.

To be sure, there is much that has been gained from this current CBA, more than this former cap critic anticipated. But your point above is hard to dispute. And it will continue to take its toll on team(s) and the league overall on a continual basis.


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08-12-2006, 10:26 PM
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I agree the Richard's contract and especially the Havlat one really caused the problem.
There is NO "problem". None.

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08-12-2006, 10:35 PM
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That was a UFA signing which has absolutely NO bearing whatsoever on RFA signings.

Sorry.
I hear this repeatedly. THe idea that UFA signings have no impact on RFA signings is a joke. An absolute joke.

For those who are suddenly poised over their keyboards ready to type "... but the CBA says that arbitrators cannot consider UFA signings!!!", here is a clue for you. The majority of RFa signings are not set by arbitration. They are determined over the negotiating table. At THAT table, everything is relevant.

In every sport, player compensation is determined by players negotiating through pegging off the top salaries in their sport. It always has been thus, and always will be. Whether it makes sense or not (and it would be easy to marshal an argument that it does not), that is how it is done. In that process, there is no distinction drawn between UFA's and RFA's. If I am a player agent for Player A, in negotiating my client Player A's contract I could care less whether a player (Player B) to whom I want to compare my client got his contract through the UFA process or as an RFA. What matters is that Player B is being paid X amount of dollars.

A high tide lifts all boats. That is the credo of every single sports union.

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08-13-2006, 10:08 AM
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Originally Posted by Jon Prescription View Post
That was a UFA signing which has absolutely NO bearing whatsoever on RFA signings.

Sorry.
That's not true at all. While certainly in the arbitrators eyes they don't view those numbers, other players around the league go "that guy is getting triple the money of me, and I have better players!" so they go to their agents and express this, or the agent sees this and brings it to the club. Also, if a player is one year past the UFA range and signs a contract, a player that is not a UFA because he is one year younger will want a comparable (but not necessarily equal) contract. There is definitely a relationship between UFA and RFA signings, it's just that the UFA contracts (which are the source of many inflated RFA contracts) are not the ones being used in arbitration.

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08-13-2006, 03:28 PM
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Tanguay's deal in CGY is making life miserable for Bob Clarke in Philly (Gagne)

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08-13-2006, 03:40 PM
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But....as has been stated before......this is a problem created by players that will only affect the other players of the union. Because there is only a set amount of money to be collected by the players. The more that player #1 makes just means there is less to give out to players #2 thru #700. How is that a problem for the owners?

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08-13-2006, 03:47 PM
  #24
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With a cap in place, it is irrelevant what any single player is paid. Bad GMs will overpay players and screw themselves, good GMs will get good value and build winners.

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08-13-2006, 04:50 PM
  #25
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I am sure if the owners had free reign to write up the CBA as they wished we wold not see these 'problems' but that pesky conceding so as to reach a deal made it so it still isn't perfect.

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