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Capamatics


Wait a minute here. Our NHL Lockout problem is simple matheCapamatics. Here – have a look:

Total revenue made last year: $3,300,000,000. If we stick with that as assumed profits this year…

Players’ salaries this year per salary caps plus bonuses (thanks, Capgeek!) are $1,853,037,118 / 56.15% / $2,701,220.29 average per player.

Difference of total team revenue – salaries = $1,446,962,882 / 43.85% of total revenue / $48,232,096.07 per team.

Forgetting for a moment this is the system designed by the NHL/ownership seven years ago, you have to agree it is not working properly if there are teams that are losing $M’s each year. And all of the issue cannot simply be bad management. Even the players agree they are willing to give up some revenue to assist teams that are operating under financial distress.

So, you can go ahead and go to a 50/50 split of revenue. For the players, that means they get a total hit against the cap of -$203,037,118 / -6.15% / -$295,972.48 average per player.

And for the owners, they receive +$203,037,118 / +6.15% / +$6,767,903.93 per team if it is split evenly 30 ways. I’m sorry – what did you say? I said a whopping +$6,767,903.93 per team. That’s in the ball park of one Zdeno Chara to Boston, or a Brad Richards to the New York Rangers. Which financially distressed team is that going to fix? How about none. Even reversing roles and going down to a 43% split for players, teams under last years’ numbers would only receive an average of around $13.5M this year. (Parise or Suter plus Backstrom for a Minnesota.)

So folks, we fans are getting locked out of our favorite sport while the NHL ownership demands the players give back an amount of money to ass/u/medly fix team financial issues that won’t fix their financial issues.

The NHLPA is absolutely correct – you have to do something to fix the way revenue is shared in order to strengthen teams overall. You cannot just take money back from the players or we will be in this same spot when the next CBA expires. And who the hell wants to do that a fourth time?

So what can they do? Here is our suggestion at OGA. Honor the contracts you wrote and signed with the players. No do overs. NHL ownership, you did that already last time and it did not fix your woes. “But how?” they would ask…

If the players drop to 50% from now through the life of the agreement, they would begin next year with an average cap of $55M per team. “Wait a minute – how are they going to honor our contracts?” players would angrily ask…

Teams would now fall under a hard and soft cap. Anyone at $55M and below (NSH, COL, FLA, STL, DAL, OTT, NYI and PHX) do not have to do anything as they meet the hard cap requirement. Where you have a Dallas Stars team with Jamie Benn as an RFA, you are given a chance to sign him and, if you bust the cap, then you, too, fall under the soft cap provisions below.

For all other teams not listed in parentheses above, you have a soft cap for anything above the hard cap of $55M. The total here is about a whopping $169M (after which about $34M / $1.1M per team they took back from the players who dropped to 50% of HRR is retained). The soft cap remains on teams’ books until it is either wiped out, or the cap evens things back out due to continued revenue growth with the following stipulations:

1. The soft cap may be retained in part or its entirety by teams until such time as it is zeroed out or the growing cap consumes it. But any amount retained in a soft cap is matched 100% as a soft cap tax which goes into an economically distressed team fund distributed by the NHL to its owners per the Commissioner.

2. You can buyout a player. If you buy him out without his consent, he receives 100% of the contract over the remaining years of term and that buyout carries no hit against the soft cap. If you buy him out with his consent, he receives 75% of the contract over the remaining years of term and that does not count against the soft cap any more.

3. If a bought out player signs with another team, the losing team loses all financial responsibility for his contract

4. You can trade out a player. If you trade him to another team, they assume 100% of his contract and your team loses the soft cap hit. If, however, both teams agree to mutually assume some portion of the contract as approved by the NHL, then there may be some residual soft cap hit for the losing team.

5. If a player’s contract expires and his team was under a hard and soft cap hit, his AAV disappears from the team’s soft cap. But if they are operating with a soft cap, they cannot sign another veteran player for the same cost and retain the soft cap hit. They must instead bring up a prospect to fill the position.

6. All prospects are signed to a three year entry level deal for no more than 1/23rd of the team’s hard cap per season at the time the deal is signed. And entry level deals do not count against the overall salary cap.

7. And it would be incumbant upon the NHL to continue to find ways to financially grow the NHL. Examples could even include expanding by at least two teams to a minimum, even 16 teams per Conference.

Remember here that at it’s average 7.1% financial growth per year since 2004/5, if the NHL salary cap dropped from this season’s projected $70.2M to $55M, the current, pre-Lockout, projected $70.2M cap would be surpassed in Year 5 of a new CBA. (The numbers would be $55M, $58.9M, $63.1M, $67.6M and $72.4M.) While teams may have to pay a diminishing average of about $6M each into the luxury tax fund each year, their revenues would grow by greater amounts than that off of the 7% increase in HRR split and potentially, annually expanding revenues.

The answer, my friends, isn’t blowing in the wind of some huge negotiating gap. The fix requires a fair reduction in player salaries, luxury taxes/increased revenue sharing between teams and continued growth of NHL revenue. And that fix is gradual over the next five or so years.

So let’s be smart about this. Players give in to 50% of HRR with owners’ guarantees nobody loses anything they have already contracted for. Owners, take the 7%, keep your team like you have it now, pay those luxury taxes and profit sharing as required for the betterment of the league, and unlock the damn doors before those profits take another setback.

Both of you, give us our game back. The Capamatics just don’t show us a huge gulf that warrants this stoppage.

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