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Proposed CBA could drop cap to $56.6M (doing the math)


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So since 2005, the salary cap, held at 57% of Hockey Related Revenue (HRR) has grown from $39M to $70M. See attached graph.

salarycapgraph-1.jpg

Year over year that's a 12.8%, 14.3%, 12.7%, 0.1%, 4.6%, 8.2%, and 9.2% increase in cap, and a similar increase in HRR. Overall that implies HRR has increased by 80% since 2005, and a mean average increase of nearly 9% per year.

One more thing. If $70.2M is 57% of HRR, then HRR this year is about $123M per team (think about that!)

The NHL's initial offer drops the HRR percentage to 46%. That would drop the salary cap from $70.2M to $56.6M.

I have two points to make, on the presumption that this holds (knowing this is just the NHL's opening position - and this will change as negotiations continue).

1. A cap hit of $5.3M on $56.6M would make Luongo that much harder to trade, and that much more important for Gillis to trade him. But over time, as the salary cap rises again, this is less and less of an issue. But short term, this puts the Canucks in a real bind, and a salary dump may be a necessity if you consider next year only.

2. Projecting forward, if the HRR continues to rise by about 9% per year on average (past performance does not necessarily reflect future performance or returns...) then, the salary cap could rise back to $62M, $67M, $73M within 3 years. It shouldn't take long for the players to recoup these concessions and in fact be making even more money than ever.

Just looking at the math.

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That would certainly solve the problem. Fehr will push for that I'm sure. Owners may see the wisdom of that as well, or they'll have to have some form of salary rollbacks.

They could even let this year run under the old CBA while negotiating the new one, letting it kick in next year.

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The league already said that the cap for the upcoming season is $70.2M no matter what. But I could see the year after the cap going down. However I don't think they would make it that drastic of a drop. That would screw over almost every team. And besides the NHLPA isn't going to accept 46%. It will be closer to 50/50 but I think the players will get somewhere around 52%.

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So since 2005, the salary cap, held at 57% of Hockey Related Revenue (HRR) has grown from $39M to $70M. See attached graph.

salarycapgraph-1.jpg

Year over year that's a 12.8%, 14.3%, 12.7%, 0.1%, 4.6%, 8.2%, and 9.2% increase in cap, and a similar increase in HRR. Overall that implies HRR has increased by 80% since 2005, and a mean average increase of nearly 9% per year.

One more thing. If $70.2M is 57% of HRR, then HRR this year is about $123M per team (think about that!)

The NHL's initial offer drops the HRR percentage to 46%. That would drop the salary cap from $70.2M to $56.6M.

I have two points to make, on the presumption that this holds (knowing this is just the NHL's opening position - and this will change as negotiations continue).

1. A cap hit of $5.3M on $56.6M would make Luongo that much harder to trade, and that much more important for Gillis to trade him. But over time, as the salary cap rises again, this is less and less of an issue. But short term, this puts the Canucks in a real bind, and a salary dump may be a necessity if you consider next year only.

2. Projecting forward, if the HRR continues to rise by about 9% per year on average (past performance does not necessarily reflect future performance or returns...) then, the salary cap could rise back to $62M, $67M, $73M within 3 years. It shouldn't take long for the players to recoup these concessions and in fact be making even more money than ever.

Just looking at the math.

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That would certainly solve the problem. Fehr will push for that I'm sure. Owners may see the wisdom of that as well, or they'll have to have some form of salary rollbacks.

They could even let this year run under the old CBA while negotiating the new one, letting it kick in next year.

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There would be an across the board roll back plus the HRR will be redefined so the cap would not be $56.6 as the OP proposes, it will be even less. No one can predict what the cap will be because we don't know what will be considered HRR in the new CBA.

After the last negotiations were completed and a hard cap installed linking player cost and HRR there was a 24% roll back on all salaries.

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There would be an across the board roll back plus the HRR will be redefined so the cap would not be $56.6 as the OP proposes, it will be even less. No one can predict what the cap will be because we don't know what will be considered HRR in the new CBA.

After the last negotiations were completed and a hard cap installed linking player cost and HRR there was a 24% roll back on all salaries.

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I disagree. They will keep the same salary cap and simply keep it frozen there until it matches the new percentage being 53% or whatever. Then it can rise above the 70 mil.

There is no reason to back peddle the cap downward to where there are like 10 teams way over the cap. That would self destructive and serve no purpose at all. Not a sound business move.

If they were serious about it , they would certainly NOT have announced a 70mil cap hit when they knew they were trying to scale back the revenue split. It becomes a non starter is so far fetched.

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What if revenues don't increase to where the cap will be $70 mill for several years? What would be the point of a hard won agreement if they don't really get change? Makes no sense to me but you could be right.

If the salaries are rolled back 20% then a player who is getting $1 mill now will be getting $800k as per new agreement. The new cap hit would be $800k. If $70 mill worth of salary was rolled back 20% the new combined salary of a team would be $56mill. This would fall in tune with the new cap which would call for approx $56 mill under owner's demands.

Of course there are lots of negotiations and we don't know what the new CBA will look like so these are just examples of numbers and percentages. It could be 10% or 25%, but we will certainly see a roll back as opposed to leaving the cap and salaries at $70 mill.

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2012-2013 Salary Cap floor is around $54 million dollars... regardless of the new CBA. So if they really drop the cap down the next year to $56.6... everyone is in trouble. I assume there will be some sort of transition such as a freeze at the current cap until the percentages catch up (and if they don't... well there will have to be some sort of an out)

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