Luxury Tax System

[stevkrause 1,247]

Yes, they either need to get rid of the cap floor, or get rid of the teams that aren't performing well enough to afford it.

But that still doesn't change the simple fact that right now, only the Wings, Toronto, Montreal, and the Rangers are really making enough money to afford a luxury tax system. But most teams aren't that healthy. It wouldn't do any good to put money in the pockets of struggling teams if that money comes from teams that can't really afford it. And if the teams that can afford it start taking talent from teams that can't, teams that are growing like Washington, Pittsburgh, LA, Colorado might become less successful and start losing revenue.

And then you require teams to spend more to get revenue sharing, and spend more than they receive from revenue sharing. It looks like no more than an across-the-board spending increase without any increase in revenue to support it. Higher spending doesn't guarantee higher success on the ice, and even if it did it doesn't guarantee an equal or greater amount of increased revenue. For one thing, on-ice success is a finite resource. If one team gets better, another team gets worse.

The current system isn't perfect, because teams are still allowed (and in some cases forced) to spend more than they can afford. And some teams just don't seem capable of making decent revenue. Revenues have been growing, but spending is growing just as fast (technically, a little faster since the players share % has also been growing), and we still need abit more growth. Those things need to be addressed before loosening controls on spending.

I know it sucks fighting the cap every year, but at least we're pretty good at it.

I think there are more teams than you realize that are able to spend more (Detroit, Toronto, New York, Montreal, New Jersey, Vancouver, Boston, Calgary, Ottawa, Philadelphia and maybe Chicago, San Jose, Pittsburgh and Washington depending on how they're playing and the attendance they are generating) and I only proposed being able to go 10% over the cap and matching that dollar for dollar into revenue sharing, that would be one more big contract or 2 at most if a team utilizes the salary cap franchise tag buffer AND the full luxury tax overage, in reality, it would probably only actually equate to one more top 6 forward or one more top 4 d-man to a team and because of that additional revenue, one of the lower teams may be able to afford one more top 6 forward or one more top 4 dman as well...

I think we're all getting caught up on semantics, like I said all along, my proposal isn't perfect, but it's a lot better than the current situation in place and I think it's a step towards a better league...

However, it is fun to watch Holland and co. work their magic within the cap and still ice such an amazing team... that is almost a game in itself...

[mmamolo 287]

I think there are more teams than you realize that are able to spend more (Detroit, Toronto, New York, Montreal, New Jersey, Vancouver, Boston, Calgary, Ottawa, Philadelphia and maybe Chicago, San Jose, Pittsburgh and Washington depending on how they're playing and the attendance they are generating) and I only proposed being able to go 10% over the cap and matching that dollar for dollar into revenue sharing, that would be one more big contract or 2 at most if a team utilizes the salary cap franchise tag buffer AND the full luxury tax overage, in reality, it would probably only actually equate to one more top 6 forward or one more top 4 d-man to a team and because of that additional revenue, one of the lower teams may be able to afford one more top 6 forward or one more top 4 dman as well...

I think we're all getting caught up on semantics, like I said all along, my proposal isn't perfect, but it's a lot better than the current situation in place and I think it's a step towards a better league...

However, it is fun to watch Holland and co. work their magic within the cap and still ice such an amazing team... that is almost a game in itself...

We actually are talking about a fairly substantial amount of money per team that could maximize this system though. 20% of a franchise player salary - say that player's salary is in the $6-7M range, so 20% of 6M is $1.2M. Then 10% over the cap is just under 6M and then they have to match it. So we're talking approximately $13M dollars.

[cmonster 11]

The input on this is amazing. But why worry about this at all? Most owners are businessman. Fairly proficient with budgets, profit margins, etc. Why can't we let them decide how much they want to spend? If Owner A wants to spend 20 million on payroll and thoroughly embarrass himself, let him. If Owner B wants to spend 100 million on payroll, let him. Let owners decide what they are comfortable spending. Personally, I admire people like the Lakers and the Yankees. They are competitive. They want to win and back it up with the money. I think it shows a commitment to winning. Capitalism is still allowed, right?

[stevkrause 1,247]

We actually are talking about a fairly substantial amount of money per team that could maximize this system though. 20% of a franchise player salary - say that player's salary is in the $6-7M range, so 20% of 6M is $1.2M. Then 10% over the cap is just under 6M and then they have to match it. So we're talking approximately $13M dollars.

But if a team is turning a MASSIVE profit, why shouldn't they be allowed to exercise that option?

The input on this is amazing. But why worry about this at all? Most owners are businessman. Fairly proficient with budgets, profit margins, etc. Why can't we let them decide how much they want to spend? If Owner A wants to spend 20 million on payroll and thoroughly embarrass himself, let him. If Owner B wants to spend 100 million on payroll, let him. Let owners decide what they are comfortable spending. Personally, I admire people like the Lakers and the Yankees. They are competitive. They want to win and back it up with the money. I think it shows a commitment to winning. Capitalism is still allowed, right?

I think there should be checks and balances in place as well though - a league where the same teams are the only ones competing year in and year out isn't as exciting... this is why I like the idea of a soft cap.

I think a hard cap punishes teams who do it right, but I think no cap punishes teams that simply don't have the population or gate to compete with every other team, but it doesn't mean their fans aren't just as intense or passionate and this is what led to great teams like the Whalers and Nordiques going away in the first place and that is not good for the game either...

[cusimano_brothers 1,655]

From Washington Post:

Wizards owner Ted Leonsis has been fined $100,000 by the NBA for his comments about possible changes to the league's salary cap.

...

...

"In a salary cap era -- and soon a hard salary cap in the NBA like it's in the NHL -- if everyone can pay the same amount to the same amount of players, its the small nuanced differences that matter," said Leonsis, who also owns the NHL's Capitals.

...

[stevkrause 1,247]

From Washington Post:

From the horses mouth... well, if this is indeed the general consensus of majority of the NHL owners, then this whole topic is moot I guess...

[cusimano_brothers 1,655]

From the horses mouth... well, if this is indeed the general consensus of majority of the NHL owners, then this whole topic is moot I guess...

However, with Leonsis you're dealing with the other end of the horse.

[stevkrause 1,247]

However, with Leonsis you're dealing with the other end of the horse.

hahaha, well said

[Buppy 1,720]

I think there are more teams than you realize that are able to spend more (Detroit, Toronto, New York, Montreal, New Jersey, Vancouver, Boston, Calgary, Ottawa, Philadelphia and maybe Chicago, San Jose, Pittsburgh and Washington depending on how they're playing and the attendance they are generating) and I only proposed being able to go 10% over the cap and matching that dollar for dollar into revenue sharing, that would be one more big contract or 2 at most if a team utilizes the salary cap franchise tag buffer AND the full luxury tax overage, in reality, it would probably only actually equate to one more top 6 forward or one more top 4 d-man to a team and because of that additional revenue, one of the lower teams may be able to afford one more top 6 forward or one more top 4 dman as well...

I think we're all getting caught up on semantics, like I said all along, my proposal isn't perfect, but it's a lot better than the current situation in place and I think it's a step towards a better league...

http://www.forbes.com/lists/2009/31/hockey-values-09_NHL-Team-Valuations_Revenue.html

That's from the 08-09 season, so most revenues would be up from there. But the cap has gone up as well. Yes, there are a few more teams that could afford to spend over the current cap, but still few who could afford to spend millions more.

But that's really beside the point. I don't see what's 'better' about this proposal. In fact, it's really no different than it is now. It's still a hard cap, just harder to reach. Parity would probably suffer to some degree. Maybe generates more for revenue sharing, but any benefit from that is negated by requiring teams to spend more.

How exactly is it any better beyond giving Detroit a minor competetive advantage?

The input on this is amazing. But why worry about this at all? Most owners are businessman. Fairly proficient with budgets, profit margins, etc. Why can't we let them decide how much they want to spend? If Owner A wants to spend 20 million on payroll and thoroughly embarrass himself, let him. If Owner B wants to spend 100 million on payroll, let him. Let owners decide what they are comfortable spending. Personally, I admire people like the Lakers and the Yankees. They are competitive. They want to win and back it up with the money. I think it shows a commitment to winning. Capitalism is still allowed, right?

I think the pre-cap years proved that owners aren't all that smart. I think many owners probably see their teams as more than just a business. They want to win as well. Then there's also the fact that winning is generally good for business.

So owners may feel that they need to spend more to be competetive, even if they can't afford it. Either they want to win badly enough, or they feel winning will bring in enough extra revenue. But spending more money is only part of the equation. You also need to spend wisely; more wisely than most everyone else actually, and there's only so much success to go around.

[stevkrause 1,247]

http://www.forbes.com/lists/2009/31/hockey-values-09_NHL-Team-Valuations_Revenue.html

That's from the 08-09 season, so most revenues would be up from there. But the cap has gone up as well. Yes, there are a few more teams that could afford to spend over the current cap, but still few who could afford to spend millions more.

But that's really beside the point. I don't see what's 'better' about this proposal. In fact, it's really no different than it is now. It's still a hard cap, just harder to reach. Parity would probably suffer to some degree. Maybe generates more for revenue sharing, but any benefit from that is negated by requiring teams to spend more.

How exactly is it any better beyond giving Detroit a minor competetive advantage?

I think the pre-cap years proved that owners aren't all that smart. I think many owners probably see their teams as more than just a business. They want to win as well. Then there's also the fact that winning is generally good for business.

So owners may feel that they need to spend more to be competetive, even if they can't afford it. Either they want to win badly enough, or they feel winning will bring in enough extra revenue. But spending more money is only part of the equation. You also need to spend wisely; more wisely than most everyone else actually, and there's only so much success to go around.

The way I think it is better, is that it encourages player development and offers incentive to retaining your own high level players, while still making it able to add a piece or 2, or have some wiggle room for call ups while still being "right up against the cap" - Also, the revenue it would generate for profit sharing would not automatically equate to teams spending more - I am certain that more often than not, there would be a surplus left over and that would be distributed as just pure revenue... the point of forcing teams to spend more off of what they initially claim, is just that, a way to force owners to put the money back into their team... then any surplus, can go directly back into their pockets and no no team is FORCED to take the luxury tax money, so it gives incentive to use it properly.

I agree 100% that the pre-cap era proved that owners could not be trusted to be responsible in a wide open format, but I think a little more flexibility (soft cap) would allow teams to exercise more risk/reward management, while still having a check and balance in place...