Replace Salary Cap with Luxury Cap?

[LeafFan]

Does anyone think this could work in the NHL instead of the current hard cap?

Let's say salary cap is 82m. Luxury tax could kick in and be something like up to 10% the cap, meaning in this case teams could spend up to 90.2m in salaries(so we still have a limit, but the limit gets balanced out by having taxes), with the 8.2m being taxed. The amount of taxes you pay goes up if you're a team who does it on regular basis.

I know what people will say, NHL cap is here so smaller markets can compete, but here's where they benefit. With NHL being a revenue sharing league, what if all the taxed money goes into a pool and spread out to all the teams who dont go over the luxury cap?

So players get more money, and teams who aren't spending as much on players also make money from this which could eventually lead to them being able to spend on guys.

Maybe even reward teams who are under the cap alot. Like you only get that taxed pool money if you were under the cap in consecutive years. So a team over in yr1 and under in yr2 and 3 would get taxed in 1,get nothing in yr2,and get part of pool in yr3. Whereas a team under tax in all 3 years will get taxed pool money for all years.

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[Ted Hoffman]

The owners have shot this idea down a few times now, including the notion that luxury tax dollars go to low-revenue teams to help them be able to spend more on player salaries. Explain why they would suddenly go for it now.

 

[Prairie Habs]

Dumbest idea since yesterday's thread where a leaf fan proposed that the leafs shouldn't have to stay under the cap.

 

[Pointteen]

The owners have shot this idea down a few times now, including the notion that luxury tax dollars go to low-revenue teams to help them be able to spend more on player salaries. Explain why they would suddenly go for it now.

It is entirely possible that not everyone knows this. Myself included. Tone could be a bit nicer to the ignorant, don't you think?


I think it is a decent idea, but if the owners have made up their mind, they've made up their mind.

 

[LeafFan]

Yes Leafs will be one of teams benefitting from paying more in salaries, but people need to realize the NHL needs teams like Leafs to support them financially. This would be another way to do it.

All other pro leagues, the big markets definitely bring the league up and help out financially. But seems like in hockey, they view it as a bad thing. If you want league to do better, your cash cow needs to be able to further exploit their earning potentials.

 

[LeafFan]

The owners have shot this idea down a few times now, including the notion that luxury tax dollars go to low-revenue teams to help them be able to spend more on player salaries. Explain why they would suddenly go for it now.

It is entirely possible that not everyone knows this. Myself included. Tone could be a bit nicer to the ignorant, don't you think?


I think it is a decent idea, but if the owners have made up their mind, they've made up their mind.

And what was the explanation given as to why it was shot down?

 

[Viqsi]

Yes Leafs will be one of teams benefitting from paying more in salaries, but people need to realize the NHL needs teams like Leafs to support them financially. This would be another way to do it.

All other pro leagues, the big markets definitely bring the league up and help out financially. But seems like in hockey, they view it as a bad thing. If you want league to do better, your cash cow needs to be able to further exploit their earning potentials.

Yes, yes, we all want our teams to succeed, and we all want to be special.

 

[Ted Hoffman]

It is entirely possible that not everyone knows this. Myself included. Tone could be a bit nicer to the ignorant, don't you think?

Really, that's being rude? I could have been *so* much worse, I thought I was just asking a question.

The players floated this in 1994 and the owners rejected it [and then didn't get any kind of control on salaries] and then floated it again in 2004 and got flatly rejected [before Goodenow inexplicably offered up a proposal with a cap]. Every time the owners have been presented it, they've said "no, we're not interested." Not even "OK, how about this for a counter?" It's a complete non-starter, it's a topic that doesn't even get a "hmm, let's see here" response.

So, why would they suddenly go for it now? That's the question I'm asking. If that comes across as rude, ... well, I can't help that.

And what was the explanation given as to why it was shot down?

Because it didn't provide cost certainty. The owners wanted linkage between salaries and revenues and a limit on what teams could spend; a luxury tax system doesn't guarantee linkage [it can, but the math gets more messy] and it certainly doesn't limit what teams can spend. In theory it does, in practice high-revenue teams can [and will] just spend freely and will gladly pay the tax to ice a better product.

It also likely takes out the cap floor, meaning teams can spend as little as they want. Again, in theory you can put in a floor but combined with linkage it's the players who bear the brunt of things. [If they hate escrow now, they'll be utterly pissed about it in that scenario.] So, no floor means teams can also spend as little on player salaries as they want. Yeah, you can say "luxury tax money sent to the teams has to be used on player salaries" but it's not difficult for a team to say "we are using that money on player salaries, because we're spending much of our revenue on other team operations" and only ice a $30 million payroll while someone else takes advantage of the luxury tax system and spends $120 million.

 

[Lazlo Hollyfeld]

Really, that's being rude? I could have been *so* much worse, I thought I was just asking a question.

The players floated this in 1994 and the owners rejected it [and then didn't get any kind of control on salaries] and then floated it again in 2004 and got flatly rejected [before Goodenow inexplicably offered up a proposal with a cap]. Every time the owners have been presented it, they've said "no, we're not interested." Not even "OK, how about this for a counter?" It's a complete non-starter, it's a topic that doesn't even get a "hmm, let's see here" response.

So, why would they suddenly go for it now? That's the question I'm asking. If that comes across as rude, ... well, I can't help that.


Because it didn't provide cost certainty. The owners wanted linkage between salaries and revenues and a limit on what teams could spend; a luxury tax system doesn't guarantee linkage [it can, but the math gets more messy] and it certainly doesn't limit what teams can spend. In theory it does, in practice high-revenue teams can [and will] just spend freely and will gladly pay the tax to ice a better product.

It also likely takes out the cap floor, meaning teams can spend as little as they want. Again, in theory you can put in a floor but combined with linkage it's the players who bear the brunt of things. [If they hate escrow now, they'll be utterly pissed about it in that scenario.] So, no floor means teams can also spend as little on player salaries as they want. Yeah, you can say "luxury tax money sent to the teams has to be used on player salaries" but it's not difficult for a team to say "we are using that money on player salaries, because we're spending much of our revenue on other team operations" and only ice a $30 million payroll while someone else takes advantage of the luxury tax system and spends $120 million.

Why would a luxury tax likely take out the cap floor? I'm not following your reasoning here.

 

[Ted Hoffman]

Why would a luxury tax likely take out the cap floor? I'm not following your reasoning here.

If you don't have linkage, you can have a Lower Limit set at whatever - but I'm presuming the owners would still want linkage in a luxury tax system. So, let's work from that viewpoint.

The impact of a luxury tax on the Upper Limit is easy to see. the Upper Limit becomes merely advisory; you can still go over it, with a cost. You don't know what that eventual cost is in aggregate; you just know that some teams are going to go over it and some will really go over it.

Where do you set the Lower Limit in response to try to reasonably ensure linkage? You can't leave it at the "normal" spot because teams are overspending the midpoint and causing escrow problems for the players. [This past season, exactly three (3) teams spent under the Midpoint in terms of cap dollars. A couple likely got there because of "dead" contracts, but we're only talking a couple teams here.] Every dollar of spending that teams do that puts them subject to the luxury tax merely comes out of the pockets of the players, which aggravates escrow. So, to alleviate that you have to move the Lower Limit down - but by how much? 5%? 10%? You don't know; you don't know how many teams are going to spend to trigger a luxury tax, much less by how much they're going to overspend.

The easiest way to account for the luxury tax and its impact on escrow is to pull the Lower Limit completely and let the market sort it out. Anything else is more likely to negatively impact the players with respect to escrow.

 

[MayonnaiseOreo]

Tone could be a bit nicer to the ignorant, don't you think?

Being nice? On HF Boards? Is that allowed?

 

[Edgelord]

I don't know why they just don't lower the cap to 60 mil and only count net against the cap. It would even every thing right out.
Or at least give the teams that pay revenue sharing from high tax areas a higher cap.

 

[illpucks]

Would be better if NHL was more like NBA. Like if you hear Crosby and MacKinnon are discussing to start a superteam like Kyrie and Durant

 

[Gizmo Tkachuk]

Here's your million dollar idea right here:

You have a soft cap at say 82 mil and a "hard" cap at 88 or 90mil.

You are allowed to exceed the soft cap, however doing so will cost you your first round pick for the year. This will remove the pick entirely from the draft, so if 5 teams go over the cap then there's only 26 picks in the first round. This will benefit teams that stay under the cap, as now late first players become early seconds.

Exceeding the soft cap 3 years in a row will cost you your 1st and 2nd round picks.

NHL saved. Boom.

 

[therealkoho]

Teams that pay into the GE/RevShare should be able to exceed the cap by exact match

So if a team is paying 3.5m in gate equalization then they should be able to exceed the cap by that number so the 81.5 can become 85m at their own discretion

The teams that pay into that fund should get something more then just a thanks for supporting teams that are failing at the box office

 

[Beukeboom Fan]

And what was the explanation given as to why it was shot down?

The owners sacrificed 1.5+ seasons to get the hard cap at 50% of HRR in place. They did this so there was a relatively competitive environment and a sustainable economic system in place for all competently run organizations. Certain big market teams would make a ton of money, but not be able to use this clout to crush the competition.

Do you think the other 30 owners are doing to throw that away because the Leafs drafted well and now can't afford to keep everyone paid? Especially when several other teams have also faced the same exact situation and had to deal with it.

 

[LeHab]

With current 50-50 revenue split this idea will compound escrow issues.

 

[Lazlo Hollyfeld]

If you don't have linkage, you can have a Lower Limit set at whatever - but I'm presuming the owners would still want linkage in a luxury tax system. So, let's work from that viewpoint.

The impact of a luxury tax on the Upper Limit is easy to see. the Upper Limit becomes merely advisory; you can still go over it, with a cost. You don't know what that eventual cost is in aggregate; you just know that some teams are going to go over it and some will really go over it.

Where do you set the Lower Limit in response to try to reasonably ensure linkage? You can't leave it at the "normal" spot because teams are overspending the midpoint and causing escrow problems for the players. [This past season, exactly three (3) teams spent under the Midpoint in terms of cap dollars. A couple likely got there because of "dead" contracts, but we're only talking a couple teams here.] Every dollar of spending that teams do that puts them subject to the luxury tax merely comes out of the pockets of the players, which aggravates escrow. So, to alleviate that you have to move the Lower Limit down - but by how much? 5%? 10%? You don't know; you don't know how many teams are going to spend to trigger a luxury tax, much less by how much they're going to overspend.

The easiest way to account for the luxury tax and its impact on escrow is to pull the Lower Limit completely and let the market sort it out. Anything else is more likely to negatively impact the players with respect to escrow.

Not to be obtuse but linkage is to revenue not expenses so I don't see why they couldn't reasonably still have a cap floor.

 

[Rschmitz]

I don't know why they just don't lower the cap to 60 mil and only count net against the cap. It would even every thing right out.
Or at least give the teams that pay revenue sharing from high tax areas a higher cap.

Oh look, more whineage about taxes.

 

[leaffaninvancouver]

I believe you already know the answer, lol. Their GM is incompetent and therefore needs protection from himself.

Why do people think it’s appropriate to slander a fanbase of millions based on a post by an account that has less then 50 posts in over a year? Almost all of them inflammatory.

 

[Edgelord]

Oh look, more whineage about taxes.

why would you be opposed to a net pay salary cap?

 

[tarheelhockey]

God damn, how many “why can’t my team cheat the cap?” threads can we have going at the same time?

 

[Rschmitz]

why would you be opposed to a net pay salary cap?

Because you would be tying extremely complex regional policy which is out of the NHL's control to mandate the multi-national business model that governs all NHL teams. Not only do those policies have the potential to change in the middle of a season, but net pay would need to include a lot more than just income tax to make it fair.

 

[NyQuil]

Yes Leafs will be one of teams benefitting from paying more in salaries, but people need to realize the NHL needs teams like Leafs to support them financially. This would be another way to do it.

All other pro leagues, the big markets definitely bring the league up and help out financially. But seems like in hockey, they view it as a bad thing. If you want league to do better, your cash cow needs to be able to further exploit their earning potentials.

League is doing fine.

 

[Stuzchuk]

Here's your million dollar idea right here:

You have a soft cap at say 82 mil and a "hard" cap at 88 or 90mil.

You are allowed to exceed the soft cap, however doing so will cost you your first round pick for the year. This will remove the pick entirely from the draft, so if 5 teams go over the cap then there's only 26 picks in the first round. This will benefit teams that stay under the cap, as now late first players become early seconds.

Exceeding the soft cap 3 years in a row will cost you your 1st and 2nd round picks.

NHL saved. Boom.

I actually like the idea