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Datsyuk, Franzen and Zetterberg's contract relative values into the future:

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Old
07-14-2009, 10:42 AM
  #1
RabbinsDuck
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Datsyuk, Franzen and Zetterberg's contract relative values into the future:

The OT discussion in the "Hudler" thread was closed, just before I had time to hit reply, so I'll add this in a new thread.

HockeyinHD expressed discomfort (or to use his term, "howling" over) in Franzen, Zetterberg and Datsyuk's contracts taking up so much room 7-8 years into the future.

However, with a modest 4-5% revenue growth their cap hits will be much easier to swallow with the cap at least at $75-80m.

Their contracts will be the equivalent of the following in today's cap hits:

Franzen: $2.86m
Zetterberg: $3.55m
Datsyuk: $4.41m

The equivalent of a $10.82m cap hit in today's dollars -- not a bad second line, an overpayment for a third line, but not nearly as bad as it would be with today's cap hit... assuming they aren't traded before then.

4-5% growth is indeed "modest", even taking the current recession into consideration.

Inflation has averaged 2% over the past bazzillion years -- I think the NHL can outmatch inflation.

Over the past 15 years:

The NFL has averaged more than a 13% average annual growth
The MLB has averaged more than 8%
The NBA has averaged over 11% growth
and the NHL has averaged over 10% growth

Ratings on NBC and Versus, as well as local cable, have been doing nothing but going up over the past decade. The NHL is most comparable in revenues and attendance to the NBA, but the NBA makes almost 5 times as much on their TV contracts. It is not a stretch of the imagination to think the NHL will close that gap a bit in the next 8 years. The last contract with Versus was over 10% more than the previous and the current contract is up in 2010/11 -- with the chance of ESPN and NBC wanting more of a slice of the pie.


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07-14-2009, 10:46 AM
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Quote:
Originally Posted by RabbinsDuck View Post
The OT discussion in the "Hudler" thread was closed, just before I had time to hit reply, so I'll add this in a new thread.

HockeyinHD expressed uncomfort in Franzen, Zetterberg and Datsyuk's contracts taking up so much room 7-8 years into the future.

However, with a modest 4-5% revenue growth their cap hits will be much easier to swallow with the cap at least at $75-80m.

Their contracts will be the equivalent of the following in today's cap hits:

Franzen: $2.86m
Zetterberg: $3.55m
Datsyuk: $4.41m

The equivalent of a $10.82m cap hit in today's dollars -- not a bad second line, an overpayment for a third line, but not nearly as bad as it would be with today's cap hit... assuming they aren't traded before then.

4-5% growth is indeed "modest", even taking the current recession into consideration.

Inflation has averaged 2% over the past bazzillion years -- I think the NHL can outmatch inflation.

Over the past 15 years:

The NFL has averaged more than a 13% average annual growth
The MLB has averaged more than 8%
The NBA has averaged over 11% growth
and the NHL has averaged over 10% growth

Ratings on NBC and Versus, as well as local cable, have been doing nothing but going up over the past decade. The NHL is most comparable in revenues and attendance to the NBA, but the NBA makes almost 5 times as much on their TV contracts. It is not a stretch of the imagination to think the NHL will close that gap a bit in the next 8 years. The last contract with Versus was over 10% more than the previous and the current contract is up in 2010/11 -- with the chance of ESPN and NBC wanting more of a slice of the pie.
IMO for the NHL to get the growth that you are speaking of. They need a MAJOR TV contract! Without it will not grow.

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07-14-2009, 10:49 AM
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I agree I am expecting 5% growth per year over 10 years to be well below average. In my heart of hearts I am expecting closer to 10%.

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07-14-2009, 11:28 AM
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Wait, so you think the NHL's cap will be $80 million at some point in the future?

Really...

Dream a little dream, I guess. The NBA's cap is at $58 million with a ton of exceptions and luxury taxes.

BTW, their games are watched more often and by more people on nearly every major network and their affiliates.

The NHL cap will never approach $80 million. The NFL is at $128 million...thats for a league that every team makes money before the first kickoff based on their TV deal(s). That number is also for 52 player rosters.

I think youre being almost delusionally optimistic.

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07-14-2009, 11:30 AM
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No way the NHL is going to close the gap on the NBA for TV contract dollars. Especially if the franchises start moving north again.

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07-14-2009, 11:37 AM
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Quote:
Originally Posted by DarkReign View Post
Wait, so you think the NHL's cap will be $80 million at some point in the future?

Really...

Dream a little dream, I guess. The NBA's cap is at $58 million with a ton of exceptions and luxury taxes.

BTW, their games are watched more often and by more people on nearly every major network and their affiliates.

The NHL cap will never approach $80 million. The NFL is at $128 million...thats for a league that every team makes money before the first kickoff based on their TV deal(s). That number is also for 52 player rosters.

I think youre being almost delusionally optimistic.
This is a really poorly thought out opinion. It is totally devoid of time and or inflation. Even if the NHL has very little growth. Within 20-30 years the salary cap will be over 80 Million if we just follow inflation.

Using a simplified formula Cap times Inflation, assuming 3% inflation (which is close to accurate btw) it would take 14 years for the cap to rise to 80M. Grant I realize inflation is actually a factor in a more complicated formula but the result will be fairly similar. That would mean assuming only match ticket/advertising increases with inflation we will have a 80M cap in 14 years. If we have any substantive growth at all it will accelerate. Your premise is based on blind facts that NHL cap cant be higher then more successful leagues. Our cap is a partnership and in many ways our players have better deals then other leagues. That is just a fact.


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07-14-2009, 12:10 PM
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Originally Posted by solo16 View Post
This is a really poorly thought out opinion. It is totally devoid of time and or inflation. Even if the NHL has very little growth. Within 20-30 years the salary cap will be over 80 Million if we just follow inflation.

Using a simplified formula Cap times Inflation, assuming 3% inflation (which is close to accurate btw) it would take 14 years for the cap to rise to 80M. Grant I realize inflation is actually a factor in a more complicated formula but the result will be fairly similar. That would mean assuming only match ticket/advertising increases with inflation we will have a 80M cap in 14 years. If we have any substantive growth at all it will accelerate. Your premise is based on blind facts that NHL cap cant be higher then more successful leagues. Our cap is a partnership and in many ways our players have better deals then other leagues. That is just a fact.
Sooooo, your argument isnt that the league will grow by any significant margin on its own merits, but that through the oncoming economic meltdown, the contracts of current Red Wings will look better based on the collapse of the financial world around it?

...and my thinking is flawed.

In 20 years, the likelihood of the US Dollar being in circulation is doubtful. What makes you think Pavel Datsyuk is going to stick around for his paltry $6 million a year here in the States when a loaf of bread costs $25 of worthless paper money?

Youre speculating, I'm speculating. I think your speculation is delusionally optimistic, you probably think the inverse of mine.

IMO, if the economic impact of the oncoming commercial real estate crash (yes, larger than the housing crash we're currently in), the devaluation of the US dollar as we spend our way into insolvency (which will usher in a new currency exchange), implement social programs with absolutely no way to pay for them and start taxing every man, woman and child from birth until death upwards of 40% just to pay the interest on our debt (it takes roughly $100 million dollars a day to service the interest on this country's $13 trillion dollar debt...our current president calls for a $1 trillion dollar deficit in his first year of office...this number will only rise), the chances of Pavel Datsyuk, Henrik Zetterberg and every other non-US citizen on the Wings roster serving the length of their contract is about nil and they'll never return to the NHL (nor will many others).

I bring this stuff up because youre prognosticating very ample growth on the most uncertain future in this country's history. While everyone else with an eye on the ball sees doom and gloom, you see growth and prosperity.

Let me sum this up...

If things go the way periodicals like The New Yorker, Forbes and Wall Street Journal think theyre going to go, these 12 year contracts will never be honored by the players for two reasons:

1) They'll make more money somewhere else...a helluva lot more money. They just have to breach the contract, flee the country and never come back. I am sure that'll be reeeeeal tough for foreign nationals to even ponder.

2) They wont pay near as many taxes where they are going. The extremely wealthy are going to be taxed to hell very, very soon in this country. Green Card Millionaires will be the first people to flee. Yes, even those who are currently under contract with an American corporation.

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07-14-2009, 01:04 PM
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Quote:
Originally Posted by DarkReign View Post
Sooooo, your argument isnt that the league will grow by any significant margin on its own merits, but that through the oncoming economic meltdown, the contracts of current Red Wings will look better based on the collapse of the financial world around it?

...and my thinking is flawed.

In 20 years, the likelihood of the US Dollar being in circulation is doubtful. What makes you think Pavel Datsyuk is going to stick around for his paltry $6 million a year here in the States when a loaf of bread costs $25 of worthless paper money?

Youre speculating, I'm speculating. I think your speculation is delusionally optimistic, you probably think the inverse of mine.

IMO, if the economic impact of the oncoming commercial real estate crash (yes, larger than the housing crash we're currently in), the devaluation of the US dollar as we spend our way into insolvency (which will usher in a new currency exchange), implement social programs with absolutely no way to pay for them and start taxing every man, woman and child from birth until death upwards of 40% just to pay the interest on our debt (it takes roughly $100 million dollars a day to service the interest on this country's $13 trillion dollar debt...our current president calls for a $1 trillion dollar deficit in his first year of office...this number will only rise), the chances of Pavel Datsyuk, Henrik Zetterberg and every other non-US citizen on the Wings roster serving the length of their contract is about nil and they'll never return to the NHL (nor will many others).

I bring this stuff up because youre prognosticating very ample growth on the most uncertain future in this country's history. While everyone else with an eye on the ball sees doom and gloom, you see growth and prosperity.

Let me sum this up...

If things go the way periodicals like The New Yorker, Forbes and Wall Street Journal think theyre going to go, these 12 year contracts will never be honored by the players for two reasons:

1) They'll make more money somewhere else...a helluva lot more money. They just have to breach the contract, flee the country and never come back. I am sure that'll be reeeeeal tough for foreign nationals to even ponder.

2) They wont pay near as many taxes where they are going. The extremely wealthy are going to be taxed to hell very, very soon in this country. Green Card Millionaires will be the first people to flee. Yes, even those who are currently under contract with an American corporation.
I only got half way through your post before I had to reply.

Generally I feel bad telling someone their opinion is Wrong. By its very definition an opinion cant be wrong. However.... What you are saying isnt an opinion. Hell its fiction, borderline science fiction. You are 100% wrong and your above statement is nonsense. Also my position is not that the league wont grow on its merits. But rather EVEN if it didnt grow at all on its merits we would still hit 80M.

However You did change the subject to this question of whether the US dollar will even be around etc etc. Thats actually a very interesting point but doesnt support your origonal position.

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07-14-2009, 01:18 PM
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Quote:
Originally Posted by solo16 View Post
I only got half way through your post before I had to reply.

Generally I feel bad telling someone their opinion is Wrong. By its very definition an opinion cant be wrong. However.... What you are saying isnt an opinion. Hell its fiction, borderline science fiction. You are 100% wrong and your above statement is nonsense. Also my position is not that the league wont grow on its merits. But rather EVEN if it didnt grow at all on its merits we would still hit 80M.

However You did change the subject to this question of whether the US dollar will even be around etc etc. Thats actually a very interesting point but doesnt support your origonal position.
Fair enough. You could have said that much more rudely, but you didnt.

I dont believe I am wrong. Lots of professional economists do not believe I am wrong. You do. I can live with that. You and Geithner.

So as not to change the subject or to derail the thread topic, it is my opinion that non-US citizen players under contract in the United States when super-inflation strikes (late 2010/early 2011 it will start and rise through...well, forever) will leave en masse regardless of contract status.

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07-14-2009, 01:21 PM
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Originally Posted by solo16 View Post
I only got half way through your post before I had to reply.

Generally I feel bad telling someone their opinion is Wrong. By its very definition an opinion cant be wrong. However.... What you are saying isnt an opinion. Hell its fiction, borderline science fiction. You are 100% wrong and your above statement is nonsense. Also my position is not that the league wont grow on its merits. But rather EVEN if it didnt grow at all on its merits we would still hit 80M.

However You did change the subject to this question of whether the US dollar will even be around etc etc. Thats actually a very interesting point but doesnt support your origonal position.
I don't know too much about this area and such, but I think there might be two problems that can arise if the Cap ever did hit around 80 million dollars.

First, there are a number of teams (ie. Atlanta, Buffalo, Florida, to list a few) that likely will not want to spend what the Cap floor becomes (if Cap hits 80 million I'm assuming the floor is at least around 55-60 million, like I said I don't know much about this though so I can be completely off).

Now, because Bettman won't want to piss off those owners who don't wanna spend to the Cap floor, maybe the CBA does get reworked so the Cap floor doesn't go up as much. The one problem I see though if the NHL fixes the Cap floor so it doesn't go as high as the maximum, is that we pretty much go back to the pre Cap days where the bottom teams have a salary of around 35-45 million, and the teams that have money to spend (like the Rangers, Leafs, and Wings in the pre lock out Cap days) spend in the 75-80 million dollar range again, and basically the NHL goes back to where it started before the lock out.

I guess with the revenue sharing or whatever it is maybe helps the bottom spending teams have a bit more to spend than when they did in the pre lock out days, but I guess the point I am trying to make is that if the Cap did increase to around 80 million or so in the amount of time you are talking about, it might create a number of problems and disarray between the NHLPA, owners, and NHL again that was seen before the lock out, and it might not be such a good idea to let the cap get that high that fast.

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07-14-2009, 01:22 PM
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Originally Posted by DarkReign View Post
In 20 years, the likelihood of the US Dollar being in circulation is doubtful. What makes you think Pavel Datsyuk is going to stick around for his paltry $6 million a year here in the States when a loaf of bread costs $25 of worthless paper money?

Youre speculating, I'm speculating. I think your speculation is delusionally optimistic, you probably think the inverse of mine.

IMO, if the economic impact of the oncoming commercial real estate crash (yes, larger than the housing crash we're currently in), the devaluation of the US dollar as we spend our way into insolvency (which will usher in a new currency exchange), implement social programs with absolutely no way to pay for them and start taxing every man, woman and child from birth until death upwards of 40% just to pay the interest on our debt (it takes roughly $100 million dollars a day to service the interest on this country's $13 trillion dollar debt...our current president calls for a $1 trillion dollar deficit in his first year of office...this number will only rise), the chances of Pavel Datsyuk, Henrik Zetterberg and every other non-US citizen on the Wings roster serving the length of their contract is about nil and they'll never return to the NHL (nor will many others).

I bring this stuff up because youre prognosticating very ample growth on the most uncertain future in this country's history. While everyone else with an eye on the ball sees doom and gloom, you see growth and prosperity.

Let me sum this up...

If things go the way periodicals like The New Yorker, Forbes and Wall Street Journal think theyre going to go, these 12 year contracts will never be honored by the players for two reasons:

1) They'll make more money somewhere else...a helluva lot more money. They just have to breach the contract, flee the country and never come back. I am sure that'll be reeeeeal tough for foreign nationals to even ponder.

2) They wont pay near as many taxes where they are going. The extremely wealthy are going to be taxed to hell very, very soon in this country. Green Card Millionaires will be the first people to flee. Yes, even those who are currently under contract with an American corporation.
Now ignoring your first portion of your post (the nonsense part) you actually make one of the more compelling Ron Paul supporter arguments. Generally I read this kind of economic conspiracy theories with a fair amount of detest (hence my Ron Paul joke, While he is an interesting candidate 75% of his supports are delusional foreigners (not us citizens) who support ideas they don't fully understand or support fro the wrong reasons.) For whatever reason your True DOOM and Gloom scenario is very possible (however I think you made liberal uses of your sources, neither are forecasting the collapse of the US currency). It is actually foreign countries and some debt holders projecting this fear. China and France were the too main.... It should be noted that the Japanese Post office holds like 75% of the U.S. national debt. (dont hold me to that percentage but its not too far from that number)

Hypothetically speaking if inflation was to run rampid as you say the cap would in fact rise to 80M. Just we wouldn't have anyone players. I think the issue is that you need to adjust your original position from we will not grow to 80M to we will not grow to 80M once you factor out inflation. It is the fundamental flaw in your original position I called you on. If your opinion is we will never see that kinda growth without inflation you are making a valid opinion.

Other key factors did you realize that our national debt has been significantly higher per % of our GDP in our countries history? We still have a fair bit of room to expand our debt before we even reach those levels that we rebounded from.

If we have a new world order of currency there are a few possibilities. 1st. The world merges into the EURO. This would be interesting because it is a modern currency that is shared between countries and is a good choice. However american's are too stubborn to ever agree to that AND American dollars is still a currency that is more common than euros. (made that up but i believe its accurate fact check to prove me wrong).
2nd. World currencies all exchange into Dollars. I wouldn't be shocked if Euro's were to consent to this but obviously the Chinese would never. OFC this raises Sovereignty questions as well.
3rd. and imo the only way we get a new US Currency. Euro and Dollars deiced to merge to create a totally new currency. Only way this would work would be to create a Euro to dollar valuation and translate it into the new currency. The debt ofc would still exist just in a new currency.

4th. Technically a sovereign nation can cancel its debt or pay it at a discount. There is nothing to stop the US from discounting its debt if... it ever gets to the point where it cant pay it. Bottom line though is it has no real effect on the government. They pay out interest to its citizens/ foreign citizens who use that money to buy more stuff which gets taxed etc and it all comes full circle. Really Currency has no value. Currencies only purpose is to accelerate the transfer of goods from one person to another and encourage people to be as efficient as possible. If you make more stuff you can sell more stuff which gets you more money so you can spend more etc etc etc. This is why GDP is more important than the dollar values. GDP shows how fast we turn currency over.

Last point I should make is that the U.S. dollar is actually one of the strongest world currencies at the moment. Though I agree it is somewhat distressed, it is still significantly more stable and safe than the Euro, Yen, Cad, etc. That is why the US currency has stayed stable despite this economic down turn.... Foreign investors have no where to go but the US. They know inflation will be a problem but they still view the U.S. the best out of several poor choices.

Ya i rambled a bit but this is a very abstract subject. I should edit this and make sure it makes sense but I dont have the time atm.

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07-14-2009, 01:23 PM
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Oh, to be clear, I am not saying Hank and Pav will ditch their contractual obligation with the Wings in late 2010/early 2011. I am saying thats when the changes, they are a comin'.

How long or how fast it happens is beyond me. Could take 10 years, thereby negating Hank and Pav from the equation of ditching their contract. Could take 5 years, whereby they are now firmly included in said equation.

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07-14-2009, 01:26 PM
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Originally Posted by Jussha View Post
I don't know too much about this area and such, but I think there might be two problems that can arise if the Cap ever did hit around 80 million dollars.

First, there are a number of teams (ie. Atlanta, Buffalo, Florida, to list a few) that likely will not want to spend what the Cap floor becomes (if Cap hits 80 million I'm assuming the floor is at least around 55-60 million, like I said I don't know much about this though so I can be completely off).

Now, because Bettman won't want to piss off those owners who don't wanna spend to the Cap floor, maybe the CBA does get reworked so the Cap floor doesn't go up as much. The one problem I see though if the NHL fixes the Cap floor so it doesn't go as high as the maximum, is that we pretty much go back to the pre Cap days where the bottom teams have a salary of around 35-45 million, and the teams that have money to spend (like the Rangers, Leafs, and Wings in the pre lock out Cap days) spend in the 75-80 million dollar range again, and basically the NHL goes back to where it started before the lock out.

I guess with the revenue sharing or whatever it is maybe helps the bottom spending teams have a bit more to spend than when they did in the pre lock out days, but I guess the point I am trying to make is that if the Cap did increase to around 80 million or so in the amount of time you are talking about, it might create a number of problems and disarray between the NHLPA, owners, and NHL again that was seen before the lock out, and it might not be such a good idea to let the cap get that high that fast.
Well if we hit 80M on a purely inflation basis the teams would have about the same difficulty hitting the cap floor as now. The only times the cap floor will be an issue is where some Teams grow faster than other teams and the revenue sharing is not enough to compensate for the discrepancy. Now is a good example. Tampa and Phoenix are growing slower than say Chicago and Boston. It effects them a bit harder cause they arent seeing increases in gate but are seeing increases in payroll.

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07-14-2009, 01:29 PM
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Fair enough. You could have said that much more rudely, but you didnt.

I dont believe I am wrong. Lots of professional economists do not believe I am wrong. You do. I can live with that. You and Geithner.

So as not to change the subject or to derail the thread topic, it is my opinion that non-US citizen players under contract in the United States when super-inflation strikes (late 2010/early 2011 it will start and rise through...well, forever) will leave en masse regardless of contract status.
I have no issues with your economic theory . I personally dont agree but its not outside the world of possibilities. The entire world economic system is in severe distress. I dont think anyone really knows. Your theory is a bit out there but I enjoy out their economic theories so I mean no ill will towards your position for that. I am only disagreeing with you Cap projections as it doesn't compute even in context of a financial collapse (which is usually preceded by 1000% inflation). Imagine if the US currency inflated 800% in one year (like Austria during WWI) and that was factored into the cap. We would see a cap increase from like 56.8-> 400M in one year. Man that would be insane. Granted I think if that happened wed have bigger problems than the DRW salary cap. I dont even see how the league could operate in those conditions.

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07-14-2009, 01:42 PM
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Now ignoring your first portion of your post (the nonsense part) you actually make one of the more compelling Ron Paul supporter arguments. Generally I read this kind of economic conspiracy theories with a fair amount of detest (hence my Ron Paul joke, While he is an interesting candidate 75% of his supports are delusional foreigners (not us citizens) who support ideas they don't fully understand or support fro the wrong reasons.) For whatever reason your True DOOM and Gloom scenario is very possible (however I think you made liberal uses of your sources, neither are forecasting the collapse of the US currency). It is actually foreign countries and some debt holders projecting this fear. China and France were the too main.... It should be noted that the Japanese Post office holds like 75% of the U.S. national debt. (dont hold me to that percentage but its not too far from that number)

Hypothetically speaking if inflation was to run rampid as you say the cap would in fact rise to 80M. Just we wouldn't have anyone players. I think the issue is that you need to adjust your original position from we will not grow to 80M to we will not grow to 80M once you factor out inflation. It is the fundamental flaw in your original position I called you on. If your opinion is we will never see that kinda growth without inflation you are making a valid opinion.

Other key factors did you realize that our national debt has been significantly higher per % of our GDP in our countries history? We still have a fair bit of room to expand our debt before we even reach those levels that we rebounded from.

If we have a new world order of currency there are a few possibilities. 1st. The world merges into the EURO. This would be interesting because it is a modern currency that is shared between countries and is a good choice. However american's are too stubborn to ever agree to that AND American dollars is still a currency that is more common than euros. (made that up but i believe its accurate fact check to prove me wrong).
2nd. World currencies all exchange into Dollars. I wouldn't be shocked if Euro's were to consent to this but obviously the Chinese would never. OFC this raises Sovereignty questions as well.
3rd. and imo the only way we get a new US Currency. Euro and Dollars deiced to merge to create a totally new currency. Only way this would work would be to create a Euro to dollar valuation and translate it into the new currency. The debt ofc would still exist just in a new currency.

4th. Technically a sovereign nation can cancel its debt or pay it at a discount. There is nothing to stop the US from discounting its debt if... it ever gets to the point where it cant pay it. Bottom line though is it has no real effect on the government. They pay out interest to its citizens/ foreign citizens who use that money to buy more stuff which gets taxed etc and it all comes full circle. Really Currency has no value. Currencies only purpose is to accelerate the transfer of goods from one person to another and encourage people to be as efficient as possible. If you make more stuff you can sell more stuff which gets you more money so you can spend more etc etc etc. This is why GDP is more important than the dollar values. GDP shows how fast we turn currency over.

Last point I should make is that the U.S. dollar is actually one of the strongest world currencies at the moment. Though I agree it is somewhat distressed, it is still significantly more stable and safe than the Euro, Yen, Cad, etc. That is why the US currency has stayed stable despite this economic down turn.... Foreign investors have no where to go but the US. They know inflation will be a problem but they still view the U.S. the best out of several poor choices.

Ya i rambled a bit but this is a very abstract subject. I should edit this and make sure it makes sense but I dont have the time atm.
No, you make good points. As I dont want to derail the thread (sorry bout that), I was just trying to make mention that it is my opinion that your speculation about the growth of professional sports in the times of ecnomic upheaval are curiously optimistic. (EDITED: this has to be one of the worst constructed sentences in the history of the English language. Its so bad, upon re-reading, I left it as is. A warning to future generations)

This...problem isnt going away. Not now, not tomorrow, not ever. Funny you should mention Paul. I like the man, he's smart and old fashioned...but his supporters are loons. It sucks that a guy like him doesnt even need to be marginalized like Perot was, the internet and Tinfoil Hat Brigade did that for him.

As it were, I see no light at the end of this tunnel. Our entire way of life as Americans is based on credit (ie debt). Debt to ourselves through the Fed, debt to foreign nations as that debt is sold at market+interest. Since we ahve had economic dominance for nearly 60 years, our currency is the default currency in the world only because its been the only stable currency in the world.

We achieved that stability through constant and predictable growth. The moment our growth stops (or God forbid, declines) for 5 or more years, while another market continues to grow (ie China, EU), the world's faith in the American dollar will wither on the vine.

Now, I admit its a confluence of events that needs to take place, but...

Lets just say, with the way our government wants to spend its way into debt oblivion, the likelihood of such events become evermore real.

Just an opinion.

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It is the fundamental flaw in your original position I called you on. If your opinion is we will never see that kinda growth without inflation you are making a valid opinion.
It was. My point was and is, the NHL will never see an $80 million dollar salary cap without hyper-inflation. The $80 of an inflated/devalued dollar of tomorrow is most likely less than the $58 today.


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07-14-2009, 01:44 PM
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The OT discussion in the "Hudler" thread was closed, just before I had time to hit reply, so I'll add this in a new thread.

However, with a modest 4-5% revenue growth their cap hits will be much easier to swallow with the cap at least at $75-80m.
There won't be an 80 million dollar cap. Certianly not in the lifetime of any currently signed contract, and probably not in the lifetime of any currently living fan.

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Ratings on NBC and Versus, as well as local cable, have been doing nothing but going up over the past decade. The NHL is most comparable in revenues and attendance to the NBA, but the NBA makes almost 5 times as much on their TV contracts.
The Stanley Cup Finals that everyone praised for their wonderfulness: a 3.1.

The NBA finals that everyone slept through: an 8.4.

The record low NBA finals? A 6.2.

Game, set, match.

The NBA has a huge (relative to the NHL's) deal because they have a huge (relative to the NHL's) viewership. That's how channels determine what they will pay for the right to broadcast, and what advertisers will pay for their right to advertise.

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It is not a stretch of the imagination to think the NHL will close that gap a bit in the next 8 years. The last contract with Versus was over 10% more than the previous and the current contract is up in 2010/11 -- with the chance of ESPN and NBC wanting more of a slice of the pie.
You're right, it's not a stretch of the imagination. It is the imagination after a ten week bender in Roger Clemens' first aid kit.

The NFL has a cap of 120ish million and that league recieves BILLIONS OF DOLLARS A YEAR in tv revenue. Their gate is less, due to only having 1/6th the games, but their stadiums are usually 3-4 times the size of even the large NHL arenas, so that difference is mitigated to a decent degree. On top of that, the NFL's average ticket price is something like 30 dollars higher than the NHLs.

The NHL is nowhere remotely close to being in what even the most generous of observers could call the same GALAXY as the other professional US sports, TV wise.

That's why the NHL draws pretty much as well as the NBA live, but cannot come anywhere remotely close to holding the NBA's jock when it comes to television.

It's not a sport that translates well to TV, at least nowhere nearly as well as the NBA, MLB and NFL do. As long as a television network can get roughly equivalent ratings when they air re-runs of Terminator as they do by airing a live NHL game, guess which option they are going to take when the Terminator costs like 250k to air for the whole year and the sports league might cost the nextwork tens of millions of dollars?

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07-14-2009, 01:44 PM
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I have no issues with your economic theory . I personally dont agree but its not outside the world of possibilities. The entire world economic system is in severe distress. I dont think anyone really knows. Your theory is a bit out there but I enjoy out their economic theories so I mean no ill will towards your position for that. I am only disagreeing with you Cap projections as it doesn't compute even in context of a financial collapse (which is usually preceded by 1000% inflation). Imagine if the US currency inflated 800% in one year (like Austria during WWI) and that was factored into the cap. We would see a cap increase from like 56.8-> 400M in one year. Man that would be insane. Granted I think if that happened wed have bigger problems than the DRW salary cap. I dont even see how the league could operate in those conditions.


Your last line there is exactly what I was driving at. The Wings payroll may or may not touch $80 million. If it does touch $80 million, IMO, we as a People have far more problems than the Wings cap situation.

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07-14-2009, 01:52 PM
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It was. My point was and is, the NHL will never see an $80 million dollar salary cap without hyper-inflation. The $80 of an inflated/devalued dollar of tomorrow is most likely less than the $58 today.
Its a pretty good point. Absent inflation that 80M mark is quite a reach.

I am forecasting a modest 2% growth over inflation (5% total) and secretly expecting a whopping 7% (10% total). I believe we have a growth league with a fair bit of growth potential.

Assuming the modest growth outlook averaging 2% indefinitely that several people have guesstimated. It would take 19 years just to reach the 80M mark (without inflation). Which of course would still be 45M less than the NFL after 19 years of NHL growing and the NFL staying stagnant. It also raises the question if the NHL can grow forever. Figure Population growth is a factor in inflation so we have to take that out. So can the NHL grow for 19 years based solely on increased popularity/ increases in revenue efficiency? I'm a bit torn.

I bet within the next 19 years we expand to Europe or enter into some agreement with the KHL. That could bring the cap up a fair bit by opening up some new lucrative markets/ marketing deals.

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07-14-2009, 01:57 PM
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There won't be an 80 million dollar cap. Certianly not in the lifetime of any currently signed contract, and probably not in the lifetime of any currently living fan.
Already been refuted. Unless you are forecasting everyone in the U.S. dies within 20 years. Lets assume it takes twice as long as inflation increases alone. The cap would hit 80M in 40 years. Ill be 65. With advances in Science even Fugu may still be alive . (just playing)


A 1.5% above inflation growth per year average wouldn't be so ridiculous either. Of course that would increase the cap 4.5% per year.

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07-14-2009, 02:05 PM
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Already been refuted.
Incorrectly.

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07-14-2009, 02:11 PM
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Another thing that might be something to consider is that perhaps the emergence of young superstars that have achieved star status to ailing franchises has occurred a bit faster than what we had seen in the 90s, and may help improve markets a bit faster than anticipated.

For example,

Crosby and Malkin in Piittsburgh
Ovechkin in Washington
Kane and Toews in Chicago

If these players did not progress as fast as they did, their markets might be a bit different than what they are right now.

The next potential market up for an increase in likely in NYI and Tampa,

If Stamkos can step it up big next year, it might help a lot over there, and if Tavares can become a star immediately it will be huge for the growth in NYI. However, if some of these new high end prospects start turning into busts, it might limit growth too in these markets that need it. However, the way the rules of NHL work right now, it does seem to favor younger players and helps them develop faster.

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07-14-2009, 02:26 PM
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Incorrectly.
Heh, unless you are implying that they will renegotiate the CBA to slow down the growth via changing the formula you are wrong. Certainly possible but, I cant see the players conceding to a a more owner friendly formula. So your statement is conjecture at best. It makes your first statement highly unlikely.

It is very likely that we will all see a 80M cap in our lifetimes. It is unlikely that the CBA will be modified to prevent a 80M cap or that the NHL or American economy will collapse to prevent a 80M cap.

500 to 1... odds but go ahead, you stand by your point.

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07-14-2009, 02:42 PM
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There won't be an 80 million dollar cap. Certianly not in the lifetime of any currently signed contract, and probably not in the lifetime of any currently living fan.
How old are you? Certainly not old enough to remember when gas was well under $1 a gallon and sodas were a quarter... let alone a nickel.

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The Stanley Cup Finals that everyone praised for their wonderfulness: a 3.1.

The NBA finals that everyone slept through: an 8.4.

The record low NBA finals? A 6.2.

Game, set, match.
Thanks for proving my point -- the NHL has similar ticket revenues to the NBA, and 1/3 - 1/2 of the TV audience -- yet the NHL's current TV contract is almost 1/5 of the NBA's! Obviously that gap will be closed in the coming years.

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You're right, it's not a stretch of the imagination. It is the imagination after a ten week bender in Roger Clemens' first aid kit.
Just take a single course in economics... just one.

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The NFL has a cap of 120ish million and that league recieves BILLIONS OF DOLLARS A YEAR in tv revenue. Their gate is less, due to only having 1/6th the games, but their stadiums are usually 3-4 times the size of even the large NHL arenas, so that difference is mitigated to a decent degree. On top of that, the NFL's average ticket price is something like 30 dollars higher than the NHLs.
Did I somehow imply the NFL would not continue to grow?
While the NHL cap will hit $80m, the NFL will probably be well over a $200m cap.


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07-14-2009, 03:56 PM
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I bet within the next 19 years we expand to Europe or enter into some agreement with the KHL. That could bring the cap up a fair bit by opening up some new lucrative markets/ marketing deals.
Ahhh, now that could make $80 million attainable...but Im with HiHD...not in our lifetime.

But it certainly does spread the growth potential to unexplored territories. Then again, it could destroy the league if it doesnt take root and hold. Risk v Reward, I guess.

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07-14-2009, 04:16 PM
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Hockey is ultimately a business, and the shareholders (owners) are going to demand nothing less than an average annual growth of 10%. Multi-billion dollar companies have maintained that kind of growth for decades... the NHL is essentially a fledgling company comparatively and located in several emerging markets.

With a more realistic 8% average annual growth (as opposed to 4-5% which is pretty much a worst-case scenario) the salary cap will be over $120m within the decade. I guess we will have some utterly shocked posters in this forum.

There is a reason the NHLPA has the optional 5% kicker -- because that is expected to be the minimum acceptable realized growth on an average annual basis.


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