Tell me again why a luxury tax won't work.

[Chadd 916]

http://www.tsn.ca/mlb/news_story.asp?id=109281

Many mid-level teams appear to be spending money on free agents this off-season, possibly because of the shift in economics created by increased revenue sharing. That could push the average salary higher next season.

According to the players' association, the average dropped 2.5 per cent this year to $2,313,535 from $2,372,189, the first decrease since 1995 and only the third since record-keeping began in 1967.

[prenny207 1]

yes, a luxury tax does in turn give money to the teams that don't earn much revenue. The problem is that it simply allows them to pay some bills, but still not make a profit. as long as the only thing stopping owners from offering HUGE contracts is a luxury tax, it still won't fix the problem that the NHL is faced with. the wing and the rangers will still spend big dollars (and from looking at the rangers, it doesn't always work) and the little teams still won't be able to afford to match offers.

with out the fan base and tv revenues, the nhl needs to gain control of salaries. as i have stated before in other topics (and this goes for all pro sports) these guys play a SPORT, they don't save lives, run corporations, or countries... they don't deserve the money they are making.

the nhl needs a cap, and if i had my choice, there would be a per player cap, as well as a team cap. if a sofe cap is placed on the team alone, a team could still offer large contracts to certain players, and the low teams still won't be able to match up. if a per player cap is set, then every team has a chance to compete for contracts. with that in place, then a soft cap could be placed on every team, and the bigger teams could try to pick up more big guys.

but first, lets cut the fat and get rid of a few teams, then put every team on par with caps, and lets try to make this league and this game exciting again.

[Eazy_b97 1]

It's not saving lives and the salaries are high, but don't think its a cake walk. This kids start their journey to the NHL at a young age and are judged much younger than any other occupation. One mistake at 14 years old can cost a person his whole life, its a gamble to play in the NHL, and I think it should be rewarded, just not to the levels it is currently at.

[prenny207 1]

It's not saving lives and the salaries are high, but don't think its a cake walk. This kids start their journey to the NHL at a young age and are judged much younger than any other occupation. One mistake at 14 years old can cost a person his whole life, its a gamble to play in the NHL, and I think it should be rewarded, just not to the levels it is currently at.

eazy, i will never put down the efforts and sacrifices that these pro athletes have made to take the career path they have chosen, and as a coach, i agree with what 14 year olds can do to make or break their chances. i am mostly stating that they are over paid. when salaries are at the level they are at, that makes ticket prices where they are. and that is way too high. when the average family can't afford to go watch a game because of ticket prices, parking, and even pizza and a pop... thats where the real problem lies.

theo, i agree that they deserve to make a good living, but the top dollar salaries are ridiculous. what does an athlete need 10 million a year for, lets be honest. now a player that is working hard, playing game in and game out... sure 1.4 mil is fair, but not 10 mil, not even 7 mil.

with regards to education, thats their choice, and they have to live with that. the players that didn't go to college prior to the pros, have options if they really want an education and something to fall back on when their pro career is over.

[MDE3 0]

These guys have no education. Make tons of sacrafices to play in the NHL, and get beat up during their career. High risk, high reward. They are luckier then I could imagine, but they deserve most of it in my eyes. I don't know where someone pointed this out....But get the 600 best people in many hige calibre occupations, and see where their salaries stand. These guys are the best, and while salaries have to go down a bit, deserve what they get.

I am sympathetic to a degree also, but I am afraid it's not just the players choice to stay within the sport. The requirment for dedication at the expense of other things happens at such a young age, that it can only take place with the encouragement and help of the parents (me included here) long before a child is ready to truly make these decisions on their own.

If you take the top 600 people and their salaries as you suggested, you also have to take the earnings of the companies they work for into account. Their pay will still be tied to the earnings of their employers.

From my point of view, that is what the NHL is asking for. A floating cap, where earnings can also go up as the team/league makes more money just like any other business paying profit based bonuses....The problem the players have with this at present, is they do not want to see their earnings tied to the financial success or failure of a franchise, that may vary negatively due to events or management/marketing errors beyond the control of the players within the franchise.

While this of course can be true, the players are also the first ones to seek more from the successfull franchises, which make their extra money, not because of the performance of the team, but because of good financial circumstances, and good overall money mangement, if not salary managment.

You cannot have it both ways.

The real problem as usual between a union and a company is trust and the issues of good faith. In this case it really boils down to the mechanism for measuring the earnings. Because the earnings of each franchise are not composed of identical components, there is no unitlateral and acceptable way (among the owners either) to agree on how to measure earnings. Knowing this, the players feel that accepting a floating cap is a trap. Hence a hard cap becomes the owners alternative. A luxury tax is not acceptable to the wealthier owners who see this as an imposed subsidy of their competitors...supposedly for the good of the game, and their own long term earnings, but still a very hard pill to swallow for any business man in a competitive business situation.

Hence as I have said many times....every game should be played for a purse. A bonus system developed to reflect a players success or failure of all parts of the game would determine their share of the purse for each game....Too complex to administer? Well every player has a different bonus system now in their contract...how much more complex could it be?

These shares would then be paid, and a multipier used which reflected not the earnings of the franchise, but the cost of living in each region. EG. if a player earned $30,000 for a game, and played in the New York region, he might have a 1.2 multiplier where the team would have to kick in an extra $6000 to offset the enhanced cost of living in this area...Nashville for example, might be the base franchise, using a "1" as the multiplier...etc. etc. These cost of living indexes already exist, so they would not be an arbitrary figure dependant on either side to develop.

This type of system ties the player earnings to their performance, and no longer their "star power", but would allow the salary to earnings ratio to be a known, if not a fixed entity, more related to attendance figures than total earnings. Those franchises in more successfull areas, typically would see higher cost of living allowances too(not exclusively but in general), so players salaries would also be "pro rated" to reflect this. This is the fairest way I can see for both sides to get what they truly deserve.

[Chadd 916]

If the cap is more punative than the MLB version, it would work. Even the NFL and NBA caps are soft caps that have some flexability. If you read the article you see that average salaries actually dropped in MLB last year, so a tax can actually work. Even one as minimal as MLB.

[MDE3 0]

I wasn't saying it wouldn't actually work...just that the owners by their nature hate to see their earnings going to their competitors....from a tax point of view. The bigger the discrepancy in team earnings, the greater the reluctance becomes...

[Chadd 916]

I wasn't saying it wouldn't actually work...just that the owners by their nature hate to see their earnings going to their competitors....from a tax point of view. The bigger the discrepancy in team earnings, the greater the reluctance becomes...

There are really only two ways to resolve the income inbalance, the owners are choosing to make it affordable for the low end teams to compete. That will just make the high revenue teams flush with cash they can't spend on salaries. In other words, pittsburgh, edmonton and carolina will continue to struggle to break even and the Rangers and Leafs will pocket an extra $40M-$50M per year. How does that help the league?

I am against contraction, but if the NHL gets a hard cap, they might as well plan on it. Top european players will stay home and earn more money and that will weaken the quality of the NHL product even more.

[Chadd 916]

The NHL likes to cite the NFL system but a true NFL type system would actually benefit the players in many ways. Spector did an excellent bit on it last week. The NHL also doesn't want a large amount of revenue sharing, despite the fact it is what the league really needs. NHL teams are partners in the operation of the league and need to see themselves as such. They are only competitors on the ice.

[MDE3 0]

Theo you may be right, lol, but that doesn't mean he would like it.....meaning support the concept........

For the fat cat teams contraction could be a plus in many ways. Even though a shortened schedule (from having fewer teams) would reduce gate monies somewhat, salaries might also reflect this. The peripheral earnings from sales of merchandise might go up as fans concentrate their allegiance on a smaller number of players and teams. Increased local rivalries could help to secure more television coverage. And they would not have to share the wealth nearly as much as they would to maintain the current expansion.

I am not supporting this point of view, but trying to look at it from the point of view of the successfull club owners. That viewpoint may not be in the best interests of the sport long term, but the individual members of the owners association may not as concerned about the "sport" in the rest of the country as they are in their individual back yards....much like the players lol. If there is contraction it will be interesting to see what lawsuits/settlements may follow....if the lockout by the owners association is essentially blamed for the demise of 8 - 10 teams.....more losses to pass on.....lol.

All this speculation and the various possibilities have no doubt been considered within the owners association, and for them to continue to show solidarity, I keep thinking there must be an alternate agenda, yet to be revealed...as most of you know from my previous posts....

[Jim Bob 0]

I am against contraction, but if the NHL gets a hard cap, they might as well plan on it. Top european players will stay home and earn more money and that will weaken the quality of the NHL product even more.

I can't see that happening.

Even with a salary cap in the range that the NHL is offering up, the NHL will still be able to outbid European clubs for top end talent.

The only issue may be with regards to the rookie cap and whether young players get offers to stay at home.

Even then, I think the draw of making more long term in the NHL will draw the vast majority of the top end European players to North America.

Right now there is only one league that can offer dozens of players $1 million+ per season and that is in Russia. But, how long will owners in Russia be willing to sustain huge losses to keep players in Russia?

[Jim Bob 0]

http://www.tsn.ca/mlb/news_story.asp?id=109281

Many mid-level teams appear to be spending money on free agents this off-season, possibly because of the shift in economics created by increased revenue sharing. That could push the average salary higher next season.

According to the players' association, the average dropped 2.5 per cent this year to $2,313,535 from $2,372,189, the first decrease since 1995 and only the third since record-keeping began in 1967.

Where is a luzury tax mentioned in that article?

Personally, pointing to MLB as an economic system that works is a joke to me.

Most pro hockey leagues in North America have a salary cap system already in place.

The two top pro football leagues have a salary cap in place.

Most of the pro basketball leagues in North America have a salary cap.

By and large a salary cap is the industry standard when it comes to pro sports leagues in North America.

The biggest issue I have with the NHL's offer is the fact that the revenue sharing portion of their offer is a joke.

However, the NHL's offer is much more likely to have a predictable outcome when compared to the NHLPA's last offer.

[Chadd 916]

http://www.tsn.ca/mlb/news_story.asp?id=109281

Many mid-level teams appear to be spending money on free agents this off-season, possibly because of the shift in economics created by increased revenue sharing. That could push the average salary higher next season.

According to the players' association, the average dropped 2.5 per cent this year to $2,313,535 from $2,372,189, the first decrease since 1995 and only the third since record-keeping began in 1967.

Where is a luzury tax mentioned in that article?

Personally, pointing to MLB as an economic system that works is a joke to me.

Most pro hockey leagues in North America have a salary cap system already in place.

The two top pro football leagues have a salary cap in place.

Most of the pro basketball leagues in North America have a salary cap.

By and large a salary cap is the industry standard when it comes to pro sports leagues in North America.

The biggest issue I have with the NHL's offer is the fact that the revenue sharing portion of their offer is a joke.

However, the NHL's offer is much more likely to have a predictable outcome when compared to the NHLPA's last offer.

Obviously you didn't bother reading the article and you couldn't grasp the points I made. The NFL cap is very flexable and the NBA is in reality a luxury tax and not a hard cap. It also has a number of exceptions. Virtually every team is over the "cap". The NBA is so happy with their system that they are considering a lockout when the current CBA expires.

As for the MLB reference, as screwed up as the system is, it still put a drag on salaries last year.

[Jim Bob 0]

http://www.tsn.ca/mlb/news_story.asp?id=109281

Many mid-level teams appear to be spending money on free agents this off-season, possibly because of the shift in economics created by increased revenue sharing. That could push the average salary higher next season.

According to the players' association, the average dropped 2.5 per cent this year to $2,313,535 from $2,372,189, the first decrease since 1995 and only the third since record-keeping began in 1967.

Where is a luzury tax mentioned in that article?

Personally, pointing to MLB as an economic system that works is a joke to me.

Most pro hockey leagues in North America have a salary cap system already in place.

The two top pro football leagues have a salary cap in place.

Most of the pro basketball leagues in North America have a salary cap.

By and large a salary cap is the industry standard when it comes to pro sports leagues in North America.

The biggest issue I have with the NHL's offer is the fact that the revenue sharing portion of their offer is a joke.

However, the NHL's offer is much more likely to have a predictable outcome when compared to the NHLPA's last offer.

Obviously you didn't bother reading the article and you couldn't grasp the points I made. The NFL cap is very flexable and the NBA is in reality a luxury tax and not a hard cap. It also has a number of exceptions. Virtually every team is over the "cap". The NBA is so happy with their system that they are considering a lockout when the current CBA expires.

As for the MLB reference, as screwed up as the system is, it still put a drag on salaries last year.

If you've read a lot on the MLB system you'd see it's the expanded revenue sharing that's been changing the way MLB has worked recently and not the luxury tax that is still a joke (only 3 teams paid the luxury tax in 2004).

Personally, neither a salary cap nor a luxury tax is all that great without more revenue sharing than the NHL owners are currently willing to do.

And the luxury tax that the NHLPA has offered up to date is a joek and won't work, either.

A luxury tax could work if it had strict enough penalties that it actually worked as a deterant to clubs. But, revenue sharing is the mechanism that is needed to level the economic playing field in the NHL.

A good book on the topic is Bob Costas' Fair Ball - A Fan's Hope for Baseball.

He makes a very well reasoned argument why revenue sharing is the big key to fixing baseball's ills. He also feels that MLB needs a salary floor and ceiling, along with a max salary for players.

Personally, I think his idea would work quite well for the NHL as well. The salary floor and ceiling levels are set at levels that are based on media generated revenues and would have enough of a range that it will allow big markets to retain an ecnomic advantage over small markets. However, it would shrink that advantage and help move back towards a time when trades and FA signings were made more based on winning and losing as opposed to dollars and cents.

[Chadd 916]

I've always suggested that the MLB system has critical flaws in execution, it's a step in the right direction though.

Revenue sharing alone isn't going to make a difference though, look at Milwaukee. They play the game so they get the most possible in revenue sharing. I would bet several NHL owners would do the very same thing.

If a tax is too strict it's a hard cap. If it's too lenient, it serves no purpose. An increasing penalty based on dollars spent could work. The MLB system has no teeth at all.

I liked the Costas book, I still have a copy in a box somewhere.

[Jim A 4]

I think we need to differentiate MLB's average and mean..

salaries may have dropped..but is that because many of the former 800k players were now playing for the min or just above..

in any system, the top players continue to get their cash..shaq in the nba, A-Rod in MLB,etc..

so average salaries can decline when only a couple big name FA's are out there and a bunch of lower tier guys either get released so a younger, cheaper player can come along..or take a substantial pay cut

I think all of the systems have certain merits..

I'd love to see a team that developed a player be able to offer the most to retain services..(NBA)

In addition, I'd like to see a more feasible rookie cap..keep the first 3 years at no more than 400-800k..and give teams options on that player for the next 3 years (MLB)

-then offer UFA after 6 seasons..(24-27 for most players) (MLB/NFL)

-no contracts over 3/4 years,depending on player age...

-no holdouts

- have a cap number tied to previous years revenues (54-57%)

-develop a shared NHLPA/NHL formula to formulate said revenues (NFL/NBA)

-no bs bonuses for finishing 6th in voting, etc..if you're a guy like Jagr, no bonuses for making the All Star team..that's what you're paid 10million for anyway...really..

-bonuses team oriented...

-most importantly...market the game and its players...make sure all teams are showing games in HDTV format...promote the players...

[Chadd 916]

Considering the NHL opened the books of four teams a year or two ago and the NHLPA found $50M in "hidden" revenue, they will never agree on anything regarding money. I am convinced the NHL is ruined and will never be the same again, no matter who wins. I can say for sure the only party that will lose is the fans.

[Jim Bob 0]

I've always suggested that the MLB system has critical flaws in execution, it's a step in the right direction though.

Revenue sharing alone isn't going to make a difference though, look at Milwaukee. They play the game so they get the most possible in revenue sharing. I would bet several NHL owners would do the very same thing.

If a tax is too strict it's a hard cap. If it's too lenient, it serves no purpose. An increasing penalty based on dollars spent could work. The MLB system has no teeth at all.

I liked the Costas book, I still have a copy in a box somewhere.

The problem with a luxury tax system is the lack of a salary floor.

And the owners won't give in on a salary floor without also getting a salary ceiling.

However, the NHLPA is willing to give up on a salary floor because they know that more teams will overspend in a luxury tax system with little teeth like the NHLPA has offered up thus far.

Is a luxury tax system better than what the NHL has had in the past?

Sure.

But, the system that the NHLPA has offered up thusfar isn't that much better and will only buy the owners time before they are in the same boat as they are know because it's been proven that the current system is too inflationary and the NHLPA hasn't offered up enough changes to change the fact that salaries have outgrown revenues.

Although, the whole definition of a system that will work has a different meaning to pretty much anyone that you talk to.

[Jim Bob 0]

Considering the NHL opened the books of four teams a year or two ago and the NHLPA found $50M in "hidden" revenue, they will never agree on anything regarding money. I am convinced the NHL is ruined and will never be the same again, no matter who wins. I can say for sure the only party that will lose is the fans.

The whole "hidden revenue" issue is merely a difference of opinion in what constitutes "revenues in the game".

Levitt used a definition similiar to what is used in the NFL and NBA CBAs and the NHLPA didn't accept that because they felt that it didn't take into account revenues that should be counted as revenues that are a part of the NHL.

However, that goes on all the time. That's the main reason why Forbes Magazine came up with numbers that differed greatly from the Levitt Report. For instance, Forbes counted revenues from the hotel that was built near the Staples Center in LA as LA Kings revenues.

I'm pretty sure the Levitt report wouldn't count that.

The NHLPA wants to count revenues that aren't taken in by the teams themselves, but rather other companies that are owned by NHL owners that make money off of NHL hockey.

The simple solution to that issue is to get both sides to agree to what the definition of revenues in the game are. If the NBA and NFL can do it with their unions, the NHL and NHLPA should be able to get that done.

[Chadd 916]

Obviously I need to spell this one out for you too. They haven't been able to agree on what is hockey revenue in the past, what makes you think they can suddenly do so now? Many of the teams don't count luxury suites as hockey revenue. Obviously some portion of it is hockey related, yet the Kings, Hawks and others say it's unrelated to hockey.

By the way, Levitt didn't get to do his own review to determine numbers, he had to use what the teams told him. It was not an independant audit as they claim.

[Jim Bob 0]

Obviously I need to spell this one out for you too. They haven't been able to agree on what is hockey revenue in the past, what makes you think they can suddenly do so now? Many of the teams don't count luxury suites as hockey revenue. Obviously some portion of it is hockey related, yet the Kings, Hawks and others say it's unrelated to hockey.

By the way, Levitt didn't get to do his own review to determine numbers, he had to use what the teams told him. It was not an independant audit as they claim.

Ummm, that's not what Levitt claims. Levitt said that if there were any numbers that looked wrong, he challenged the teams and had them update the UROs with accurate information.

And trust me, agreeing on what should be included in team revenues will be a lot easier to agree to than the difference of opinion over the whole cap vs no cap stance will be.

If the NHLPA will make the leap to talk about a hard cap, then the agreeing to the definition of what revenues are will fall into place rather quickly. In fact, the deal could be that the NHLPA will only give in on the salary cap point if the NHL will accept a broader defintion of revenues.

[Jim Bob 0]

An FYI if I may...Don't know if it was pointed out here, but:

Arthur Levitt's (Who wrote the report) son was an executive for Disney. And since Disney owns the mighty ducks, it might be fair to say that he was an executive for an NHL team. This is all set and done with, but it makes you wonder how unbiased this party was.

At worst, he was as unbiased as the NHLPA accountants that "found" underreported revenues.

[Jim A 4]

There is so much of that in business though, I don't think a financial auditor will really care who his son works for or through such degrees of separation..its like if his kid worked for Hurley and he was doing an audit for Nike...the Ducks run on their own budget, etc..and have little to do with Disney on a day to day basis...

anyways ..if you're going the tax route..then you need a debt rule like MLB...I think you can't spend more than 60% of the value of your revenue or franchise on payroll..so you have to show revenue streams etc. for a higher payroll to work..even a team like the yankees if they sign beltran..may have to show where some of the $ is coming from..ie. YES Network..that they have been able to keep out of sight from MLB with a little nudge nudge wink wink..

i don't think they can agree on what is revenue either..and it sucks...and its going to be a long time before we have the NHL again