Kukla's Korner

The Malik Report

Semi-CBA optimism, meet ‘winter’s coming’

KK readers had a spirited and plain old smart discussion regarding yesterday’s quips from the Hockey News’s Ken Campbell, pegging the NHLPA and the players as the bad guys because the NHL’s salary cap floor has risen far past its initial post-lockout ceiling, with many comments stating the obvious—that a salary cap based upon league-wide revenues with a narrow, $15 million payroll range is never going to make it easier for the “have not’s” to compete, nor is it the players’ fault that they agreed to a fixed percentage of revenues that’s increased past the league’s projections—but the New York Post’s Larry Brooks brings us a declaration wrapped up in a, “Why the Rangers shouldn’t sign Brad Richards to an inflated contract” frame, suggesting that no matter what happens over the course of the NFL or NBA’s lockouts, we should expect the NHL to demand nothing less than both a rollback in salaries and a reduced “players’ share,” and that “creativity” or logic won’t hold sway. Instead, Brooks believes, the NHL and Gary Bettman will simply try to roll back the clock and bail out his owners’ mistakes on the players’ backs:

Gary Bettman’s utopia proved nothing of the sort. The entire concept of “gross revenue” in the NHL is fraudulent. Teams do not pool their revenue under any circumstance other than to arrive at a figure that’s then used to calculate the cap.

The entire premise of linkage the commissioner posited through the last owners’ lockout—that would all but ensure every franchise would be in position to make a profit—is counterfeit. It never made the slightest bit of sense the Islanders’ minimum payroll would be dependent on the Rangers’ revenues or the Hurricanes would have to spend more because the Maple Leafs make more money year after year after year. But common sense doesn’t matter. Percentage of the gross is Bettman’s baby. It is not going away. It is, however, going down, and if the owners have their way, it is going down dramatically, to somewhere in the range of 48-to-50 percent.

Beyond that, there will be a push to include minor-league contracts under the cap, to impose stringent term limits on deal, to transform the mid-point into the ceiling; to, in effect, claw back everything with which the tattered union emerged in 2005.

This isn’t a screed about the owners or the league or the relentless push in this society for the wealthy to become wealthier. This isn’t about the players. Not today, anyway. This is simply about pointing out the way of the future. The cap is going down. Club maneuverability is going to be limited. Mistakes will be far more difficult to erase. Big market fans will prop up the small market franchises.

The only way to prevent chaos—anarchy!—under a dramatically reduced cap is to effect a rollback accompanied by amnesty buyouts. But it is inconceivable Fehr, who is earning $3 million per as head of the PA (three times more than he earned as head of the baseball players’ union) would preside over a rollback in his one and only negotiation with Bettman and the Board of Governors.

Continued, and I sure as hell hope not, because we’ll be right back where we were in 2005, and on course for a fourth owners’ lockout in the latter part of this decade…

Filed in: | The Malik Report | Permalink
 

Comments

Baroque's avatar

I thought that minor league teams were managed as their own entities. If they are, I see no way how the NHL could legally impose regulations on them for the convenience of the NHL.

At least I know that baseball minor leagues work like that. It’s why my local team is in no danger of moving - when they were established in 2007, it was as a non-profit entity to drive economic growth in the area and funnel donations to charities in the area, especially for kids. As a nonprofit organization they don’t have the same worries as a team that needs to rely on revenues to exceed costs enough to make a profit for the ownership.

Not to mention that affiliate agreements can change every few years if a major league club decides they would like to have an affiliation that is closer to the big league city, or they don’t like the way the team is developing players, or whatever. I don’t see that the NHL would have any legal authority to force the minor leagues to do something that isn’t in their own agreements.

Posted by Baroque from Michigan on 06/26/11 at 09:37 AM ET

Avatar

I thought that minor league teams were managed as their own entities.

I assume what Brooks is talking about is NHL clubs stashing/hiding one-way contracts in the minors to free up cap space, like the Rangers are doing with Wade Redden.

George—I love your work, you are friggin’ awesome. But please look up the definition of quip.

Posted by shep on 06/26/11 at 10:00 AM ET

Baroque's avatar

I assume what Brooks is talking about is NHL clubs stashing/hiding one-way contracts in the minors to free up cap space, like the Rangers are doing with Wade Redden.

Ah, that makes more sense. Still problematic, I would think, but it falls more under NHL purview than other aspects of the minors.

I know that rules regarding waivers and how high a salary can be affect how the minors operate somewhat.

Posted by Baroque from Michigan on 06/26/11 at 11:18 AM ET

RWBill's avatar

When this CBA established its first mid, lower and upper limits the range from mid-point either way was about 25% , i.e. the floor was about 25% below mid-point and the cap was about 25% above mid-point.

They established a fixed dollar amount from minimum to maximum instead of a percentage range.  Now the deviation from mid point either up or down is only about 12%.

At first the increase to cap maximum was about a 60% increase from the floor.  Now it’s only a 30% increase from floor to cap.  The small revenue teams are having a hard time keeping up, thus Florida’s move to throw $7 Million at Campbell was more to just get to the required floor amount than a savvy and contrived, strategic hockey decision.

If the same range off mid point existed as a percentage as it did in the first year of the CBA it would be $42M - $70M,  as is $49M - $64M.

Done as a percentage the lower revenue teams could spend $28M less than the maximum in 2011 instead of being forced to stay within $15M of the cap.

From the players perspective keeping the window from floor to cap a fixed dollar amount is a windfall.

Posted by RWBill from cruising Brush Street with creepy Rob Lowe. on 06/26/11 at 11:54 AM ET

J.J. from Kansas's avatar

From the players perspective keeping the window from floor to cap a fixed dollar amount is a windfall.

Posted by RWBill from Imported from Detroit, Land of Todd-Ber-Tuz-zi !! on 06/26/11 at 09:54 AM ET

It shouldn’t be viewed as that.  It should be viewed as using them as a pass-through for revenue sharing.  They still don’t make more than 57% of league revenues, no matter how much money the owners spend on them.  When teams like the Panthers are forced to spend 65% of their revenues (*not actual figure) because of a fixed window of spending, it’s not like the players get to keep that.  It’s just that those bigger salaries have more escrow taken off to pay back to the owners.

As far as I’m concerned, hiding contracts in the minors should be the owners’ problem and not the players’.  I don’t know that they can or should count ALL money in the minors towards a slightly higher cap ceiling, but I would approve of a rule in the new CBA that sets a minimum bar for how much of a player’s salary is allowed to be in the minors (similar to the over-35 contract bar that gives teams only $100K in cap relief for sending a veteran to the minors).

I would set this on an indexing scale just like league-minimum salary indexes.  I would suggest that $1M be the first-year cutoff for salary cap protection in the minors (or Europe, as the case may be).  If a player makes more than $1M, then every dollar over that is still counted against the team’s cap hit, even if he is not being counted against their roster limit.

Posted by J.J. from Kansas on 06/26/11 at 01:02 PM ET

Avatar

I see the last NFL proposal was for the player share to be 48%, this is in a league that makes millions for even the weakest teams. Fifty seven percent will be tough to maintain if the NFL and NBA make ground on this number with a solid cap.  Of course they have a soft cap, but if they pull signing bonus and franchise players into these levels the NHL will have to come down.

Posted by timbits on 06/26/11 at 01:30 PM ET

Avatar

Giving up 57% of your revenue to a select group of individuals, while still having to pay thousands of other employees, including multimillion GMs and coaches, plus travel, meals, health care, normal everyday office stuff, rink maintenance, other practice facilities at home and road, etc., is no way to run a business.  That’s why the small market teams are struggling; there are so many more expenses than just player salaries.  Knocking them back to 45 percent would be appropriate.

Posted by jkm2011 on 06/26/11 at 02:13 PM ET

J.J. from Kansas's avatar

Small market teams aren’t struggling because they have to pay 57% of their revenue to the players.  Small market teams are struggling because they have to pay about 65% of their revenues to players.

The teams where their salaries are actually around 57% of their revenues are not struggling to make money.

Posted by J.J. from Kansas on 06/26/11 at 02:44 PM 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 The Malik Report

The Malik Report is a destination for all things Red Wings-related. I offer biased, perhaps unprofessional-at-times and verbose coverage of my favorite team, their prospects and developmental affiliates. I've joined the Kukla's Korner family with five years of blogging under my belt, and I hope you'll find almost everything you need to follow your Red Wings at a place where all opinions are created equal and we're all friends, talking about hockey and the team we love to follow.