Kukla's Korner

Kukla's Korner Hockey

Same Story, Different Year

from Larry Brooks of the NY Post,

The last time around, Gary Bettman pledged that NHL “cost certainty” in the guise of a percentage-of-the-gross hard cap would, in no particular order, make ticket prices more affordable, increase franchise values across the board, and give small-market clubs every opportunity to become profitable.

Seven years later, the CBA won from the ashes of the canceled 2004-05 season has accomplished none of these objectives. And yet the commissioner, the Board of Governors and the NHL are doubling down on their own flawed concept with a collective bargaining strategy amounting to little more than reaching as deep as possible into the players’ pockets.

A system in which the payroll of revenue-poor clubs is linked to the amount of revenue generated by the league’s powerhouse franchises is fatally flawed — incoherent and doomed to fail no matter how low the league wants the players to go.

And yet here we are again, the league right out of the gate having proposed the players take 22 percent less (a much smaller percentage of a much smaller pot) without any sort of plan or inclination to funnel additional dollars to the small market franchises that cannot economically keep pace with the big boys.

continued

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

Comments

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How long do teams that can afford to be big market teams allow a league, and its commissioner to dictate what they can spend and whether their fans get to see a hockey season?

If another season is lost due to revenue arguments by mainly small market teams, when do the big markets apply pressure and threaten to disband?

The fans have almost 100% forgiven the lockout, I don’t think they’ll forgive one every 7 or so years.

Posted by PotbellyJoe from Jersey on 07/18/12 at 11:43 AM ET

bezukov's avatar

Solidarity Forever.  I’m pulling for you NHLPA!

Posted by bezukov from the kids are alright. on 07/18/12 at 11:43 AM ET

Primis's avatar

I don’t know how you guys can ever take Brooks seriously.

Posted by Primis on 07/18/12 at 12:02 PM ET

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But it isn’t only the large market teams being restrained from spending, it is the small market teams being force to pay to a floor they cannot hope to meet and remain profitable.

If a team is re-building then why does it need to have cap mules on the books just to reach the floor. Those are losses that are never recouped even when the team turns the corner. Unfortunately, some owners will perennially be on the bottom of the salary floor no matter how profitable they are, but the cap has to be set at percentage of the total and not fixed amounts.

The biggest problem is that all of the solutions need to be worked out on the owners side and the keep looking to the players since they have all of the leverage in that negotiation.

Posted by hockey1919 from mid-atlantic on 07/18/12 at 12:04 PM ET

Nathan's avatar

As someone that doesn’t like the cap, this isn’t really my idea position to take, but I have accepted the cap exists and is what it is. That being said, the bigger of the two cap problems is the floor, not the ceiling. The ceiling escalated because revenue did. And as long as the NHL doesn’t kill a season, revenue will just continue to grow, so even if a 46/54 split is achieved by the league, the cap will pretty quickly grow to its current limit and move beyond. The floor will follow with it.

This actually gives big market teams more of a financial advantage than the uncapped system did for a few reasons.

First, big market spending still isn’t constrained much. I know, inflation and all that, but let’s not forget that the typical standard for pre-cap spending—the 2001-2002 Red Wings—actually had a payroll that was roughly $65 million, and that was a payroll of which Mike Ilitch has stated over the years that he stretched quite a bit over the budget in light of the opportunities to sign HOF talent and win another Cup. It took a few seasons, but under the majority of the years of this CBA, the big market teams were able to spend.

Second, there’s logic to the idea that the CBA has actually allowed more big market teams (and maybe more so, some of the teams bordering between the haves and have nots) to spend more than the really would have under the old system. This is because costs are much more predictable.

If you are the Mike Ilitch and his management team, in 2001-2002, you had to have your own budget, and you had to make your own judgments as to the marginal utility of each dollar, or each million, you were to spend over that budget in an effort to win. You had to gamble big time on just how much money it would cost if you didn’t get the number of home playoff games you expected, or the number of Brett Hull jersey sales you expected.

Under the current CBA, there’s still risk in terms of playoff gate receipts, but with player costs fixed as a percentage of HRR, and HRR having steadily gone up year-over-year, it makes it very easy as a big or mid-market owner to commit to spending near the cap. When you have certainty on your biggest cost, it actually makes it easier for you to spend more with confidence because you don’t have to plan for contingency like in the uncapped world.

Third, the floor forces small clubs to spend more than they want, which has given the big clubs a sort of safety net for their bad investments. Not only has it allowed big clubs to get out of some of their bad contracts, but that allows them to turn around and then spend that money immediately again on a better player. So the big clubs make a mistake, are able to force it onto the small clubs, allowing the big club to improve, all the while forcing the small club to spend more money than it really has, even if the player ends up being good for them (think Brian Campbell).

All of this is to say, the owners are looking in the wrong places to fix the problem. They can take money back from the players, but without a fundamental change to the system as it works between the owners, to say nothing of the players, the problems will remain. The method they are taking to solve the problem would involve shrinking the players’ share much farther than is feasible, what with the KHL and even the SEL, Finnish SM, and Swiss leagues starting to pay some decent money.

Posted by Nathan from the scoresheet! on 07/18/12 at 12:35 PM ET

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Nathan: well put as far as cost certainty is concerned. I don’t think foreign leagues will end up being a factor because their budgets are constrained far, far beyond even small market NHL teams.

Posted by Dave on 07/18/12 at 01:17 PM ET

Nathan's avatar

I agree, they are not a practical factor. My point is that the owners would have to ask for such an unfair percentage to solve the small-market problems strictly thought how they slice up the pie that it isn’t feasible.

Posted by Nathan from the scoresheet! on 07/18/12 at 01:41 PM ET

Avatar

I don’t know how you guys can ever take Brooks seriously.

Posted by Primis on 07/18/12 at 11:02 AM ET

Yeah, this article, in particular, is pretty bad. I’m with the players 100% at this point, but only Brooks could think that

a) there wasn’t a problem with runaway inflation prior to the last lockout
b) if there was one it hasn’t been largely solved by the last CBA

Posted by larry from pitt on 07/18/12 at 03:37 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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