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The Salary Floor Is Key For Survival

from Michael Grange of Sportsnet,

Remember the salary floor, the lower limit on what teams can spend on player salaries?

It’s gotten scant attention over the past 110 days, but it could end up being the determining factor before a deal gets made.

There are two competing groups of owners howling in Bettman’s ear at the moment. On one side are those that actually make money or otherwise feel the need to get the season up and running -- the big-market Canadian teams and the major U.S. clubs such as the Rangers, Flyers and Blackhawks, as well as Pittsburgh and perhaps Minnesota.

They are joined in the ‘just get a deal done already’ chorus by sponsors and broadcast rights holders.

On the other are the floundering U.S. owners -- Anaheim, Columbus, Florida, Tampa Bay and the like.

They see this next CBA as being key to their ability to survive, if not thrive -- and they have the ear of a commissioner who feels he’s given too much to the players’ already.

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

Comments

J.J. from Kansas's avatar

they will once again be met with a shrug and stony stare as Bettman is loathe to have the new CBA institutionalize the opportunity for richer clubs to spend poorer clubs into the ice.

That’s what’s already happening… and it’s happening in part *because* the floor is too high.

Posted by J.J. from Kansas on 01/03/13 at 02:38 PM ET

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That’s what’s already happening… and it’s happening in part *because* the floor is too high.

Exactly.

But here’s the problem, JJ.  The floor has to pretty close to the ceiling or else all of these non-traditional hockey markets (you know, the ones you want to keep around for 50 years) are going to be screwed competitively.  If there was a rational floor/ceiling like, say 60-70ish% of the cap that year, those non traditional teams could just plug along spending 30 million bucks a year less than the big teams and maybe getting in the playoffs one year in 5.

Long term does a perennially competitively moribund franchise in a non-traditional market for the sport seem like a great strategy with regards to driving and expanding interest?  I don’t think so either.

On the other hand, those markets cannot function financially when they are eating 8-10 mil a year on hockey ops.  Whacking players share helps, but when so much of HRR is going to be driven by the super mega double plus amazing profits of 2-5 teams the revenue gap between the rich traditional markets and the poor non-traditional markets is such that unless the NHL put in something like a 60% tax on those top 2-5 teams there’s just not enough profit to move around to make those small teams whole.

And those markets can’t ever improve when they’re getting outspent by 30 million bucks a year.

It’s a catch-22 brought on by some spectacularly short-sighted league planning, a Bettman specialty.

So many teams in so many soft non-traditional (yet statistically large) markets because Bettman is Quixotically chasing a domestic US TV deal puts too many financial plates in the air.  And every CBA they come plummeting to the ground.

Right now he either has to say bleep you to the big market teams and tax the hell out of their profits, earning who knows what amount of animosity from the flagship franchises, or he has to raise the white flag on non-traditional expansion being a strategy for a large domestic TV contract and focus more on allowing those teams to be financially solvent but competitively hobbled through the implementation of a rational floor/ceiling spread.

Posted by HockeyinHD on 01/03/13 at 03:05 PM ET

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Wouldn’t revenue sharing have been more helpful to the weaker teams than a cap?  Especially in a league where currency fluctuation can have a big impact.

Posted by 13 user names on 01/03/13 at 06:32 PM ET

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This article neatly outlines why I loathe Bettman. He has a big-picture view but can’t make out the shape of some smaller, simpler object a foot from his face.

He’s got it in his head that there will be a $44 million floor and a $16 million spread in his perfect little system. But that those particular numbers match that or are slightly different on a one year basis is irrelevant because he’s already got the revenue split he says he needs.

If the ceiling is $65 million and the floor $49 million—guess what—the payout from the cap floor teams is i-damn-dentical to what they would be under Bettman’s values once escrow is distributed.

For the PA’s part, wanting this one-point-five year artificial bump is for relatively noble reasons. Everybody accepts short-term high taxes so nobody without a contract gets low-balled. The measure is revenue neutral. Bettman has no damned reason to waste one breath fighting the PA on this.

I mean, Bettman’s quadrupled the amount of variance in his offer in the last two weeks. That has the potential to not be revenue neutral. That he’d give on that and not on this just reiterates to me how terrible he is at assessing the small-fry stuff.

Posted by larry on 01/03/13 at 06:59 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.

From breaking news to in-depth stories around the league, KK Hockey is updated with fresh stories all day long and will bring you the latest news as quickly as possible.

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