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Replace Salary Cap with Luxury Cap?

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b in vancouver said:
This just came up in another thread.
How about everything else?
Are you also willing to factor in housing prices and give places like Vancouver and New York some kind of 'Cap Free Bonus'? - because the players will have to spend so much more to live there? Then we can penalize places like Winnipeg and Arizona because the houses are so much cheaper.
How about we factor in public vs. private health care because there's an extra cost for players, especially ones with kids.
How about cost of living and gas prices?
How about we use The Happiness Index? School ratings? Crime rates? Distance to National Parks? Best fishing hole?

This is coming up all the time now because The Leafs are in cap trouble. Lots of teams have dealt with it and soldiered on without complaining about well-established rules.
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There's a massive difference between taxes and all that you just mentioned... it's the way Vegas is signing players cheap at long-term. It's why Mark Stone makes more than guys like Connor McDavid, Alex Ovechkin, Sidney Crosby or Auston Matthews.
 
perhaps the only way the owners would ever go for a luxury tax system would be in the tax kicked in at the current midpoint of the ceiling and floor. The maybe a 100% tax on spending up to 20% over the cap. Any further salary would cause the tax to increase to 250%
 
DudeWhereIsMakar said:
There's a massive difference between taxes and all that you just mentioned... it's the way Vegas is signing players cheap at long-term. It's why Mark Stone makes more than guys like Connor McDavid, Alex Ovechkin, Sidney Crosby or Auston Matthews.
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Nitpick: Ovechkin signed his contract years ago when the cap was significantly lower; he would have certainly made more [and be making more] had he not signed for 13 years. Crosby clearly took less than he could have fetched on the open market to help the team and make his cap number symbolic. If he wanted to maximize dollars, he wouldn't have signed for 12 years.

2nd nitpick: Vegas signed all these players "cheap at long-term" and then had to move guys to create cap space because they didn't have room for them all. [There's a comment I want to make about the difference between claiming to have knowledge of the cap and managing it smartly, but I'm going to let it sit quietly.]
 
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There shouldn’t be a luxury tax, there should however be a hard cap on ticket prices. It makes no sense that some fans need to pay so much more to see their team play.
 
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LeafFan said:
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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If we do this then Toronto has to pay 90% of the cap instead of 10%.
 
Stick with the hard cap IMHO but if they did make a luxury tax it needs to be real. Square the amount over cap, add $2m.

$1m over $3m penalty
$3m over $11m penalty
$8m over $66m penalty
 
The idea of a luxury tax doesn't work. Budget teams would simply factor it into their budget and end up spending about the same with most of the tax just going into their profits. The only way I could get behind a soft cap is with the idea of creating incentives for a team to have an "all in" year. This however would would come at a price of hurting them in future years.

The way I would do that is simple.

1) A team can only do this once every three years. Doing it like this makes it possible for teams to actually plan to do this. This can create excitement in that fanbase and make the league more fun I'm general to watch. It also prevents the creation of perennial juggernauts and teams that can't compete with them.

2) For however much a team exceeds the cap in one year, their hard cap the following year is dropped by that same amount. Since teams are only allowed to exceed the cap once every three years this means the spending advantage is negated overall and keeping their team together the following year becomes more difficult and could actually encourage more trading.

4) Institute draft penalties. If a team exceeds it at all they lose a 3rd round pick. If a team excceds the cap by for instance 3 million, they lose a 2nd round pick. If the exceed it by more than 5 million then it becomes a 1st.
If they exceed it by 7 million then it's a 2nd and a first. Continue down this line of thought with ever increasing penalties.

4B) These picks that are lost do not disappear into the ether. Instead they become part of the draft lottery process. After the first three picks are awarded via lottery then the selection process continues for every team that did not receive a lottery pick. Any team that did receive one would not be eligible for compensation. The winner would receive the best pick available and then would not be eligible to be picked again. This process would continue until all lost picks are awarded. If there are more picks available then non playoff teams then whichever teams lose in the first round become elligable for the remainder of the picks. There shouldn't be any more picks then that. This idea would give teams that don't exceed the cap help in becoming better teams to increase league parity.

5) A team cannot spend more above the cap then the difference between the floor and the soft cap in that year. This should prevent the creation of 1 year mega teams to an extent.
 
If you're going to do it, then make the luxury tax bite, make it 1 to 1 dollars. We know that 10% would be meaningless to big spending teams like Toronto and the Rangers again, and super distort the salary structure and we'd go back to the day when big money teams would blow their brains out spending $10 million bucks a year on third liners.

Pass, the current system works. A luxury tax won't solve geographic or tax issues.
 
FissionFire said:
Salary cap isn’t NOT about letting small markets compete. It’s about having the owners have a known fixed cost for player salaries annually. A soft cap or luxury tax situation would eliminate that cost certainty which is why he owners have been steadfastly against any form of it. Likewise the players probably wouldn’t be for it since it would just drive up escrow to absorb levels which would hurt the 90% of the league not getting huge contracts far more than help the superstars. I mean under the cap escrow was at 11%. Imagine no upper limit with spending like it was pre-cap. You think players will enjoy seeing 20-25% or more of their paycheck go back to owners every year?
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Can’t repeat this enough. The cap is not meant to create fairness/parity or whatever. It is simply a mechanism to limit player salary-based expenditures on teams.

The reason why high revenue teams are capped just like low revenue teams is to prevent the high revenue teams from overbidding on players and thus escalating prices/salaries across the board. This is especially true for middle-of-the-road, everyday players.
 
If Toronto under a scenario of 88 million in spending, signs Marner for 11 million, how much does that drive up costs for players in other markets. The problem with a soft cap is the actual comparable costs are not league wide but team to team. Teams are dealing with contracts that are tough to swallow as is. A hard cap keeps player and team collusion in check. Owners like a vehicle that is cost contained.
 
chethejet said:
If Toronto under a scenario of 88 million in spending, signs Marner for 11 million, how much does that drive up costs for players in other markets. The problem with a soft cap is the actual comparable costs are not league wide but team to team. Teams are dealing with contracts that are tough to swallow as is. A hard cap keeps player and team collusion in check. Owners like a vehicle that is cost contained.
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For a player in his RFA years like Marner a huge contract becomes a precedent that players can point to in arbitration to get bigger rewards. The more big contracts RFAs get, the more precedent for larger awards is created which drives up RFA contracts across the board. Now said RFA becomes a UFA and teams bid to get them however the bigger their contract in their RFA years, the larger the contract in the UFA years will be, once again driving up prices for all markets. It’s precisely what happened in the uncapped system which saw player salaries skyrocketing and that was back when RFAs still made peanuts and UFA age was 31. It would be even more accelerated and pronounced under the current system where RFAs are getting top dollar contracts and UFA age is earlier.

Tl;dr It’s all about establishing precedent and a baseline value that all other players/agents will use as leverage to get bigger contracts from other teams, not just yours.
 
DudeWhereIsMakar said:
Kucherov is left with $7,289,128. Tyler Seguin is left with $8,113,607. Mark Stone is left with $7,247,317.

With Toronto Austin Matthews makes $7,247,317. But if Matthews was with Vegas he'd make $9,658,042 after taxes. So Nikita Kucherov is making more money than him, technically Tyler Seguin is the highest paid player in the league.

I always found long-term deals somewhat dumb because half-way through those deals the deal looks cheap. If they signed multiple bridge deals then they have the potential to make more money.
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Correct me if I'm wrong, but doesn't Matthews get 90%+ of his money taxed in Arizona since it comes in the form of signing bonuses, which actually leaves him with a lot more after tax cash?
 
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filinski77 said:
Correct me if I'm wrong, but doesn't Matthews get 90%+ of his money taxed in Arizona since it comes in the form of signing bonuses, which actually leaves him with a lot more after tax cash?
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Can't answer that, I could give many examples such as place of residence and place of work, sometimes they hire an account and/or lawyer to find loopholes into saving money. It's complicated really. But on paper that's what they'd receive.
 
Machinehead said:
A luxury cap system has worked very well in baseball.
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Has it? The accusations from the mlb PA are that teams are not spending and why quality pitches like Keuchel are waiting for deals 1/3 of the way into a season seems strange.

There are differences in each sport. MLB only 10 teams make the playoffs and only 8 play a series as 2 are one and done. So unless you’re going to really contend then owners opt to not spend the money to be average. NHL half the teams make the playoffs so spending likely increases your odds to make it.

NBA has a luxury tax system. Are the smaller markets like SA, Utah, Milwaukee, Indiana spending? But basketball is star driven and if those stars opt to leave they have full control and will leave for another team.

Could a luxury tax work in hockey. Depends on your POV. For pure revenue growth it would. From a competitive POV likely no as we’d see the small markets not spend anything.
 
StreetHawk said:
Has it? The accusations from the mlb PA are that teams are not spending and why quality pitches like Keuchel are waiting for deals 1/3 of the way into a season seems strange.

There are differences in each sport. MLB only 10 teams make the playoffs and only 8 play a series as 2 are one and done. So unless you’re going to really contend then owners opt to not spend the money to be average. NHL half the teams make the playoffs so spending likely increases your odds to make it.

NBA has a luxury tax system. Are the smaller markets like SA, Utah, Milwaukee, Indiana spending? But basketball is star driven and if those stars opt to leave they have full control and will leave for another team.

Could a luxury tax work in hockey. Depends on your POV. For pure revenue growth it would. From a competitive POV likely no as we’d see the small markets not spend anything.
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The small markets are already not spending anything.

Baseball absolutely has their issues, don't get me wrong, but it has the most parity in North American sports.
 
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