News Article: Tying the Salary Cap to the Canadian Dollar Unfair

[deeshamrock]

http://nypost.com/2015/01/31/loonie-bin-tying-nhl-salary-cap-to-canadian-dollar-unfair/

An article which has some info on the forward forcasting of the Canadian dollar to the Salary Cap. points out other factors. Also how the NHLPA will vote on the escrow issue that is a part of that.

But the Canadian dollar closed on Friday at a six-year low of 78.67 cents U.S. Every cent the dollar declines represents an increase in escrow losses for players who forfeited approximately 12 percent of their pay to escrow last year, had 14 percent of their salaries withheld the first half of the season and are having 16 percent withheld this quarter.

Which is why it is patently absurd to assume the NHLPA is going to vote to adopt the 5-percent escalator next season. And though it is true the union and the league have to both agree not to implement the inflator, it is difficult to imagine Sixth Avenue insisting on increasing the cap if the players vote against it.

Note- Bettman said a little while back if the CD was .80 the CAp would be 71.7 next year.
well the CD fell again it's now .78...

Click to read more...

 

[BigBrown]

http://nypost.com/2015/01/31/loonie-bin-tying-nhl-salary-cap-to-canadian-dollar-unfair/

An article which has some info on the forward forcasting of the Canadian dollar to the Salary Cap. points out other factors. Also how the NHLPA will vote on the escrow issue that is a part of that.





Note- Bettman said a little while back if the CD was .80 the CAp would be 71.7 next year.
well the CD fell again it's now .78...

And that was assuming the players accepted the 5-percent escalator, was it not?

edit: just read the article... wow, potentially 68M or lower cap would be pretty crushing for this team.

 

[KINGS17]

Read the article. What a shock to find Larry Brooks whining about the players not being able to pick where they are going to play and still get paid the max they can get. Gee, that's too bad.

Everyone knew how the cap was to be calculated when the CBA was signed, right? If you are a player and you want to stay in Chicago, New York or LA, you take less money. If you want money you pack your bags and you're off to Miami, Winnipeg, or Edmonton. It's that simple, and it's the individual player's choice.

Some teams like Chicago, LA, etc. are going to have to make some tough decisions. Everyone was crowing over on the Chicago board about the Kane and Toews deals. Hope those two and Keith enjoy playing with a bunch of minimum salary players.

Given the uncertainty of the cap growth going forward, it would be foolish of Dean to accept the idea that Toews is the standard for any negotiations with Kopitar.

 

[kingsfan]

Read the article. What a shock to find Larry Brooks whining about the players not being able to pick where they are going to play and still get paid the max they can get. Gee, that's too bad.

Everyone knew how the cap was to be calculated when the CBA was signed, right? If you are a player and you want to stay in Chicago, New York or LA, you take less money. If you want money you pack your bags and you're off to Miami, Winnipeg, or Edmonton. It's that simple, and it's the individual player's choice.

Some teams like Chicago, LA, etc. are going to have to make some tough decisions. Everyone was crowing over on the Chicago board about the Kane and Toews deals. Hope those two and Keith enjoy playing with a bunch of minimum salary players.

Given the uncertainty of the cap growth going forward, it would be foolish of Dean to accept the idea that Toews is the standard for any negotiations with Kopitar.

This.

I think Kopitar's agent is going to try to use comparibles like Toews. If I'm DL I focus a bit more on what I think Kopitar will get in free agency if he gets that far. Do I really think someone is going to give Kopitar a deal worth a cap hit of $10.5 million? Maybe, but I'd have my doubts, especially in a year where the cap could be falling. I'd likely shoot for $9 million and leave some wiggle room to go to $9.5 million. Beyond that, other options would have to be strongly considered.

Also, tying the cap to the Canadian dollar is not unfair. The NHL has seven of it's 30 NHL teams in Canada, or just over 23 per cent. There's a lot more than 23 per cent of league revenues coming out of Canada however.

If Brooks wanted something more legit to complain about being unfair, this would work better:

http://www.thestar.com/sports/leafs/2015/01/25/mlse-blue-jays-deal-with-dollar-dive.html

Without adding a single forward, goalie or defenceman, the Toronto Maple Leafs saw the potential cost of their payroll jump by more than $1 million this past week.
Much of that climb came in less than 24 hours. The reason? A sudden two-cent plunge in the value of the Canadian dollar, after the Bank of Canada shocked investors by cutting a key interest rate on Wednesday.
With the loonie down by almost 20 per cent against the U.S. dollar over the past year, the cost of doing business for Canadian teams in the NHL, NBA, Major League Baseball and MLS has been climbing steadily. That’s because under their collective agreements players get paid in U.S. dollars. The majority of revenue, however, is in Canadian currency.
“That’s a 20 per cent addition to the wage bill for every Canadian NHL team, the Raptors and the Blue Jays,” said Glen Hodgson, chief economist at the Conference Board of Canada, an Ottawa-based economics think tank.
When those wage bills are in the tens of millions of dollars, that adds up to a whole lot more than chump change. For the Toronto Blue Jays , whose 2014 payroll was around $137 million (U.S.), the loonie’s fall over the last year equates to more than $25 million. For the Raptors and Leafs, both around the $70-million mark, it’s an extra $14 million each.

 

[Chain]

http://nypost.com/2015/01/31/loonie-bin-tying-nhl-salary-cap-to-canadian-dollar-unfair/

An article which has some info on the forward forcasting of the Canadian dollar to the Salary Cap. points out other factors. Also how the NHLPA will vote on the escrow issue that is a part of that.





Note- Bettman said a little while back if the CD was .80 the CAp would be 71.7 next year.
well the CD fell again it's now .78...

Chicago's probably going to feel it even worse considering they have two players taking up a greater % of the salary cap than anyone in the league this side of Weber.

 

[Raccoon Jesus]

Thanks for sharing.

I'd also add that it's not just the Chicagos/LAs that are going to feel this. I've pointed out in other threads that there is only finite cap space to go around and there are a lot of teams that are going to run into surprising trouble sooner rather than later. I know this is HF, but people singing the praises of teams like Buffalo and Edmonton where the talent is all coming in at the exact same time are going to be shocked when those teams get dismantled sooner rather than later. If their players perform well, they will get rewarded.

But agree with the above--players are going to have to accept smaller contracts if they want to be competititve. That's not going to go over well.

Edit: yeah, counting bonus cushions and all via NHLnumbers, 17 teams have cap in excess of 68 million, with another 7 or so teams just under. All this doom and gloom about the Kings and Hawks from outsiders is hilarious when some completely unsuccessful teams are about to hit the grinder too.

 

[KINGS17]

I don't know if the Kings can look at this as an opportunity, but some franchise will improve their roster due to this situation.

Take the Kings for example, would you rather sign Williams for $25M over 5 years, which is what he is rumored to want, or sign Saad to a similar deal that the Blackhawks can't match? The answer is obvious.

This puts a lot of downward pressure on the market for a player like Williams, that is unless he is willing to play for a team that isn't competitive in a less desirable location. Then again, why would a team like that give him $25M over 5 years. The only team I see that is up and coming that might be a good fit for a deal like that would be the Islanders or maybe the Flames. Still, if I was GM of either of those teams I sure wouldn't tie up that amount of cap space for 5 years.

 

[kingsfan]

I don't know if the Kings can look at this as an opportunity, but some franchise will improve their roster due to this situation.

Take the Kings for example, would you rather sign Williams for $25M over 5 years, which is what he is rumored to want, or sign Saad to a similar deal that the Blackhawks can't match? The answer is obvious.

What would the compensation be for that?

 

[Raccoon Jesus]

I don't know if the Kings can look at this as an opportunity, but some franchise will improve their roster due to this situation.

Take the Kings for example, would you rather sign Williams for $25M over 5 years, which is what he is rumored to want, or sign Saad to a similar deal that the Blackhawks can't match? The answer is obvious.

This puts a lot of downward pressure on the market for a player like Williams, that is unless he is willing to play for a team that isn't competitive in a less desirable location. Then again, why would a team like that give him $25M over 5 years. The only team I see that is up and coming that might be a good fit for a deal like that would be the Islanders or maybe the Flames. Still, if I was GM of either of those teams I sure wouldn't tie up that amount of cap space for 5 years.

That's the thing; any contending team that is going to give that up for Williams is going to lose something else. Maybe they would feel his Game 7 heroics are worth it, can't blame them--but yes, there is some opportunity cost there now as well. And all these up and coming teams are going to face it sooner rather than later--we're lucky we won TWICE in our window when teams like St. Louis, TB, and the Islanders have yet to really cash in before their players either price themselves out or they sacrifice some of the auxillary pieces that help them be so successful currently while their youth is on cheapie deals.

Those cheap skilled top round picks become pricey vets quickly. look at the Pens as an example of juggling moving parts season after season around an expensive-but-effective core.

 

[KINGS17]

What would the compensation be for that?

I'm not sure, but it's no where near the max. Chicago will likely lose Saad unless he is willing to take less money than he can command on the open market.

Good capologists for less competitive teams are going to start looking at other teams with cap problems and when some of their better players hit RFA status, and plan accordingly.

Okay, I looked it up. Last year signing an RFA to a contract with a cap hit of $5M would have cost you a 1st and a 3rd. What GM doesn't do that in Saad's case? We are going to be in the same boat with Toffoli if we aren't careful, and this is why Dean just can't give Williams whatever he wants.

Dean's #1 priorities must have shifted at this point. Right now, if I were him, my #1 priorities are re-signing Toffoli and Pearson, and getting as much cost certainty with them as I can. After that Williams and Stoll get what is left over if they want to stay. That's another reason I think trading Williams at the deadline is looking more and more like a good idea.

 

[kingsholygrail]

Why pay US dollars if you're gonna tie your budget to another currency? I don't understand that really.

 

[Chain]

I'm not sure, but it's no where near the max. Chicago will likely lose Saad unless he is willing to take less money than he can command on the open market.

Good capologists for less competitive teams are going to start looking at other teams with cap problems and when some of their better players hit RFA status, and plan accordingly.

Okay, I looked it up. Last year signing an RFA to a contract with a cap hit of $5M would have cost you a 1st and a 3rd. What GM doesn't do that in Saad's case? We are going to be in the same boat with Toffoli if we aren't careful, and this is why Dean just can't give Williams whatever he wants.

Dean's #1 priorities must have shifted at this point. Right now, if I were him, my #1 priorities are re-signing Toffoli and Pearson, and getting as much cost certainty with them as I can. After that Williams and Stoll get what is left over if they want to stay. That's another reason I think trading Williams at the deadline is looking more and more like a good idea.

I'm doubtful we'd ever get Saad, but if we could sign him while resigning Kopitar, TT and TP, I'd hate to do it but I would let Williams go and give up a 1st and a 3rd in a heart beat.

 

[KINGS17]

Thanks for sharing.

I'd also add that it's not just the Chicagos/LAs that are going to feel this. I've pointed out in other threads that there is only finite cap space to go around and there are a lot of teams that are going to run into surprising trouble sooner rather than later. I know this is HF, but people singing the praises of teams like Buffalo and Edmonton where the talent is all coming in at the exact same time are going to be shocked when those teams get dismantled sooner rather than later. If their players perform well, they will get rewarded.

But agree with the above--players are going to have to accept smaller contracts if they want to be competititve. That's not going to go over well.

Edit: yeah, counting bonus cushions and all via NHLnumbers, 17 teams have cap in excess of 68 million, with another 7 or so teams just under. All this doom and gloom about the Kings and Hawks from outsiders is hilarious when some completely unsuccessful teams are about to hit the grinder too.

It would be interesting to see if someone could do an analysis of given a certain cap number, say $70M, how much money is available league wide to sign the 250 (I think this is what Brooks' article said) or so UFAs/RFAs that will hit the market when the season ends.

The answer may shock some players and their agents.

 

[KINGS17]

I'm doubtful we'd ever get Saad, but if we could sign him while resigning Kopitar, TT and TP, I'd hate to do it but I would let Williams go and give up a 1st and a 3rd in a heart beat.

If Dean could swing that, he wouldn't even call Williams' agent.

 

[SFKingshomer]

I think the Hawks will try to move Sharp and Bickell so they can lockup Saad. I'm with you on trading Williams if he wants more than 4.5 on a 3 year deal. I still hate the Gaborik contract...

 

[Chain]

If Dean could swing that, he wouldn't even call Williams' agent.

I see what you did there.

Hell, if Dean thought he could swing that maybe he should just try and trade Williams now for a draft pick to soften the blow of giving a 1st/3rd up for Saad.

Still doubtful we'd get Saad though. I don't see Chicago letting him go even if the cap drops a bit.

 

[Raccoon Jesus]

It would be interesting to see if someone could do an analysis of given a certain cap number, say $70M, how much money is available league wide to sign the 250 (I think this is what Brooks' article said) or so UFAs/RFAs that will hit the market when the season ends.

The answer may shock some players and their agents.

I'll see if I can swing that tonight with an archived version of capgeek...not sure NHLnumbers has what I'd be looking for. But agree, I think a lot of teams and players are REALLY going to feel it this offseason, teams low in payroll/cap can't hide forever.

 

[KINGS17]

I see what you did there.

Hell, if Dean thought he could swing that maybe he should just try and trade Williams now for a draft pick to soften the blow of giving a 1st/3rd up for Saad.

Still doubtful we'd get Saad though. I don't see Chicago letting him go even if the cap drops a bit.

See, great minds. We're on the same page. It doesn't have to be Saad necessarily either. Could be any young winger Dean feels he could land for $5M or less on a 5 year deal that improves his roster.

This year seems to have too many hurdles. Get younger, get better.

I will also remind everyone as the Kopitar negotiations approach that he has scored five, count'em five 5-on-5 goals this season. That is not the stuff of $9M contracts IMO.

 

[Raccoon Jesus]

If the cap were 69 million next year, there would be $514,056,549 in cap space. That's a blank slate though as things are right now--in other words, there are expiring contracts, etc. people would need to fill rosters.

RFA Forwards: 218, about 2/3 prominent, 144
UFA Forwards: 150, I'd say about 2/3 are prominent, so about 100.
RFA Defensemen: 115, only half prominent, 60ish
UFA Defensemen: 78, only about half are prominent though, so let's say 40.
RFA Goalies: 45, only about half prominent--23
UFA Goalies: 28, about 20 prominent

I only say prominent meaning I'd imagine these names get resigned, just total speculation on my part though.

I don't know how many empty slots per team and I'm off to a party so maybe I'll look that up later The team stuff should be semi-easy to do with an archived version of capgeek but then you have to imagine not all empty roster slots will be signings so it's a lil more rigorous than it looks at first glance. Regardless, there are a lot of spots up for grabs and not nearly that much money.

 

[SFKingshomer]

7.5-8 for Kopitar is about fair. The Getzlaf deal looks great right about now

 

[Herby]

So all the people who were saying that the new Canadian TV deal was going to be great and raise the cap to almost $80 million by 2017 are suddenly saying that it's unfair because the Loonie is in the toilet?

Businesses in all all types of industries have to adjust to market changes and ebbs and flows. The Kings are not going to be in cap hell because the cap is going to be 71 instead of 74 or 75, they are going to be in cap hell because they made some poor decisions in regards to contracts. Or more specifically a bad decision. Chicago was in the same boat in 2010.

 

[likid]

I will also remind everyone as the Kopitar negotiations approach that he has scored five, count'em five 5-on-5 goals this season. That is not the stuff of $9M contracts IMO.

I can also remind you that Kopitar has no need to sign new contract this summer. He can wait till next summer if he want to. And he will if he'll get a feeling that Lombardi is not show him enough respect in negotiations.

Kopitar is the one, who will have all aces in his hands. Not Lombardi.

 

[KINGS17]

I can also remind you that Kopitar has no need to sign new contract this summer. He can wait till next summer if he want to. And he will if he'll get a feeling that Lombardi is not show him enough respect in negotiations.

Kopitar is the one, who will have all aces in his hands. Not Lombardi.

What's the point of signing Kopitar if it cripples the team's chances to contend? Kopitar is a fine player. How much respect needs to be shown to a guy that has scored five 5-on-5 goals through 50 games this season?

I agree with SFKingshomer. $7.5M - $8M cap hit for 5 or 6 years is showing plenty of respect for that type of performance. Don't get me wrong he is still a great performer. I don't see why the Hawks making a mistake on the Toews' contract means Lombardi should make the same mistake with Kopitar's contract.

Put another way, why should Kopitar get more than Getzlaf?

 

[Arrhizal]

Yes, I do think that he will love a 700k raise after winning two cups and essentially being a PPG player in the playoffs. Lol.

 

[KINGS17]

Yes, I do think that he will love a 700k raise after winning two cups and essentially being a PPG player in the playoffs. Lol.

Yep, 5 goals, 21 assists. He played well, and also had a lot of help. The cap is an element in determining his raise. When he is on, Kopitar and Doughty are the Kings best players, but I think it has been shown that for the Kings to win, they need to have enough cap space to carry a very good #2 center that shoulders a good portion of the offensive load.

Just how much of a raise does Kopitar deserve? What if the Kings don't make the playoffs this season, in large part due to his poor performance in early season games?