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What the Salary Cap has really done


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#1 FightCommies77

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Posted 02 July 2007 - 11:27 AM

http://www.sportsnet...702_100957_1192


What hath Bettman wrought?
By Jim Kelley, Sportsnet.ca

Daniel Briere goes to the Philadelphia Flyers for $52 million over eight years. He'll receive a whopping $10 million in the first year alone.

Chris Drury and Scott Gomez go to the New York Rangers for six years and $35 million and seven years and $51.5 million respectively.

Ryan Smyth is off to the Colorado Avalanche for $31.25 million over five years and Jason Blake -Jason Blake for crying out loud- goes to the Toronto Maple Leafs for $20 million over five years.

On the surface it looks good for the likes of the Flyers and the Rangers and maybe even the Avalanche and the Maple Leafs in the short term, but what does this say about where the NHL is heading with yet another round of salary escalation with advantages for the richer teams and something considerably less for the lesser markets (which just happens to be the majority of NHL cities).

Now it's a given that no one talks about "a drag on salaries," the often laughed at proclamation the commissioner used to make every time former union chief Bob Goodenow whipped his backside at the bargaining table.

But wasn't this CBA, the one that did Goodenow in, broke the players association as a viable force in the sport and the one that promised cost certainty to legions of fans who sided with ownership against "greedy" players?

Wasn't this the deal that would put all teams on a competitive footing regarding payroll costs and therefore strike a competitive balance throughout two lands?

I'm sorry, did we miss something or did all that go out the same way of the promise of reduced ticket prices?

Do you think fans in Nashville are singing the praises of "a fair an equitable system for all" now that Paul Kariya is in St. Louis, Kimo Timonen and Scott Hartnell are in Philadelphia, Tomas Vokoun is in Florida and an owner that has lost money in every season is gutting his team to get to the minimum spending level while he awaits a sale that may never come?

Think anyone has broken into a chorus of "Happy Days are Here Again" in Buffalo now that co-captains, top scorers and team leaders Drury and Briere are gone despite the fact Sabres fan sold out the HSBC arena for every game and led the league in merchandise sold (or so they claimed for most of the season)?

Hey, I understand it's pro sports and it's a follow the money game, but isn't that the problem all over again? And, by the way, where is all this money coming from?

If the league was in such dire straits that if felt both the need (and the obligation as some said back then) to shut down for an entire season in order to regain fiscal sanity, well, where is it?

The year before the lockout, the Buffalo Sabres had a nice little team that appeared to be on the rise with a tidy and manageable payroll of about $30 million. Now a part of the reason for that was they had owners that were about to become convicted felons and they were struggling to get through a bankruptcy, but their salvation was thought to be new ownership in the form of billionaire Tom Gollisano who bought the team on the premise that Bettman was building a new economic order that would allow even small and mid-market teams to be competitive, hold on to their talent and, if they minded their dollars and signings, even make a profit.

In the season after the lockout, Gollisano's payroll rose to some $42 million and the year after that it rose to $44 million and that was after they had to accept a $5 million arbitration award for Briere and let No.1 defensive defenceman Jay McKee and power forward Mike Greir walk in free agency AND lose J.P. Dumont because the ran out of cap space and couldn't sign him.

It was worse in Nashville this time and last time I looked, things weren't going particularly well in Atlanta, Washington, Phoenix, Florida, Columbus or even in big-markets-Los Angeles, Chicago and Boston-with bad teams who can't seem to get better but keep raising ticket prices just to stay "competitive" in the free-agent marketplace.

And what was once a self-imposed ceiling on mid-market and small-market teams now won't even equal the commissioner's new floor. Just last week, the new minimum spending limit was announced at $34.3 million. That's a number that could doom a Phoenix or Washington or Columbus and it's certainly a stumbling block for any group of civic-minded people who want to try and keep a team in Nashville or who are struggling to get a new building built in Edmonton or on Long Island.

Now I don't normally get on a soap box for millionaires and billionaires, especially when the billionaire owner in Buffalo and the somewhat wealthy outgoing owner in Nashville are accepting revenue sharing checks from teams who didn't make the playoffs, but there is a case to be made here.

For instance, the Globe and Mail recently published calculations indicating that the so-called "cap" has risen by $11 million per club in just two seasons. From $39 million to $50.3 million for the upcoming season.

Now given that the players can only get 54 percent of the total league revenues in one season, and given that the NHL's television revenues, the lifeblood of most any successful pro sports league, are abysmal, one has to wonder exactly where all this new money is coming from.

Surely some comes from the never-ending parade of ticket price hikes since the lockout ended, but 30 clubs, $11 million per club, well, you do the math.

OK, too many zeroes. Well, the Globe did it for you and if the teams average just $45 million in salaries for next season, some $5 million below the cap, then the projected league revenue is $1.35 billion for next season.

But here's the kicker: That's pretty much the same amount as the league was taking in before the lockout. The problem with that is the big markets are capped, but still taking in tons of money that goes right into the profit column, but the smaller teams have to spend to a floor that some of them can't afford and still have to deal with a system that allows the bigger market clubs the necessary leeway to pick off the better players with more lucrative deals spread out over longer terms to minimize the cap hit in any one season.

That may come back to haunt those clubs in the future, but with a gap of $16-plus million between the ceiling and the floor, don't count on it happening anytime soon.

Under this CBA the rich get richer AND get to pick off the better players. The less rich will have to raise ticket prices in some markets just to get to the floor and in other markets just to be able to pay for arbitration awards that will be rising because of the new contracts being handed out to players who are jumping to teams with more cash on hand.

Imagine hiking ticket prices after you've just seen your best player bolt for a bigger market and you've got nothing in return.

Of course even those teams losing a star player will have to raise ticket prices to "absorb" the costs of securing their remaining players while the larger market teams will have to raise them to pay for their new players and to keep the profit margins they are now growing accustomed to and in the end, the inflationary cycle, the one that was supposed to be broken by this new CBA, is back and in an even high gear.

Don't know how you see it but from here, it looks like the same old NHL and now they're talking expansion?

Thanks a lot Gary.
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#2 Triumph

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Posted 02 July 2007 - 11:39 AM

he makes the right point (somewhat) with all the wrong examples

in a different world i think drury and gomez are still in new york and briere's still in philadelphia. kimmo timonen and scott hartnell are no longer in nashville, and buffalo's still struggling to keep all their players. no one said that the new CBA was a license to squash salaries and have NHL owners collude like baseball in the late 80s. it's just strange that the flyers and rangers have as much cap space as they do.

the central irony in all this is that it's the bump in revenues caused by the new CBC deal that caused this spike in the salary cap.
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#3 BlueSkirt

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Posted 02 July 2007 - 11:48 AM

The other benefit of the cap is that the big $ are going to younger players.
in the past it was the graybeards that got the huge deals.

I just don't know how the NHLPA/anyone can expect the cap to go up again following 2007-08.

No new TV revenues, ticket prices up / sales diminishing, higher salaries.
It cannot go up 6Mil per team again, can it ?


Unless they are counting on all those newly sold-seats at the Rock..
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#4 Devilish34

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Posted 02 July 2007 - 12:00 PM

It's too much too soon.
45-47 would of been acceptable.
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#5 Devils731

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Posted 02 July 2007 - 12:40 PM

I couldn't keep reading when the guy was complaining that arguably the most talented team in the league, Buffalo, couldn't keep guys due to raises. Duh, that's part of what the cap is supposed to do, stop teams from spending more money than other teams to retain all the talent.

If the situation were reversed and the NYR and PHI had lost players to BUF in the exact same situation reversed this would be a non-issue. Then Flyers just have lots of cap room from dumping guys last season and the Rangers have extra cap room due to Jagr's cap hit being so small.
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#6 emptynet

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Posted 02 July 2007 - 01:19 PM

6+ million for the salary cap to go up in one year is a large jump.
It's kinda like we're back to square one before the lockout.
the only difference now is that teams can only offer players a certain percentage of the total cap, which in a way makes it easier for GM's to stack teams you dont have to offer one superstar 13 million a year to pry him away from the pack.

Sure the Devils have lots of cap room now, but who is really worth signing that's an impact player.
I have a feeling no matter what happens this is going to be a long frustrating season.

Edited by emptynet, 02 July 2007 - 01:20 PM.

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#7 SC Devs Fan

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Posted 02 July 2007 - 01:21 PM

Fiscally I do think Lou made the best move by doing nothing, but the problem as I see it is we have no stars in the minors to step in and take the guys places. We won't be worse because we are against the cap, we'll just be worse.
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#8 SteveStevens

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Posted 02 July 2007 - 01:21 PM

Eventually though, the salary cap will have to be done away with. I love salary cap, i infact think it should be lower than it is now. It keeps it more competitive and makes it a more well rounded game.
However, eventually the European leagues will say "Hey, if they can only offer so much to player X, we can offer more" and they can thusly steal them. It's a grea concept and idea, but eventually it wont work.
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#9 Don

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Posted 02 July 2007 - 02:15 PM

Eventually though, the salary cap will have to be done away with. I love salary cap, i infact think it should be lower than it is now. It keeps it more competitive and makes it a more well rounded game.
However, eventually the European leagues will say "Hey, if they can only offer so much to player X, we can offer more" and they can thusly steal them. It's a grea concept and idea, but eventually it wont work.


Yeah. The European leagues that are paying $7M salaries. Which ones are those again?
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