Kukla's Korner

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Afternoon Line

There is clearly no end to the madness, nor will there ever be. No matter what the NHL does, it will always be thus. Their need to control spending has created a salary cap situation that has helped almost nobody but the players. It has created far more headaches than it has ever solved, forces teams to spend to a salary floor that wouldn’t even be close to their budget if they could spend as little as they wish and has done almost nothing for competitive parity. Yes, Horton signed with the small-market Columbus Blue Jackets. But the reality is it was more about him wanting to play in a city where he could live a more anonymous lifestyle than anything else. The fact is, the salary cap has not been responsible for one ounce of whatever parity there is in the league these days.

-Ken Campbell of The Hockey News where you can read more about the NHL contracts being handed out.

Filed in: NHL Teams, NHL Talk, | KK Hockey | Permalink
 

Comments

Primis's avatar

Any team that can’t spend to the floor shouldn’t have a team.  Otherwise you’d have dumb sh*ts like NAS icing payrolls of AHLers worth maybe $15m/yr.

Any argument that brings up the salary floor as a bad thing automatically loses any and all credibility.

Posted by Primis on 07/08/13 at 01:16 PM ET

bezukov's avatar

1.)  I have to question the idea that the mission of the salary cap is all about funneling “small market teams” (there’s a moving goal post if I’ve ever heard one) to the finals.  To me it was always about bailing out bad management and saving the owners money.

2.) Having fourteen different cities (read “half the league”) in the conference finals in five years sounds a lot like parity to me.  I don’t have the info on what the pre-lockout picture was over five years (sort of curious Campbell doesn’t include that info), but I don’t remember the picture being as diverse as it is now. 

3.) On the salary cap floor:  The players deserve to make money as well.  They’ve agreed to work for less money and job security in a labor market that would be slammed in an anti-trust suit.  So keep that in mind before you begin carping about player salaries.  A salary cap floor may exacerbate the financial problems of some teams, but the NHL still has to offer attractive salaries to keep the NHL in it’s position as the world’s premier hockey league.  Not to mention a level of quality of play must be maintained as well if you want to compete with the NBA and MLS, never mind the NFL or MLB. 

4.) If you don’t like failing franchises, place the blame where it belongs: a commissioner that over expands the league into unfavorable markets and allows incompetent ownership groups to mismanage their teams for generations (looking at you Charles Wang).  That’s not on the players.

Posted by bezukov from the kids are alright. on 07/08/13 at 01:40 PM ET

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Any argument that brings up the salary floor as a bad thing automatically loses any and all credibility.

The problem with the salary floor is in it’s relation to the salary cap.  The specific problem is that as long as the floor is effectively 80+% of the cap, you have a) league enforced parity and b) around 15 teams that are going to lose money every year on hockey ops, and maybe 20.

There should be a floor.  There should not be a floor at 80% of the ceiling.

Posted by HockeyinHD on 07/08/13 at 01:52 PM ET

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They’ve agreed to work for less money and job security

Less money relative to when?  A smaller percentage?  Sure.  Less total money?  I don’t think I’ve yet seen where the players in aggregate have made less money in any 82 game season than they did the one before.

Same deal with job security.  A NHL job is no less secure now than it was under the old deal.  Heck, if anything the case can be made that given the leagues rules regarding super long contracts and stashing contracts in the minors or elsewhere an NHL contract is more of a guarantee of work now than it was before.

Posted by HockeyinHD on 07/08/13 at 01:57 PM ET

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What people like Campbell don’t understand is that while the Salary cap hasn’t exactly killed the players, it hasn’t particularly helped them either. Revenue has gone up something like 80% since 2004, yet only now are we seeing salaries to match. He isn’t understanding that, without the cap, Claude Giroux isn’t getting $8 million per…he’s getting something in the vicinity of $18 million per.

I have to question the idea that the mission of the salary cap is all about funneling “small market teams”

It’s not. The purpose is to index cost inflation to revenue growth. That’s it. If your hockey team’s revenue shrinks and everyone else’s grows, you’re SOL.

 

Posted by larry on 07/08/13 at 02:09 PM ET

bezukov's avatar

Posted by HockeyinHD on 07/08/13 at 01:57 PM ET

If teams have a limit on what they can spend on labor costs, that means lower salaries for the players.  Term limits on contracts have the same affect.  I’ll grant that these factors may not mean less in actuality, but they do mean less in potential.  If I’m a player or Donald Fehr, that potential is valuable.  If I’m working in an environment where the risk of career ending injury is possible everyday I’m on the job, and it’s likely that I won’t be able to play anymore by the time I’m forty (half way to real world retirement age and half way through average life expectancy), foregoing unlimited contract length and salary is a pretty big hit.

Posted by bezukov from the kids are alright. on 07/08/13 at 02:11 PM ET

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Their need to control spending has created a salary cap situation that has helped almost nobody but the players

How did the cap help the players compared to a non-capped system? They get less of the total revenue and any increase in total revenue is the result of them producing a superior product than NHL management or marketing acumen.

Posted by hockey1919 from mid-atlantic on 07/08/13 at 02:29 PM ET

LivinLaVidaLockout's avatar

There should be a floor.  There should not be a floor at 80% of the ceiling.

Posted by HockeyinHD on 07/08/13 at 01:52 PM ET

The floor in the NBA is 90% of the ceiling.  The amount the team salary is beneath the floor at the end of the season is split between the players on the roster.  There really shouldn’t be an NHL team that can’t afford the floor where it is.

Posted by LivinLaVidaLockout on 07/08/13 at 02:32 PM ET

J.J. from Kansas's avatar

The problem with the salary floor is in it’s relation to the salary cap.  The specific problem is that as long as the floor is effectively 80+% of the cap, you have a) league enforced parity and b) around 15 teams that are going to lose money every year on hockey ops, and maybe 20.

There should be a floor.  There should not be a floor at 80% of the ceiling.

Here I was hoping that a few months of actually watching hockey would get you to stop inflating numbers to outright lie.

The floor is not 80+% of the cap. The floor is locked in right now at 68.43% of the cap. As the cap rises, the floor will index so that it will remain at 75.62% of the cap.

There is a piece that allows this factor to change (floor and cap set at 15% above and below the midpoint). That states the floor can’t ever be more than $28M below the cap.

In order for this relationship to be mathematically possible where your 80+% figure is actually honest, the salary cap would have to be $140M, leaving the floor at $112M.

Of course, if the cap were $140M, that would be predicated on NHL HRR being just shy of seven billion dollars.  The average team would have just shy of $116M worth of dollars to spend on every possible thing which is not directly or indirectly taken from paying the players or providing their benefits in order to break even.

Posted by J.J. from Kansas on 07/08/13 at 02:50 PM ET

Savage Henry's avatar

The floor in the NBA is 90% of the ceiling.

But the ceiling in the NBA is a joke.  When did that ever stop a deep-pocketed team fro spending $$ on somebody they wanted?

Posted by Savage Henry on 07/08/13 at 03:42 PM ET

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If teams have a limit on what they can spend on labor costs, that means lower salaries for the players.

But lower relative to what?  I suppose my concern is that it is being portrayed as though the NHLPA, collectively, is taking less money now than they did before when I’m not exactly sure that’s the case.

Under the old CBA they got 5% more a year as a group without regard to whether HRR went up or down, and it always went up anyway.

Yeah, due to the shortened season they made less last year (obviously), but I’d bet dollars to donuts that the players will make as much or more as a group in 2013-14 than they did in 2011-12.

In that context I don’t think it’s accurate to say the players ‘took less money’ because they took as much or more money.  Yes, their money didn’t go up as fast as it could have, but more is more.

If I’m working in an environment where the risk of career ending injury is possible everyday I’m on the job, and it’s likely that I won’t be able to play anymore by the time I’m forty (half way to real world retirement age and half way through average life expectancy), foregoing unlimited contract length and salary is a pretty big hit.

For whom, though?  5 guys?  10 guys?  That aside, when were there unlimited contracts in either term or amount being handed out?  IIRC, some of the biggest money deals of all time were handed out just before, during and after these last negotiations.  In the last few years Crosby’s gotten a 104 mil deal over 12, Perry got the same amount over 8, Getzlaf got 8.25 over 8, Weber got 7.8 over 14, Parise and Suter got their huge deals.  Rinne got a huge deal.  Alex freaking Semin got a 35 mil deal.  I mean, Val got 5 a year, bezukov.  Maybe now isn’t the right time to talk about guys not getting their deals. wink

I don’t see where there are a whole bunch of players getting squeezed on either term or amount.  And there really shouldn’t be since the total amount getting paid to players has gone up every year and while there is that 7/8 year restriction on contract length we’re only talking about a very, very small percentage of the player population being impacted by that.

The floor in the NBA is 90% of the ceiling…  ...There really shouldn’t be an NHL team that can’t afford the floor where it is.

Compare the NBAs TV deal to the NHL’s and get back to me.  Further, the NBA has a soft ceiling and not a hard one.  The money the rich teams go over the cap is taxed according to a formula and split up between the clubs.

For instance, the last year the Brooklyn Nets spent 92 mil in guaranteed salaries and the New Orleans Hornets/Pelicans spent 48 mil.  That top spending team spent 92% more than the cheapest team.

Last year, including the NHL’s cap overage exception for that one single year, the highest spending team (Philly, of course) spent 46.8% more than the cheapest team… and that number is going to go wayyyyyy down next year since it was 36.3% in 11-12.

Here I was hoping that a few months of actually watching hockey would get you to stop inflating numbers to outright lie.

Oh, look who it is, the guy with the faintest relationship with the truth around!

The floor is not 80+% of the cap.

Are you familiar with the usage of the term ‘effectively’?  If so, please demonstrate your familiarity in a manner that makes you look like less of an idiot.

The floor is locked in right now at 68.43% of the cap. As the cap rises, the floor will index so that it will remain at 75.62% of the cap.

I get a huge kick out of you think you’ve proved a point because instead of an 80% number I picked out of the air the actual number is… 75.62%  Wow, JJ, you reallllly nailed me with that one!  Woo boy.  The trophy is in the mail!  I mean, 75.62% instead of 80%?  Man, that’s like a million miles away.  It’s like predicting a guy will score 40 goals and he scores 37.  How awful.

Further, do you actually think teams are going to slide in at one cent over the floor or something?  Even the cheapest teams in the NHL spent over the floor by 800k-1.5 mil, just to be safe.

At any rate, goof, the point is that a whole boatload of revenue generation happens with a very few teams.  If the floor is linked as tightly to the ceiling as it is, then the majority of teams in the NHL will struggle to be operationally solvent under those financial conditions.

In other words, unless every team in the NHL is experiencing revenue growth on par with total league revenues, any and all teams who do not will far further and further behind that growth curve over time and have a harder and harder time meeting a rising cap floor.

And that compounds over time, as well.  If the NHL grows at 5% each year but in year one a team is flat, and then in year two they go up 3%, then in year three they’re up 5%, then in year 4 they are down 1… by the end of that 4th year if this hypothetical club started with an ability to pay 55 mil under a 68 mil cap by year four they can pay 58.888 mil under… a 82.654 mil cap.

Or, in still different words, they are underwater 4+ million just to the floor when they started out just under 4 mil clear of it.

That’s why, for the NHL, having a cap at effectively 80%... oh, right, 75.62%... of the ceiling is going to be bad news for a whole host of teams, and bad news in a big hurry.

The intelligent way to set the cap floor if you’re not looking to bleep your poor teams in the behind is to index it to the aggregate revenues of the 5ish lowest revenue teams in the league, not tie it to how much the Leafs and Rangers can raise ticket prices.

But that isn’t the leagues agenda.  They want to grow the game in nontraditional hockey markets, and they don’t think they can do that if those weak market teams are only winning 30 games a year because two other teams in their division who have fans spend 30 mil a year more than they do and take all their FAs.

So they constrain the ability of the rich teams to spend, they artificially narrow the competitive band, and they make owners of those weak teams get robbed for 10+ mil a year in ops costs for the privilege of owning an NHL team, mostly just to get a sweet arena deal so they can actually make money doing other things.

Which is just awesome for that hockey club.

 

Posted by HockeyinHD on 07/08/13 at 04:47 PM ET

J.J. from Kansas's avatar

Are you familiar with the usage of the term ‘effectively’?  If so, please demonstrate your familiarity in a manner that makes you look like less of an idiot.

Yes, “effectively” means that in practice, it does that. If it does not do that in practice, you’re full of shit when you make up numbers.

It means that when you say something is “effectively” a higher number than it actually is, you’re inflating numbers to outright lie, which is what I accused you of.

This is because you have an annoying habit of doing so. Rail and scream all you want about how it must not matter much, but it does matter because you seem to have this compulsive desire to lie in order to make your points seem stronger than they actually are. (Like when you pretend that 2/3rd of the league loses money)

If you do this when it’s not actually necessary, there’s no reason to believe you don’t do it all the time.

I’m just sharing knowledge with those who actually bother reading what you say so that they know you’re full of shit and can take what you say with the appropriate level of cynicism.

Even the cheapest teams in the NHL spent over the floor by 800k-1.5 mil, just to be safe.

Hey cool, that lowers the cap requirement down to a measly $133M to make your stupid “effectively” defense make any sense.  Good job there.

Posted by J.J. from Kansas on 07/08/13 at 04:58 PM ET

bezukov's avatar

But lower relative to what?  I suppose my concern is that it is being portrayed as though the NHLPA, collectively, is taking less money now than they did before when I’m not exactly sure that’s the case.

The players took a cut in HHR.  They might be getting “more” money as the value of the dollar changes, or as the NHL grows, but either way it’s a smaller piece of the pie than they had before.  That’s a pay cut. 

Under the old CBA they got 5% more a year as a group without regard to whether HRR went up or down, and it always went up anyway.

The players are still taking less in contract length and share of profit.  Don’t change the topic.

Yeah, due to the shortened season they made less last year (obviously), but I’d bet dollars to donuts that the players will make as much or more as a group in 2013-14 than they did in 2011-12.

Again, it’s about proportion.  The players took a smaller share of the wealth they generate.  High water might raise all boats, but a yacht will still be a yacht and row boat will still be a row boat.

In that context I don’t think it’s accurate to say the players ‘took less money’ because they took as much or more money.  Yes, their money didn’t go up as fast as it could have, but more is more.

I bet you wouldn’t take that attitude when it comes time to discuss a raise with your boss.  I’m sure you’d want him or her to consider the cost of living, inflation, retirement, etc. before deciding your pay.  I imagine you wouldn’t care much if your wage was bigger at the same time your share got smaller.  You’d want a paycheck that equals the same or greater return on the value of your labor as it was before. 

Anyway, I guess I’m willing to take it on the nose for using too loose of a term, but you haven’t damaged my point in the least.  The players are receiving a smaller share of the NHL’s wealth.

For whom, though?  5 guys?  10 guys?  That aside, when were there unlimited contracts in either term or amount being handed out? 

The seventeen year long contract Kovalchuk was set to get was pretty damn close.  Franzen and Z come to mind too.  Now that’s impossible.  Isn’t that a loss for the players, even if was five guys (as if that’s important)?

IIRC, some of the biggest money deals of all time were handed out just before, during and after these last negotiations.  In the last few years Crosby’s gotten a 104 mil deal over 12, Perry got the same amount over 8, Getzlaf got 8.25 over 8, Weber got 7.8 over 14, Parise and Suter got their huge deals.  Rinne got a huge deal.  Alex freaking Semin got a 35 mil deal.  I mean, Val got 5 a year, bezukov.  Maybe now isn’t the right time to talk about guys not getting their deals.

Besides changing the topic, none of that is qualifying evidence, because the CBA paradigm isn’t a free market.  We don’t know what Crobsy’s contract would have looked like before 2006. 

A career long contract for an NHLer might still be a pipe dream in a cap-less universe, but before cap era it was a possibility.  Now it isn’t.  That’s a loss.  The owners colluded to cap and restrain the free labor market = the players took less.

Don’t come back and talk to me about resigning a contract either.  Resigning when a contract ends isn’t the same as limitless term.  Job security is diminished every time you have to renegotiate, because the incentive to make you work for less will never go away.

 

 

Posted by bezukov from the kids are alright. on 07/08/13 at 07:14 PM ET

J.J. from Kansas's avatar

Under the old CBA they got 5% more a year as a group without regard to whether HRR went up or down, and it always went up anyway.

This is also a lie.

Posted by J.J. from Kansas on 07/08/13 at 07:35 PM ET

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Paul Kukla founded Kukla’s Korner in 2005 and the site has since become the must-read site on the ‘net for all the latest happenings around the NHL.

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