It's time to institute a luxury tax

[Steamy Ray Vaughn]

This is where it's fantasy though. Owners LIKE that salary is capped at 50% of HRR. They have zero interest in allowing themselves to spend more.

Some owners technically are spending more though. The teams that offer salaries as full signing bonuses every July 1st with very little salary being paid through the year are paying more because they're not recouping any potential escrow from those players since the money has already been paid.

Using LTIR to stash contracts like Montreal is doing with Carey Price is another form of spending more. It's not like everyone just spends the same.

 

[Tawnos]

Some owners technically are spending more though. The teams that offer salaries as full signing bonuses every July 1st with very little salary being paid through the year are paying more because they're not recouping any potential escrow from those players since the money has already been paid.

Using LTIR to stash contracts like Montreal is doing with Carey Price is another form of spending more. It's not like everyone just spends the same.

That's really not how this works. The owners recoup the escrow, if necessary, whether the salaries came from signing bonuses or not.

Does anyone know if the 50% of HRR is calculated on a team-by-team basis or if it's a league-wide calculation? @mouser?

 

[Yukon Joe]

That's really not how this works. The owners recoup the escrow, if necessary, whether the salaries came from signing bonuses or not.

Does anyone know if the 50% of HRR is calculated on a team-by-team basis or if it's a league-wide calculation? @mouser?

50% is league-wide. Revenue sharing is what equalizes the teams.

 

[Steamy Ray Vaughn]

That's really not how this works. The owners recoup the escrow, if necessary, whether the salaries came from signing bonuses or not.

Does anyone know if the 50% of HRR is calculated on a team-by-team basis or if it's a league-wide calculation? @mouser?

Signing bonuses are escrow free. Meaning that money is gone and paid out. Sure other players' escrow comes into account if you are under the 50% threshold but the players that are under deals where they get paid almost everything upfront on July 1st only get their actual salary escrowed and given that the "salary" portion is minuscule, they're basically not paying anything into that pool.

 

[Tawnos]

50% is league-wide. Revenue sharing is what equalizes the teams.

The league-wide thing is definitely possible, but isn't revenue sharing entirely dictated by revenue and spending isn't part of the equation?

 

[Yukon Joe]

The league-wide thing is definitely possible, but isn't revenue sharing entirely dictated by revenue and spending isn't part of the equation?

Yes, that's my understanding.

That's why teams got frustrated at Arizona for technically spending under the cap by taking on all those dead cap hits yet still receiving revenue sharing.

 

[Tawnos]

Signing bonuses are escrow free. Meaning that money is gone and paid out. Sure other players' escrow comes into account if you are under the 50% threshold but the players that are under deals where they get paid almost everything upfront on July 1st only get their actual salary escrowed and given that the "salary" portion is minuscule, they're basically not paying anything into that pool.

I'm relatively sure that's false. That part of the CBA specifically says Player Salary and Bonuses are subject to escrow and signing bonuses are part of the definition of Bonuses.

 

[KevFu]

It's really stabilized the smaller markets in the league, especially the ones in Canada.

I agree, and it's stabilized them because they have the fan base that will keep coming to the arena in good times and bad. Whereas your "NHL is our third/fourth team" markets struggle because of how the CBA is set up...

The CBA is NOT set up where a "Rising tide doesn't raise all boats." Success of OTHER TEAMS raises the amount of money you need to be competitive, and if your revenues don't rise at the same right, you're falling further behind.

If Utah is like crazy successful revenue-wise compared to Arizona, the low revenue teams have to spend a higher percentage of revenues to get to the floor. Which can cause budget cuts elsewhere, like SCOUTING and MARKETING which impacts the ability to raise revenues going forward. You're more likely to make roster mistakes when you're pinching pennies on your front office; and less likely to create new fans if you're slashing your marketing budget. And THAT is franchise quicksand. And THAT needs to be addressed by changing the Revenue Sharing system from a Robin Hood style to a Central Pool at a higher percentage, like the other leagues use.


A luxury tax on payroll would basically make the gap from rich to poor even larger, which is terrible. BUT there could be a way to implement a tax to create more RS dollars:

The two obvious things are the LTIR circumvention. I don't know why the hell it "your playoff roster has to have a total cap hit under the cap" but if you're not doing that, at least tax the hell out of teams for it.

And the other one are BUYOUTS. You can buy out a player and they have the formula for what the cap hit is to do it. Why not just set a tax on how much cap space the team wants to buy out?

Like if Minnesota wants to get Zack Parise's $7.5m cap hit COMPLETELY off their books when they bought him out with four years left, they can... it's just costing them like 250% tax, per season, on that amount.

If they want to pay the rest of the league $75m over four years to NOT have Parise's cap hit, go for it. That helps everyone, does it not?

 

[Salsero1]

I agree, and it's stabilized them because they have the fan base that will keep coming to the arena in good times and bad. Whereas your "NHL is our third/fourth team" markets struggle because of how the CBA is set up...

The CBA is NOT set up where a "Rising tide doesn't raise all boats." Success of OTHER TEAMS raises the amount of money you need to be competitive, and if your revenues don't rise at the same right, you're falling further behind.

If Utah is like crazy successful revenue-wise compared to Arizona, the low revenue teams have to spend a higher percentage of revenues to get to the floor. Which can cause budget cuts elsewhere, like SCOUTING and MARKETING which impacts the ability to raise revenues going forward. You're more likely to make roster mistakes when you're pinching pennies on your front office; and less likely to create new fans if you're slashing your marketing budget. And THAT is franchise quicksand. And THAT needs to be addressed by changing the Revenue Sharing system from a Robin Hood style to a Central Pool at a higher percentage, like the other leagues use.


A luxury tax on payroll would basically make the gap from rich to poor even larger, which is terrible. BUT there could be a way to implement a tax to create more RS dollars:

The two obvious things are the LTIR circumvention. I don't know why the hell it "your playoff roster has to have a total cap hit under the cap" but if you're not doing that, at least tax the hell out of teams for it.

And the other one are BUYOUTS. You can buy out a player and they have the formula for what the cap hit is to do it. Why not just set a tax on how much cap space the team wants to buy out?

Like if Minnesota wants to get Zack Parise's $7.5m cap hit COMPLETELY off their books when they bought him out with four years left, they can... it's just costing them like 250% tax, per season, on that amount.

If they want to pay the rest of the league $75m over four years to NOT have Parise's cap hit, go for it. That helps everyone, does it not?

That's not happening though.

 

[Steamy Ray Vaughn]

I'm relatively sure that's false. That part of the CBA specifically says Player Salary and Bonuses are subject to escrow and signing bonuses are part of the definition of Bonuses.

I thought for sure that a big reason the huge signing bonuses were popular was because they were Escrow proof. I must have heard that somewhere but I can't find anything that supports that conclusion.

 

[Tawnos]

I thought for sure that a big reason the huge signing bonuses were popular was because they were Escrow proof. I must have heard that somewhere but I can't find anything that supports that conclusion.

I think you’re mixing it up with them being taxed differently. A player like Panarin whose legal residence is Florida doesn’t pay NY state income taxes on his signing bonuses (although I think NY has passed some laws to try to claw some of that kind of thing back).

 

[tarheelhockey]

*checks calendar*

Yep, it’s Help The Leafs season again.

 

[McRpro]

While it's fine discussing all this stuff the simple fact is there is zero chance the league will ever give up the hard cap. They lost a season to get it implemented. The PA will never be able to outlast the owners if they truly want to fight for it's removal in future CBA bargaining.

 

[StreetHawk]

While it's fine discussing all this stuff the simple fact is there is zero chance the league will ever give up the hard cap. They lost a season to get it implemented. The PA will never be able to outlast the owners if they truly want to fight for it's removal in future CBA bargaining.

Not sure anyone here is really well versed in how the NBA's luxury tax system works in terms of the final HRR that ends up getting split. Any system can work so long as for the owners, they end up with their 50/50 split.

But, not sure the NHL wants to see $50-60 mill difference in spending between teams.

 

[Steamy Ray Vaughn]

*checks calendar*

Yep, it’s Help The Leafs season again.

And the Oilers, and the Rangers, and the Canadiens and the Flyers (but not the Blackhawks)

Not sure anyone here is really well versed in how the NBA's luxury tax system works in terms of the final HRR that ends up getting split. Any system can work so long as for the owners, they end up with their 50/50 split.

But, not sure the NHL wants to see $50-60 mill difference in spending between teams.

And yet the NBA dwarfs over the NHL in terms of revenue, not even close. Hockey is such an exciting sport but the NHL under Gary Bettman has gone about it all wrong. People like seeing David beat Goliath, but nobody really cares about David versus Paper goliath.

 

[TheGreenTBer]

And the Oilers, and the Rangers, and the Canadiens and the Flyers (but not the Blackhawks)



And yet the NBA dwarfs over the NHL in terms of revenue, not even close. Hockey is such an exciting sport but the NHL under Gary Bettman has gone about it all wrong. People like seeing David beat Goliath, but nobody really cares about David versus Paper goliath.

Love the username lmao

 

[mouser]

Signing bonuses are escrow free. Meaning that money is gone and paid out. Sure other players' escrow comes into account if you are under the 50% threshold but the players that are under deals where they get paid almost everything upfront on July 1st only get their actual salary escrowed and given that the "salary" portion is minuscule, they're basically not paying anything into that pool.

Incorrect, signing bonuses are subject to escrow.

 

[tarheelhockey]

And the Oilers, and the Rangers, and the Canadiens and the Flyers (but not the Blackhawks)

I’m glad we’re on the same page that this is explicitly intended to help a handful of teams.

 

[mouser]

The league-wide thing is definitely possible, but isn't revenue sharing entirely dictated by revenue and spending isn't part of the equation?

HRR is determined league wide. The pool of funds available for revenue sharing is 6.055% of HRR. That revenue pool is then distributed to teams based on each team’s hockey revenue relative to the league-wide average, with a maximum per-team distribution cap. Any team below league average is eligible to receive funds—which can be more than 50% of the teams.**

**The rule uses league wide average revenue, not median revenue.

 

[StreetHawk]

And the Oilers, and the Rangers, and the Canadiens and the Flyers (but not the Blackhawks)



And yet the NBA dwarfs over the NHL in terms of revenue, not even close. Hockey is such an exciting sport but the NHL under Gary Bettman has gone about it all wrong. People like seeing David beat Goliath, but nobody really cares about David versus Paper goliath.

Rare for David to beat Goliath in nba.

Most of the 1 vs 8 or 2 vs 7 series are won by the better team.

Luxury tax can work but you’d end up with a large gap between the spending of teams.

 

[McRpro]

And the Oilers, and the Rangers, and the Canadiens and the Flyers (but not the Blackhawks)

I doubt you'll see many Oilers fans arguing for the removal of the salary cap and/or the implementation of a luxury tax. We watched star player after star player leave because we could not compete with teams like the Leafs and Rangers who had 2-3x our payroll. Even though the Oilers now have a mega rich owner who could afford to keep the teams star players regardless of a cap or not, I never want to see the salary discrepencies in the NHL like we used to pre-2005.

 

[Tawnos]

HRR is determined league wide. The pool of funds available for revenue sharing is 6.055% of HRR. That revenue pool is then distributed to teams based on each team’s hockey revenue relative to the league-wide average, with a maximum per-team distribution cap. Any team below league average is eligible to receive funds—which can be more than 50% of the teams.**

**The rule uses league wide average revenue, not median revenue.

Ok that’s what I thought. The main reason I wanted to be sure was that I was going to mention that a lot of teams already spend above the league average 50% of HRR while at the same time spending less than 50% of their own HRR.

I wasn’t sure the OP realizes that the cap isn’t set at 50%, but above that number.

 

[Barclay Donaldson]

As we know, Pittsburgh needs all the help they can get so people come...

This is patently false at this point. The cap is for cost certainty, not parity. As long as the NTCs and NMCs exist, the playing field will never be fair.

The hard cap system in place is the best system of ensuring parity. I don't know why you're going for the NTC's and NMC's. There already are competitive advantages in place with the nature of the income taxes fitting into individual salaries and staying under the cap.

Things are more even in a world with a hard cap than with a luxury tax. Those are just facts.

 

[Melrose Munch]

The hard cap system in place is the best system of ensuring parity. I don't know why you're going for the NTC's and NMC's. There already are competitive advantages in place with the nature of the income taxes fitting into individual salaries and staying under the cap.

Things are more even in a world with a hard cap than with a luxury tax. Those are just facts.

Because NTCs make things unfair. How is Winnipeg supposed to compete with around 33% percent of the league has them on their list? "Parity" is a ruse.

 

[Steamy Ray Vaughn]

Incorrect, signing bonuses are subject to escrow.

Yep, my mistake. I misremembered that part.