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Friedman: KHL and NHL should make a (transfer) deal

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Old
04-03-2010, 10:57 AM
  #1
LadyStanley
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Friedman: KHL and NHL should make a (transfer) deal

http://www.cbc.ca/sports/blogs/ellio...ke-a-deal.html

Friedman wonders how the KHL "makes" money with low ticket prices (e.g., C$10-80) and rumors that the league pays to be on TV. Guys who might earn $100k in AHL are getting $1m, and more than 20 players in the league have salaries at/above $5m.

Article is based on interview with Medvedev.

Quote:
It is a mistake to underestimate Russian pride, and some very powerful people want a strong, thriving hockey league. Apparently, Prime Minister Vladimir Putin has told those who've made themselves rich on Russian resources that building the KHL is a form of payback.
...
Medvedev himself admits that right now, the economics don't make sense. When I asked him if he hopes to compete with the NHL he said "10-15 years," once the league's infrastructure is more developed.
Believe it or not, the NHL needs to make sure the KHL continues to move forward, especially now that it is trying to fund junior teams as well. But, the Russians must be more reasonable in their demands.
Medvedev says that Ovechkin should have had a Beckham-like transfer deal (C$54.6m), but even one NHL GM is balking at an estimated $1.5-2.5m per top player transfer rate.

Quote:
NHL deputy commissioner Bill Daly told a Russian newspaper this week that the NHL is not interested in negotiating a fee on a player-by-player basis. But, is it willing to go higher on a per country basis? Not every guy on a team makes the same money, either.
...
There are other things Medvedev talked about in his interview. He'd like Russian players who get sent to the AHL to return home instead (In the deal with Sweden, non-first rounders under 22 can go back if cut from the NHL).
He also wants a kind of "exchange program" where young North Americans play in the KHL. Don't know if the CHL would be so interested but his quote about this, which will be featured in the online version of tonight's Inside Hockey, is hysterical.
He also said he's offered to buy an NHL team, providing some North American owners invest in his league. That, in theory, is not a bad idea.
Friedman also mentions that Slovaks and Czechs are not producing the # and quality of players as in years past (as evidenced by # of NHL draft picks recently).

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04-03-2010, 11:28 AM
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As Slava Fetisov said, "What would the NHL look like without Europeans?"

Answer: not very good.

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04-03-2010, 01:39 PM
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The NHL is demanding an unfair compensation model - that's the main problem. Sadly, the other European leagues don't have the balls and funds for an adequate reaction.
Signing a top player, who is already under contract, should cost some major money and require both clubs approval; individually negotiated.
If that doesn't fit on the current draft system - well, come up with something new.

Quote:
Former Flame Hakan Loob is conducting a feasibility study on behalf of five Swedish Elite League teams.
That study isn't co-financed by KHL anymore. Loob presented the European Trophy this week, a tournament of non-KHL clubs, which is rumoured to turn into a league in some years (thread).


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04-03-2010, 01:46 PM
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I happen to agree with there should be a transfer deal to the developing country. The russians are correct in the amounts being offered are ridiculously low. A country develops a player and gets nothing or peanuts for their efforts. Not fair at all IMO.

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04-03-2010, 05:24 PM
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http://www.cbc.ca/video/#/Sports/ID=1459269810

Video feature. (Canadians only)

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04-04-2010, 01:11 AM
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Quote:
Originally Posted by LadyStanley View Post
http://www.cbc.ca/video/#/Sports/ID=1459269810

Video feature. (Canadians only)
Anything new in this? Or does anyone know a good proxy for watching it?

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04-04-2010, 06:51 AM
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Originally Posted by Hockeyhopeful View Post
I happen to agree with there should be a transfer deal to the developing country. The russians are correct in the amounts being offered are ridiculously low. A country develops a player and gets nothing or peanuts for their efforts. Not fair at all IMO.
The NHL should pay nothing, if players want to play in the NHL that's their choice or they can play in the KHL or any other league they so chose. As long as they are not under contract they should have the right to sell their services to the highest bidder.
Are other hockey leagues required to pay for player development or just the NHL?
Do any other sports leagues pay for player development?

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04-04-2010, 07:03 AM
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Quote:
Originally Posted by LadyStanley View Post
http://www.cbc.ca/video/#/Sports/ID=1459269810

Video feature. (Canadians only)
Wow the part about Graham is scary. I like the part about making the players play until the season's end. If the team is eliminated from the playoffs, they have to still go to practice. The league says we pay you to April 1st you will play / practice to April 1st. No reward of a short season for missing the playoffs.

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04-04-2010, 08:00 AM
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Quote:
Originally Posted by eliostar View Post
The NHL should pay nothing, if players want to play in the NHL that's their choice or they can play in the KHL or any other league they so chose. As long as they are not under contract they should have the right to sell their services to the highest bidder.
I don't think you've fully understood what the transfer agreement controversy is about. The NHL and the Europeans are not disagreeing over what happens to players who are not under contract, the problem is that the NHL wants to be able to sign players who are under contract, and most importantly, they want to do so without paying the full market value of those players.

Quote:
Are other hockey leagues required to pay for player development or just the NHL?
Other leagues pay market value for players who are under contract, as a result, outright transfers between European hockey clubs involving players who are under contract are incredibly rare. Players only ever really change clubs in Europe as free agents.

Quote:
Do any other sports leagues pay for player development?
FIFA and UEFA have a system in which any team a footballer has played for between the ages of 12 and 21 gets a "development benefit" every time a player changes clubs, generally a percentage of the players transfer fee determined by how long said player was at each club.
If the NHL wishes to keep its current system of obtaining European talent, they should take serious consideration to implementing a similar system of compensation.

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04-04-2010, 09:26 AM
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Quote:
Originally Posted by Hockeyhopeful View Post
Wow the part about Graham is scary. I like the part about making the players play until the season's end. If the team is eliminated from the playoffs, they have to still go to practice. The league says we pay you to April 1st you will play / practice to April 1st. No reward of a short season for missing the playoffs.
Can't watch the video. What was said about Graham, want to know so I understand why its scary.

Anyone know how to watch the clip if you are not in Canada.

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04-04-2010, 10:29 AM
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Quote:
Originally Posted by eliostar View Post
The NHL should pay nothing, if players want to play in the NHL that's their choice or they can play in the KHL or any other league they so chose. As long as they are not under contract they should have the right to sell their services to the highest bidder.
Are other hockey leagues required to pay for player development or just the NHL?
Do any other sports leagues pay for player development?
Quote:
Originally Posted by Franck View Post
I don't think you've fully understood what the transfer agreement controversy is about. The NHL and the Europeans are not disagreeing over what happens to players who are not under contract, the problem is that the NHL wants to be able to sign players who are under contract, and most importantly, they want to do so without paying the full market value of those players.
Err. Not exactly. As discussed in a few other threads (search for "grass roots"), the NHL pays a few million dollars ($8 IIRC) annually to USA Hockey for development of players (e.g., for USHL/NCAA) and a much lesser amount to the CHL for development of kids in Canadian major junior.

While transfer fees are not included in the cap hit, they are a legitimate, authorized expense. (Recall that the Penguins were prevented -- by the league -- from negotiating or paying what amounted to extortion to get Malkin to the states.)

(Transfer fees in the past have been paid to the national federation, not a local team.)

It's not that the NHL does not want to support development of players (directly or indirectly via transfer fees) in countries outside of North America, but they don't want to be "fleeced" to pay an exorbitant amount.

IIRC the pre-2005 transfer agreement included a payment of like $150k per player (with like a $50k bump if signed after 6/15). Then with Russia balking at signing any agreement for less than seven figures (for first round picks), there became a huge controversy and negotiations broke down with all European federations.

So the past few years, the NHL has been able to sign any European (draftee or free agent) without the federations getting a penny.

So, we're back at the negotiating table. (Which is a good thing, IMHO).

What's fair compensation? First rounder? 7th rounder?

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04-04-2010, 10:50 AM
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Quote:
Originally Posted by LadyStanley View Post
Err. Not exactly. As discussed in a few other threads (search for "grass roots"), the NHL pays a few million dollars ($8 IIRC) annually to USA Hockey for development of players (e.g., for USHL/NCAA) and a much lesser amount to the CHL for development of kids in Canadian major junior.
What do European clubs gain from this?

Quote:
Originally Posted by LadyStanley View Post
While transfer fees are not included in the cap hit, they are a legitimate, authorized expense. (Recall that the Penguins were prevented -- by the league -- from negotiating or paying what amounted to extortion to get Malkin to the states.)

(Transfer fees in the past have been paid to the national federation, not a local team.)

It's not that the NHL does not want to support development of players (directly or indirectly via transfer fees) in countries outside of North America, but they don't want to be "fleeced" to pay an exorbitant amount.
From an interview with Fasel (IIHF, 2008):
Quote:
Q: Let’s say a Slovakian player is under contract with his club and an NHL club would like to sign him and negotiate a release fee with the Slovakian club. Is that possible?
A: In theory yes. But the NHL has informed the IIHF that NHL clubs are prohibited to enter individual negotiations with European clubs. They are prohibited both due to an agreement the NHL has with the NHLPA, but also by the provisions of Article 26 of the Collective Bargaining Agreement. The NHL would view any individually negotiated release fee to be a clear circumvention of the CBA and punishable by heavy fines and forfeiture of draft picks. It would be considered as a very serious offence. So it’s not likely that any NHL club would attempt that.
NHL fends off ideas of individual negotiations. As long as this is the case, there can't be a fair compensation.

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04-04-2010, 10:56 AM
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Quote:
Originally Posted by Rjinswand View Post
NHL fends off ideas of individual negotiations. As long as this is the case, there can't be a fair compensation.
What is fair compensation? Isn't it nominally negotiated?

If you are drafting the next Malkin, $1m might be "fair" as compensation.

But if you're drafting a 7th rounder from Europe, is $100k too much?

The NHL seems to have the stance that paying a fair amount for players is fine, but 100% supporting junior/lower age development is not what they are setting out to do.

So, I ask again? What is fair compensation for a top ten draftee? First round? 2nd round? 3rd-5th round? 6th-7th round?

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04-04-2010, 12:18 PM
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Fair Compensation

Quote:
Originally Posted by LadyStanley View Post
What is fair compensation? Isn't it nominally negotiated?

If you are drafting the next Malkin, $1m might be "fair" as compensation.

But if you're drafting a 7th rounder from Europe, is $100k too much?

The NHL seems to have the stance that paying a fair amount for players is fine, but 100% supporting junior/lower age development is not what they are setting out to do.

So, I ask again? What is fair compensation for a top ten draftee? First round? 2nd round? 3rd-5th round? 6th-7th round?
The issue is more complex.

Fair compensation is measurable if you are paying for the actual development of a draft pick / players as is the case with draft picks / players developed in the leagues governed by Canadian and American amateur hockey bodies. However the leagues in question do not compete with the NHL for pro players.

If the issue is compensation to the appropriate governing amateur body in Russia where it is possible to track the dollars back to the development of youth hockey then there is hope but if the issue is compensation to the KHL - effectively subsidizing a competing pro league, then you will remain a long way from resolution.

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04-04-2010, 04:53 PM
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Quote:
Originally Posted by LadyStanley View Post
What is fair compensation? Isn't it nominally negotiated?

If you are drafting the next Malkin, $1m might be "fair" as compensation.

But if you're drafting a 7th rounder from Europe, is $100k too much?

The NHL seems to have the stance that paying a fair amount for players is fine, but 100% supporting junior/lower age development is not what they are setting out to do.

So, I ask again? What is fair compensation for a top ten draftee? First round? 2nd round? 3rd-5th round? 6th-7th round?
Going rate in Europe for a young, future superstar footballer starts at around €10m and moves upwards from that, transfer fees of €30m or more are far from unheard of. Market value for a young Malkin or Ovechkin level hockey player is going to be at a similar level. 7th round players are going to be significantly cheaper than that if signed before they break through, possibly cheaper than what the NHL is willing to offer in its transfer agreements. I would certainly not expect any 1st or 2nd round talent to ever leave Europe for less than $1m if the NHL would start negotiating fees individually and pay market value.

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04-05-2010, 01:04 PM
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Quote:
Originally Posted by Franck View Post
Going rate in Europe for a young, future superstar footballer starts at around €10m and moves upwards from that, transfer fees of €30m or more are far from unheard of. Market value for a young Malkin or Ovechkin level hockey player is going to be at a similar level. 7th round players are going to be significantly cheaper than that if signed before they break through, possibly cheaper than what the NHL is willing to offer in its transfer agreements. I would certainly not expect any 1st or 2nd round talent to ever leave Europe for less than $1m if the NHL would start negotiating fees individually and pay market value.
Currently, I do not believe that the market value would be the same, since the demand for hockey players, by organizations with deep pockets, is smaller than the demand for soccer players, by organizations with deep pockets. However, I agree that not all players should have equal payments.

The other problem with comparing soccer transfer payments to hockey transfer payments is whether the NHL should make transfer payments even for a guy not signed to a contract. So a transfer payment would be paid for Malkin, but maybe not for Ovechkin who had a mechanism in place to cancel his Avengard contract before signing his Capitals contract. Furthermore, is the transfer paid to the club team (like in soccer) or to the national federationÉ

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04-05-2010, 02:45 PM
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Originally Posted by Franck View Post
Other leagues pay market value for players who are under contract, as a result, outright transfers between European hockey clubs involving players who are under contract are incredibly rare.
But when they do happen, the selling club is much better off if the player signs with the KHL than if he signs with the NHL.

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04-05-2010, 02:56 PM
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Currently, I do not believe that the market value would be the same, since the demand for hockey players, by organizations with deep pockets, is smaller than the demand for soccer players, by organizations with deep pockets.
I don't think anyone implied the market value would be the same. Having said that it's not like NHL teams don't have money to spend: if the Capitals can sign Ovechkin for $124 million it just goes to show that they do have money to spend.

Quote:
Originally Posted by LadyStanley View Post
The NHL seems to have the stance that paying a fair amount for players is fine,
Stop being naive, the NHL wants to pay as little as possible.

Remember when Ufa signed Radulov and then offered Nashville the same amount of money that the NHL used to pay?

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04-05-2010, 03:29 PM
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I don't think anyone implied the market value would be the same. Having said that it's not like NHL teams don't have money to spend: if the Capitals can sign Ovechkin for $124 million it just goes to show that they do have money to spend.
The post to which I responded did.


Last edited by Section337: 04-05-2010 at 03:35 PM.
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04-05-2010, 04:33 PM
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Quote:
Originally Posted by Section337 View Post
Currently, I do not believe that the market value would be the same, since the demand for hockey players, by organizations with deep pockets, is smaller than the demand for soccer players, by organizations with deep pockets. However, I agree that not all players should have equal payments.
I think the problem with that reasoning is that a players market value to a large extent depends on the finances of the selling club, since your typical KHL club is owned by either an incredibly wealthy individual or backed by a wealthy company, and therefore have very little financial interest in letting their stars go, bids would have to get to very high levels for them to accept.

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04-05-2010, 05:02 PM
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Originally Posted by jekoh View Post
Stop being naive, the NHL wants to pay as little as possible.
That may be. I haven't seen a NHL statement stating their stance, one way or the other.

Quote:
Remember when Ufa signed Radulov and then offered Nashville the same amount of money that the NHL used to pay?
CBA prohibits NHL team from accepting such $$s, even if they thought it was fair.

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04-05-2010, 05:22 PM
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I think the problem with that reasoning is that a players market value to a large extent depends on the finances of the selling club, since your typical KHL club is owned by either an incredibly wealthy individual or backed by a wealthy company, and therefore have very little financial interest in letting their stars go, bids would have to get to very high levels for them to accept.
I understand what you are saying from a supply side, but the problem is the demand side is so small, one team. The other thing is the supply side has a tenuous hold on their guys, for as long as they continue to give them short term contracts with outs, since all an NHL team has to do is wait until the contract end and then sign the guy for nothing.

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04-06-2010, 01:18 AM
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This is an area I've always been interested in but I learned to stop trying a while ago. It's always the same old tired argument... North America and Europe have different sports cultures & values, they want lucrative Football style transfer payments, and we think the whole transfer payment concept is silly and players should be free to to play in whichever league they want. When it comes down to it though the NHL understands the value in helping fund the development of foreign players and willing to pay something, but there is no FIFA/UEFA type organization to coerce them into giving into any demands or agreeing on what is considered 'fair'.

Personally I've adopted a 'money talks' approach. I'd welcome equal competition from across the ocean, but if they want to dictate any terms to the NHL then they need to ramp up player development and league finances to match us. Let's not forget that the real driving force behind the NHL is not the wealthy billionaire owners or powerful politicians, but the thousands of fans that pay good money to put buts into 18-20k seat arena's to watch hockey games 82+ games a season. The NHL is the best hockey league in the world and it's us their fans and our money that makes it so.

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04-06-2010, 01:51 AM
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How many players has the NHL recently taken from any European league that was under contract? I know with Malkin, he got out of it by using a loophole (now closed) under Russian law, so he wasn't under contract.

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04-06-2010, 02:06 AM
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How many players has the NHL recently taken from any European league that was under contract? I know with Malkin, he got out of it by using a loophole (now closed) under Russian law, so he wasn't under contract.
Without having the stats to back me up right now, I'd be willing to bet that 50% of europeans coming over to NHL/AHL are under contract to their European teams but have NHL-clauses in their contracts (so they can leave to NHL without any compensation).

And if the next question is why do they have these clauses it's because most players insist on having one in their contract.

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