Kukla's Korner

Kukla's Korner Hockey

Would A Soft Cap With Luxury Tax Work?

from David Shoalts of the Globe and Mail, 

So far, the players are only willing to reduce the rate at which their salaries grow. They have offered (on the assumption revenue will continue to grow at 7 per cent a year) to take the equivalent of a gradual reduction of their share of revenue from 57 per cent to 52 per cent and change over five years. (That is a simplified summation of the offer, as it is more complicated than that, but your agent has only a faint grasp of high-school mathematics.)

It’s frustrating that anyone who has talked at length with those on the owners’ side knows they would take a simple 50-50 split in revenue under the present system if the National Hockey League Players’ Association were to offer it.

Similarly, there is a strong belief the players would agree to a 50-50 share if all the salary the owners saved were distributed to the bottom 10 or 12 teams on the revenue chart.

Using the $3.3-billion in revenue from 2011-12 as an example, if the players’ share were reduced to 50 per cent from 57 per cent, the 30 owners would collectively save $240-million. That means the bottom 10 revenue teams could each receive $24-million, which would double what the worst of them got in the limited revenue-sharing under the old collective agreement.

But there is little incentive for the rich teams to do that because it would mean they couldn’t spend more than their poor relations and would still have to fork over more money to them. However, what if the league were to adopt a soft salary cap that would allow the rich guys to spend more on payroll as long as they paid a luxury tax that would be distributed to the poorer teams?

more

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

Comments

Evilpens's avatar

What a DOUCHE BAG TWAT WAFFLE!! look at MJB

Posted by Evilpens on 10/03/12 at 12:05 PM ET

Avatar

WTF we went through a previous lockout to get parity. Now the T.O. dipwads want to promote going to a failed baseball model. They have illusions that they would become the Yankees.

Posted by timbits on 10/03/12 at 12:15 PM ET

HockeytownOverhaul's avatar

failed baseball model… seriously?  Starts getting scary when you stop letting facts get in the way of opinion.

Posted by HockeytownOverhaul on 10/03/12 at 12:39 PM ET

Evilpens's avatar

failed baseball model… seriously?  Starts getting scary when you stop letting facts get in the way of opinion.

UMMM Tell that to 3/4 of the Baseball fans

Posted by Evilpens on 10/03/12 at 12:48 PM ET

J.J. from Kansas's avatar

UMMM Tell that to 3/4 of the Baseball fans

Posted by Evilpens on 10/03/12 at 12:48 PM ET

I’d rather tell it to 5/5 of the fans who make baseball an $8B per year league.

You’re either going to get parity or you’re going to get revenue sharing. I don’t think the big market clubs are going to allow both.

Posted by J.J. from Kansas on 10/03/12 at 12:50 PM ET

Avatar

failed baseball model… seriously?  Starts getting scary when you stop letting facts get in the way of opinion.

UMMM Tell that to 3/4 of the Baseball fans

Posted by Evilpens on 10/03/12 at 12:48 PM ET

didn’t MLB’s tv contract just tripled under this system? the problem with some teams in baseball is that they refuse to spend, just like you see in hockey. A great point was the phillies. After 1993 season, they refuse to spend money and after they built new baseball stadium they won 5 division crowns, 2 appearances in world series and won a world series. Now they are at the luxury tax line this season because it work for the current luxury tax system.

when was the last time pirates actually spent money besides this past season?

Posted by FlyersFan on 10/03/12 at 01:30 PM ET

Evilpens's avatar

FlyersFan Spent MONEY?? 48 Mill payroll? spending money ?? Brewers traded a lot for Sabathia who went in that offseason to ......................... wait for it ........................................ The Skankees ! Attanasio is More than willing to spend money. They lost Saabthia & last offseason lost Fielder

Posted by Evilpens on 10/03/12 at 01:37 PM ET

Avatar

From a competitive sports perspective the MLP is a failed model. It can take years or even decades before some teams can compete for the playoffs. It is of no value to have the Yankees and Red Sox pay the other teams to not compete, while still remaining profitable. A majority of NHL teams would benefit from more revenue sharing AND a hard cap. This would allow for a coast to coast league, that is economically viable and competitive. If the have not teams are profitable, there is less interest in extracting money from players at the expense of the season.  It is revenue sharing that has saved baseball from labor trouble and it is a hard cap that makes the sport competitive and interesting for ALL fans.

Posted by timbits on 10/03/12 at 02:24 PM ET

Avatar

If the Yankees were run like the Maple Leafs and the MLB bottom dwellers were run like a competitive small market team like the Penguins, there would be no problems in baseball.

Prior to the NHL cap you had just as many different teams winning the Cup as the post cap NHL. Money means you can stay competitive longer, but in a “balanced” league it just means every team will have to go through a down cycle. Will small market teams need to be smarter with less? Yes, but why should that be a problem?

Posted by hockey1919 from mid-atlantic on 10/03/12 at 02:48 PM ET

Evilpens's avatar

.(JavaScript must be enabled to view this email address) Milwaukee Brewers say hi!

Posted by Evilpens on 10/03/12 at 03:11 PM ET

Avatar

This entire argument presumes the point of the “lockout” is finding a way to make smaller-market teams more financially viable.

It is not.

The point is to lower the players share of revenue from 57% to no more than 50%.

As an accidental consequence of that, the smaller market teams will become somewhat more financially viable.

Getting smaller-market teams in a better financial position could be accomplished by spreading out the cap and the floor, instituting a soft cap, or increasing RS contributions… any or all of which could be done just as quickly under a 57% split as it could under a 50-50 split.

And you never know, maybe we’ll see one or two of those things.  We just won’t see any of them until the NHLPA agrees to 50-50.  At most.

Posted by HockeyinHD on 10/03/12 at 03:21 PM ET

J.J. from Kansas's avatar

A majority of NHL teams would benefit from more revenue sharing AND a hard cap.

I agree, and personally I’d love it if the NHL went to a very strong revenue sharing system while keeping a hard cap in place.

Unfortunately, you need more than just a majority of teams to see it that way and as long as you have the eight top-ranking clubs who would rather pay the extra money towards making sure the recipients of those dollars aren’t a threat to their playoff chances than pay the extra money in a more equitably-competitive way, you’re not going to get a system like that.

I also say that on personal experience, forced parity is every bit as noncompetitive as market-pressured disparity.  A league where the reward for success is an added difficulty of maintaining it and where everybody simply has to wait for their team’s turn to be competitive is a Skinner Box for fans.

Posted by J.J. from Kansas on 10/03/12 at 03:29 PM ET

Avatar

The point is to lower the players share of revenue from 57% to no more than 50%.

I don’t disagree that from an owners standpoint this is about making the rich richer while as a side affect keeping smaller teams afloat. However, why should it only be the owners that frame the debate? That is where the bargaining sessions have fallen apart. The owners make a proposal, the players make a counter proposal based on their own take and the owners pretend to not understand why it isn’t just concession off of the owners original proposal.

I know I am in the minority, but I have no problem with teams that make the most money in the biggest markets spending the most money. If I were in a large market and saw my team making a huge profit while only minimally investing in my team while I pay outrageous prices I would be pissed. I don’t have a problem with them spending because we have seen time and time again that many teams become sloppy and wasteful the more bloated their revenue stream. Take the Mets, Leafs, Knicks or Redskins in each of the 4 major sports and you have a guarantee that a fool and their money are easily parted.  Take away the incentive from the larger markets to grow revenue streams and watch how much more the smaller teams suffer. Maybe the solution is to give each team a participation trophy so everyone is a winner and the players orange slices after each period.

Posted by hockey1919 from mid-atlantic on 10/03/12 at 03:46 PM ET

Nathan's avatar

@Evilpens—

You never respond to anything I say about baseball. You clearly show, over and over again with your misrepresentations of MLB history both on the field and in the collective bargaining room, that you don’t know what you’re talking about. You can scream, “Brewers!” over and over again, and it doesn’t make your underlying argument any less weak (and wrong).

I’m not going to dig up the facts yet again, because I’ve done it at least once in before, and I’ve seen HockeyinHD dig up the same facts to refute you on another occasion. So instead, I’ll just say, you’re wrong, baseball has actually had quite healthy competition across the board. This time, please look it up for yourself so I can save the effort. Anyone else that doesn’t believe, look at the teams that have won pennants and the WS since 1996. It doesn’t look any more or less balanced than the NHL.

@timbits—

See my second paragraph above. Also, consider that every league, even the parity-fest of the NFL, has it’s crap clubs that are perennially mismanaged to the point where no amount of high draft picks can save them. The NFL still has the Browns, the Bills, the Dolphins, the Raiders, the Redskins, and the Lions as examples of teams that have either A) been criminally mismanaged and has almost no success in any recent memory or B) have been so poorly mismanaged that even ownership that has piled money into coaching and player payrolls year after year can’t fix the issues.

Also, consider that in comparing to parity in the NFL and MLB alike, you have a sample size issue.

The NFL only plays 16 games per season, so there is far less time for clubs and their players to regress to the mean and show their true colors. Professional sports are played on the margins, and when you only have 16 games to act upon, those margins can be really screwy an unexpected. This is a large reason why so many teams in the NFL go from zero to hero, and vice versa, not just the way the draft works and the financial system.

On the other side of the token, MLB plays 162 games per season. This means that at the end of it all, the odds are a heck of a lot better that teams really finished with records indicative of who they really are. This means that there will be less an appearance of parity. You could shuffle dollars around to your heart’s content, but the fact would remain that teams like the Yankees, Red Sox, Rays, Rangers, Cardinals, and Giants would remain near the top because they consistently draft and develop players. Remember that in baseball, you can’t trade draft picks, you have to trade actual players. So when the Yankees are able to put together a package of players to get Michael Pineda, they do it with prospects like Jesus Montero that they developed with good scouting and coaching and a sound management philosophy. When the Red Sox put together a deal to trade for Josh Beckett and Mike Lowell, they’re able to get that done because they developed a guy named Hanley Ramirez. All this shit doesn’t happen by accident, and it doesn’t all happen just because of the all-mighty dollar.

Lastly, what fun would a sports league be if everyone could count on their team winning the title once every 30ish years? Talk about killing the competitive spirit and fire among the fans. Maybe hockey could actually cultivate rivalries again if it had a system where teams could feed off one another, like we had with the Wings, Avs, Stars, and (to a lesser extent) the Blues between 1996 and 2003.

Posted by Nathan from the scoresheet! on 10/03/12 at 03:46 PM ET

Nathan's avatar

I also say that on personal experience, forced parity is every bit as noncompetitive as market-pressured disparity.  A league where the reward for success is an added difficulty of maintaining it and where everybody simply has to wait for their team’s turn to be competitive is a Skinner Box for fans.

Posted by J.J. from Kansas on 10/03/12 at 03:29 PM ET

+1 million

Posted by Nathan from the scoresheet! on 10/03/12 at 03:49 PM ET

Avatar

I knew it.  I HATE Fehr.  HATE.

Posted by gretzky_to_lemieux on 10/03/12 at 04:03 PM ET

James9825's avatar

Milwaukee Brewers say hi!

Posted by Evilpens o

Brewers still have a top 10 payroll (98 million) and were in the wildcard race until last week.

1. New York Yankees $200 million
5 .Detroit Tigers $132 million
6. Texas Rangers $120 million
7. San Francisco Giants $117 million
9. St. Louis Cardinals $110 million

16. Atlanta Braves $82 million
17. Cincinnati Reds $82 million
19. Washington Nationals $81 million
20. Baltimore Orioles $80 million
30. Oakland Athletics $52 million

Half the teams that made the playoffs this year are 15th and lower in payroll, including the A’s who are all the way at the bottom.

Posted by James9825 on 10/03/12 at 04:03 PM ET

Avatar

I wonder if there is any correspondence between some teams being able to support a high payroll and being well managed? Aren’t the Cardinals in the same city as the Blues and yet they remain a consistent MLB contender while the Blues have peaked and valleyed? If a team is well run, the fans will pay more to see them and that in the long run will keep them more competitive.

Posted by hockey1919 from mid-atlantic on 10/03/12 at 04:27 PM ET

Avatar

Lastly, what fun would a sports league be if everyone could count on their team winning the title once every 30ish years

It isn’t just about winning titles, it is about being competitive. The first round of the NHL playoffs are the best in sports because of the parity. LA won the Stanley Cup as an 8 seed and in fact they were the best team in the playoffs and down the stretch. This never happens in baseball. I stop watching my favorite baseball team in late June, because the season is over for them. After 10 years of that, I am no longer really a fan of the team and at this point I don’t care anymore. I would hate to see that happen in the NHL.

Posted by timbits on 10/03/12 at 04:57 PM ET

Avatar

However, why should it only be the owners that frame the debate?

It’s right there in the name:  Owners.

A league where the reward for success is an added difficulty of maintaining it and where everybody simply has to wait for their team’s turn to be competitive is a Skinner Box for fans.

IMO the NHL is heading towards a point that’s even worse than what you suggest.  Nowadays the NHL isn’t about waiting for your turn, it’s about being 1 of 16 teams that make the playoffs and then put their ticket in a hat.

Hot goalie, catch the bounces, beat the injury bug.  Blah blah blah.  By trying to drag small-market teams into the postseason the NHL forces big market teams out of them.

Then the NHL playoffs turn into a game of Keno.

 

Posted by HockeyinHD on 10/03/12 at 04:57 PM ET

Evilpens's avatar

You never respond to anything I say about baseball. You clearly show, over and over again with your misrepresentations of MLB history both on the field and in the collective bargaining room, that you don’t know what you’re talking about. You can scream, “Brewers!” over and over again, and it doesn’t make your underlying argument any less weak (and wrong).

I’m not going to dig up the facts yet again, because I’ve done it at least once in before, and I’ve seen HockeyinHD dig up the same facts to refute you on another occasion. So instead, I’ll just say, you’re wrong, baseball has actually had quite healthy competition across the board. This time, please look it up for yourself so I can save the effort. Anyone else that doesn’t believe, look at the teams that have won pennants and the WS since 1996. It doesn’t look any more or less balanced than the NHL.


Attanasio is more than willing to throw around big money, No players want to play there & they have been semi successful. The Royals & Succos have been bad for a Long Long Long Time how do you get free agents to sign there? Neal Huntington called Roy Oswalt’s agent & his agent told Huntington Don’t waste your time Roy doesn’t want to play there Edwin Jackson turned down a 3 yr. deal with the Succos to sign a 1 yr deal with the Nationals what Player Wants to play in Edmonton ?? Winnipeg?? Calgary??Fla.??

Posted by Evilpens on 10/03/12 at 07:11 PM ET

mrfluffy's avatar

Attanasio is more than willing to throw around big money, No players want to play there & they have been semi successful. The Royals & Succos have been bad for a Long Long Long Time how do you get free agents to sign there? Neal Huntington called Roy Oswalt’s agent & his agent told Huntington Don’t waste your time Roy doesn’t want to play there Edwin Jackson turned down a 3 yr. deal with the Succos to sign a 1 yr deal with the Nationals what Player Wants to play in Edmonton ?? Winnipeg?? Calgary??Fla.??

Posted by Evilpens on 10/03/12 at 07:11 PM ET

And what pray-tell does any of this have to do with a salary cap or lack of one?

Posted by mrfluffy from A wide spot on I-90 in Montana on 10/03/12 at 07:36 PM ET

Evilpens's avatar

Because it shows that baseball BS system is worthless & would be even worse in the NHL

Posted by Evilpens on 10/04/12 at 10:24 AM ET

Avatar

However, why should it only be the owners that frame the debate?

It’s right there in the name:  Owners.

Still only have of the equation. Wwhen the product you are selling is a service, such as entertianment, without employees you own nothing.

Posted by hockey1919 from mid-atlantic on 10/04/12 at 11:15 AM ET

Add a Comment

Please limit embedded image or media size to 575 pixels wide.

Add your own avatar by joining Kukla's Korner, or logging in and uploading one in your member control panel.

Captchas bug you? Join KK or log in and you won't have to bother.

Smileys

Notify me of follow-up comments?

Feed

Most Recent Blog Posts

About Kukla's Korner Hockey

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.

Email Paul anytime at pk@kuklaskorner.com

 

image

image

image