Brave New (Salary Cap) World, or How Stan Bowman "OZ"ed the NHL

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    Brave New (Salary Cap) World, or How Stan Bowman "OZ"ed the NHL

    What a strange Cap world we've seen this year.  A lot of attention had been paid too Orpik's deal around here because of Boychuk's impending UFA year, and there have been plenty of deals that look steep the way UFA deals always do in a competitive market.


    I don't know that enough attention has been paid to something stevegm has brought up a couple of times, and that I alluded to in another thread as the impact of a 50% vs. 57% cap.  Subban's deal is now the third highest cap hit in hockey.  Only the first and second overall pick in 2004 have higher hits.  Ovechkin is the only one who signed his deal under the old CBA - in 2008! after he scored 163 goals in his first three years in the league.  65 the year he signed.  Next year, Subban will drop to at least the 5th highest cap hit when Kane and Toews jump to $10.5M for the top of the leaderboard.


    The year the economics of the league were apparently whacked enough to warrant a lockout, the Cap was set to be $70.2M.  Two years later, it's $1.2M below that level. The NHL formula for the cap is a bit more complicated than Hockey Related Revenues/2 spilt 30 ways, but that simple calculation is still pretty telling.  If the current revenue level justify a $69M cap at 50%, they would justify a $78.67M cap at 57%.  Fortunately for the Bruins and their UFA/RFA situation next year, this story: 


    http://www.theglobeandmail.com/sports/hockey/globe-on-hockey/report-nhl-revenues-to-hit-record-37-billion/article19080171/" rel="nofollow">http://www.theglobeandmail.com/sports/hockey/globe-on-hockey/report-nhl-revenues-to-hit-record-37-billion/article19080171/)


    ...suggests that next year's Cap will jump $7M to $76M next year with the new TV money kicking in.  That's a healthy jump.  But it also says the healthy jump this year had a lot to do with the novelty stadium series games and an LA vs. NY final.  A Florida-Edmonton final could reverse that good fortune overnight, and the appeal of the winter classic/heritage classic hasn't exactly grown over time.  With a stable TV deal and successful gimmicks factored in/out of the projections for future years, it seems highly unlikely that the Cap rises $7M again any time soon.


    Compare this to 2012-13 - the highest the Cap has ever been.  That year, there were a total of 14 deals where one player was getting more than 10% of his team's cap, but only 5 of those deals would require the Cap to go up more than ~10% for the player's cap hit to drop into the 10% or less group.  Next year, with Kane and Toews, will be brand new territory both for the Cap limit and the max player cap hits.  Now, the new goofiness of these huge deals is partly based on knowing that next year will be fatter than this one - but these deals don't seem proportionate even to what we saw under the old CBA and they don't seem account for a Cap that grows more slowly because it takes that much more revenue to make a difference (basically, revenue now has to be $4.5B for the cap to be roughly similar to what it would have been at $4B). For the cap hit of Toews, Kane, or Subban to drop into that 10% range, the Cap will have to rise...30% and more.  It will have to hit $90M for Subban, and $105M for Kane and Toews.  A $36M jump per team.  Multiply by 30 - that would be a $1.08B jump in HRR.


    It may be possible; the Cap for next year is $30M more than the first cap year.  But I don't see any of these deals looking like a bargain at any time in the foreseeable future, and I am very curious to see if any team can win carrying one of these new deals.  And the first time one of these players suffers a Lecavalier like injury that turns him from superstar to mere mortal - able to play, but not dazzle - it will cripple a franchise for a generation.


    Are you not entertained?!?!

     
  2. You have chosen to ignore posts from bostonfan191646. Show bostonfan191646's posts

    Re: Brave New (Salary Cap) World, or How Stan Bowman

    In response to Bookboy007's comment:
    [QUOTE]

    What a strange Cap world we've seen this year.  A lot of attention had been paid too Orpik's deal around here because of Boychuk's impending UFA year, and there have been plenty of deals that look steep the way UFA deals always do in a competitive market.

     

    I don't know that enough attention has been paid to something stevegm has brought up a couple of times, and that I alluded to in another thread as the impact of a 50% vs. 57% cap.  Subban's deal is now the third highest cap hit in hockey.  Only the first and second overall pick in 2004 have higher hits.  Ovechkin is the only one who signed his deal under the old CBA - in 2008! after he scored 163 goals in his first three years in the league.  65 the year he signed.  Next year, Subban will drop to at least the 5th highest cap hit when Kane and Toews jump to $10.5M for the top of the leaderboard.

     

    The year the economics of the league were apparently whacked enough to warrant a lockout, the Cap was set to be $70.2M.  Two years later, it's $1.2M below that level. The NHL formula for the cap is a bit more complicated than Hockey Related Revenues/2 spilt 30 ways, but that simple calculation is still pretty telling.  If the current revenue level justify a $69M cap at 50%, they would justify a $78.67M cap at 57%.  Fortunately for the Bruins and their UFA/RFA situation next year, this story: 

     

    http://www.theglobeandmail.com/sports/hockey/globe-on-hockey/report-nhl-revenues-to-hit-record-37-billion/article19080171/" rel="nofollow">http://www.theglobeandmail.com/sports/hockey/globe-on-hockey/report-nhl-revenues-to-hit-record-37-billion/article19080171/" rel="nofollow">http://www.theglobeandmail.com/sports/hockey/globe-on-hockey/report-nhl-revenues-to-hit-record-37-billion/article19080171/)

     

    ...suggests that next year's Cap will jump $7M to $76M next year with the new TV money kicking in.  That's a healthy jump.  But it also says the healthy jump this year had a lot to do with the novelty stadium series games and an LA vs. NY final.  A Florida-Edmonton final could reverse that good fortune overnight, and the appeal of the winter classic/heritage classic hasn't exactly grown over time.  With a stable TV deal and successful gimmicks factored in/out of the projections for future years, it seems highly unlikely that the Cap rises $7M again any time soon.

     

    Compare this to 2012-13 - the highest the Cap has ever been.  That year, there were a total of 14 deals where one player was getting more than 10% of his team's cap, but only 5 of those deals would require the Cap to go up more than ~10% for the player's cap hit to drop into the 10% or less group.  Next year, with Kane and Toews, will be brand new territory both for the Cap limit and the max player cap hits.  Now, the new goofiness of these huge deals is partly based on knowing that next year will be fatter than this one - but these deals don't seem proportionate even to what we saw under the old CBA and they don't seem account for a Cap that grows more slowly because it takes that much more revenue to make a difference (basically, revenue now has to be $4.5B for the cap to be roughly similar to what it would have been at $4B). For the cap hit of Toews, Kane, or Subban to drop into that 10% range, the Cap will have to rise...30% and more.  It will have to hit $90M for Subban, and $105M for Kane and Toews.  A $36M jump per team.  Multiply by 30 - that would be a $1.08B jump in HRR.

     

    It may be possible; the Cap for next year is $30M more than the first cap year.  But I don't see any of these deals looking like a bargain at any time in the foreseeable future, and I am very curious to see if any team can win carrying one of these new deals.  And the first time one of these players suffers a Lecavalier like injury that turns him from superstar to mere mortal - able to play, but not dazzle - it will cripple a franchise for a generation.

     

    Are you not entertained?!?!

    [/QUOTE]

    Very good stuff. I agree, and I think 2/3 of the huge deals this off season will bite the team. Subban's deal continues the habs recent tradition, they're not built to be a cup contender. They invested poorly. Toews is such a rare talent that I don't mind the deal, but Kane? Please. Laughable.

    now that's from the hockey side of things, business wise, the clubs will likely never regret these deals. They will make money with these players, they won't win cups

     
  3. You have chosen to ignore posts from 50belowzero. Show 50belowzero's posts

    Re: Brave New (Salary Cap) World, or How Stan Bowman

    In response to bostonfan191646's comment:
    [QUOTE]

     

     

     They will make money with these players, they won't win cups

    [/QUOTE]


    The Hawks have already won 2 Cups with Toews and Kane and made it to a Western final or two with them as well, Montreal on the other hand seem to always have the horses to pull an upset but their SC will be the Eastern final from now on,they just don't have it. Subban is a good,could be great player for the Scabs and locking him up,at whatever the price,is just smart business.

     
  4. You have chosen to ignore posts from days-of-Orr. Show days-of-Orr's posts

    Re: Brave New (Salary Cap) World, or How Stan Bowman

    the Hawks & shabs had no choice to pay what we deem to be ridiculous sums for their top players....

    all teams capable of paying top dollar will be doing so too when the time arrives to pay their best....

    and so will the B'S....

    9-10 mil. per for top talent will look like a bargain very soon....

    “People think common sense is common - but it's not.”


     
     
  5. You have chosen to ignore posts from 50belowzero. Show 50belowzero's posts

    Re: Brave New (Salary Cap) World, or How Stan Bowman

    In response to days-of-Orr's comment:
    [QUOTE]

    9-10 mil. per for top talent will look like a bargain very soon....

    “People think common sense is common - but it's not.”


     [/QUOTE]


    Yes it will,it will seem like a bargain in 10 yrs. Hockey is turning into basketball,salary wise anyway. 

     
  6. You have chosen to ignore posts from islamorada. Show islamorada's posts

    Re: Brave New (Salary Cap) World, or How Stan Bowman

    Good analysis Book.  Correct in your hypothesis! The inflation variable is a key.  If by chance the pseudo economy of the US does take off into a boom period your calculations will be incorrect. Given the Feds inclination next year to raise the loan rate by a point, I would say inflation is coming.  Demographics of the Echo generation having children thus stimulating the economy.  Blah Blah Blah….If so the revenues of the NHL would get to benchmarks of 90B in a half the life of the CBA.  

    "Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes." Ben Franklin    Addendum: economic buffoonery like The Fed economists!  What debt? they ask.

     
  7. You have chosen to ignore posts from Bookboy007. Show Bookboy007's posts

    Re: Brave New (Salary Cap) World, or How Stan Bowman

    In response to 50belowzero's comment:
    [QUOTE]

    In response to bostonfan191646's comment:
    [QUOTE]

    Fiddy, the Hawks won with those players on more affordable contracts.  Now that Kane and Toews are $21/$76M, will they have the other horses to succeed?  I mean, in both of the years they won, one or both of those guys were the story because of what they hadn't done.  It was guys like Bickell and Shaw, Bolland and Buffetglien who picked up that slack, and guys like Sharp and Hossa who played key roles in the regular season as well.  And that's without mentioning the D.

    Days, the point of my post is that there seem to be a lot of people assuming $9-$10M is the new black, but I think they've overshot.  You sign a guy like Bergeron to $6.5M knowing that it's 10% today, but by the time the cap is $76M, it's only 8.5%.  You sign Subban at 13+% this year, 11.8+ next year if the cap does go to $76M....  Could be a long time before that deal is anything like a deal.

    The OP was long enough, but google how slowly the NFL cap increased over the last 5 years.  This year, their Cap went up huge, but over the last 5 years, it's been like 1%, 2%, 1.5%....  The NHL is not the NFL.

     

     They will make money with these players, they won't win cups

    [/QUOTE]


    The Hawks have already won 2 Cups with Toews and Kane and made it to a Western final or two with them as well, Montreal on the other hand seem to always have the horses to pull an upset but their SC will be the Eastern final from now on,they just don't have it. Subban is a good,could be great player for the Scabs and locking him up,at whatever the price,is just smart business.

    [/QUOTE]


    [object HTMLDivElement]

     
  8. You have chosen to ignore posts from islamorada. Show islamorada's posts

    Re: Brave New (Salary Cap) World, or How Stan Bowman

     
  9. You have chosen to ignore posts from 50belowzero. Show 50belowzero's posts

    Re: Brave New (Salary Cap) World, or How Stan Bowman

    In response to Bookboy007's comment:
    [QUOTE]

    Fiddy, the Hawks won with those players on more affordable contracts.  Now that Kane and Toews are $21/$76M, will they have the other horses to succeed?  I mean, in both of the years they won, one or both of those guys were the story because of what they hadn't done.  It was guys like Bickell and Shaw, Bolland and Buffetglien who picked up that slack, and guys like Sharp and Hossa who played key roles in the regular season as well.  And that's without mentioning the D.

     

     



    [/QUOTE]


    Its like the Jurgen Klinsmann comment , when he said why is it in America teams pay big contracts to players who's careers are on the downside in reference to Kobe Bryant,to me its sort of paying a big thank you for what the player has done for the franchise and the city.In Toews and Kanes instance i don't think they are anywhere near being on the downside of their careers and they are players who the Hawks wanted to see end their careers playing in Chicago.They are 2 players who while not entirely responsible for Chicago's Cup victories ,they did play a big part at various times through those playoff runs,with Kane winning the Conn Smythe.They are also two of the main reasons for making hockey relevant in Chicago again.

    With all this being said,it is true that by tieing these 2 players up for the foreseeable future,it also handcuffs the Hawks in fielding a deeper team and decisions will have to be made. Will they win another Cup while Kane & Toews are eating up a lot of cap space? Who knows,i personally don't think so because they don't have the goaltending. ;)

     
  10. You have chosen to ignore posts from Fletcher1. Show Fletcher1's posts

    Re: Brave New (Salary Cap) World, or How Stan Bowman

    Very interesting and I appreciate the research.  You hear a lot of talk about how this deal or that deal will look under the future cap, but here's some definitive evidence that the league (some teams at least) are trending towards the superstar contracts either way.  

    The gap between superstar money and average player money is growing greater in any scenario you look at.  The 3rd and 4th lines in Montreal need to cost less now, right?

    That superstar money has to come from somewhere, on the roster, and it seems like the most likely scenario is the 3rd and 4th forward lines.  That is, I think teams will make the sacrifice there, and we'll see more and more under-25 ELC/bridge deal guys playing on those lines.  Teams used to have lots of veterans within the bottom six forwards, but I wonder if Chris Kellys and Gregory Campbells are going to give way to youth within the bottom six.  Not because that is really a preferred solution, but because it is the least painful way to carve out some extra salary for your superstar contracts.

    The other cost of a Subban/Kane/Toews contract, are the guys that are kept off the roster because of it. Goodbye Brian Gionta; hello Hamilton Bulldogs.

     
  11. You have chosen to ignore posts from SanDogBrewin. Show SanDogBrewin's posts

    Re: Brave New (Salary Cap) World, or How Stan Bowman

    In response to bostonfan191646's comment: [QUOTE]

    They invested poorly. Toews is such a rare talent that I don't mind the deal, but Kane? Please. Laughable.

    now that's from the hockey side of things, business wise, the clubs will likely never regret these deals. They will make money with these players, they won't win cups [/QUOTE]

     

    Bowman was handed a goldmine but has also made some shrewd moves since.

    Invested poorly ? Hossa not being bought out will bite as that contract winds down but that is it.

    Take Kane out of the 2010 and 2013 Hawks line up NO AUTOCUP. 

    The whittle Irish drunk surely helped the business side. 

     
  12. You have chosen to ignore posts from jmwalters. Show jmwalters's posts

    Re: Brave New (Salary Cap) World, or How Stan Bowman

    In response to Fletcher1's comment:
    [QUOTE]

    That superstar money has to come from somewhere, on the roster, and it seems like the most likely scenario is the 3rd and 4th forward lines.  That is, I think teams will make the sacrifice there, and we'll see more and more under-25 ELC/bridge deal guys playing on those lines.  Teams used to have lots of veterans within the bottom six forwards, but I wonder if Chris Kellys and Gregory Campbells are going to give way to youth within the bottom six.  Not because that is really a preferred solution, but because it is the least painful way to carve out some extra salary for your superstar contracts.

    [QUOTE]

     My thoughts exactly....

     

     
  13. You have chosen to ignore posts from Sportsnutty. Show Sportsnutty's posts

    Re: Brave New (Salary Cap) World, or How Stan Bowman

    Look at the past SC winner's in the past five years: Kings, Hawks, Kings, Bruins, Hawks. What do all of these teams have in common? Depth. And depth along four lines. It's not only a trend, its a formula. Look at the Pens. Haven't reached the ECF since they started paying Crosby and Malkin $17.4 million.


    Lets GO BRUINS!!!

     
  14. You have chosen to ignore posts from Bookboy007. Show Bookboy007's posts

    Re: Brave New (Salary Cap) World, or How Stan Bowman

    Nutty - I was thinking about the Pens when I wrote the OP, and actually Crosby and Malkin were making $8.7M the year they won the Cup.  Considering that the Cap in 2008-09 was only $56.7M, each of those deals was taking up 15.34% of the Pens salary cap.  30.68% on two players.  Now, Crosby's hit is still $8.7M, but that's now only 12.6% and Malkin is 13.77% for a total of only 26.37% of their cap.  Additionally, the year the Wings won last, Lidstrom had the second highest cap hit in the league, and Datsyuk 13th.

    So...winning with huge cap hit players is possible.  But the jump to 8 digits feels like it might cross a line where the salaries are too far out ahead of the cap.

     

    Are you not entertained?!?!

     
  15. You have chosen to ignore posts from stevegm. Show stevegm's posts

    Re: Brave New (Salary Cap) World, or How Stan Bowman

    The Toews/Kane/Subban deals were made with a 69 million dollar cap.  If the cap goes up, these superstar deals will continue to defy common sense.

    I don't think the cap is going to go up every year for the next 5 years, but assuming it does...have a quick look at capgeek.  If it goes up, salaries will escalate accordingly(maybe moreso) which means teams will be no further ahead than they are now in terms of icing a team within the cap confines.

    Since about half the league doesn't even make the playoffs, and half of them are only interested in getting to the cap floor, what does that do?

    Detroit is ranked 16th best with around 5.5 mil to play with, but they still need to sign about 4 guys to ice a team.  Pretty much everyone whose a bit competitive is in the same boat.  Virtually pinned right to the wall.

    Since the stars get theirs...and more....teams will increasingly have to depend on entry level/AHL guys to round out the squad.

    More interesting to me than what the big dogs are signing for.....is the value moving forward for guys like Danny Paille and Greg Campbell.  Seems to me, the guys making  1.2-1.8 are on pretty thin ice.  

     
  16. You have chosen to ignore posts from stevegm. Show stevegm's posts

    Re: Brave New (Salary Cap) World, or How Stan Bowman

    In response to Bookboy007's comment:
    [QUOTE]

    Nutty - I was thinking about the Pens when I wrote the OP, and actually Crosby and Malkin were making $8.7M the year they won the Cup.  Considering that the Cap in 2008-09 was only $56.7M, each of those deals was taking up 15.34% of the Pens salary cap.  30.68% on two players.  Now, Crosby's hit is still $8.7M, but that's now only 12.6% and Malkin is 13.77% for a total of only 26.37% of their cap.  Additionally, the year the Wings won last, Lidstrom had the second highest cap hit in the league, and Datsyuk 13th.

    So...winning with huge cap hit players is possible.  But the jump to 8 digits feels like it might cross a line where the salaries are too far out ahead of the cap.

     

    Are you not entertained?!?!

    [/QUOTE]

    It's possible, but it demands that the remaining money is "more perfectly spent".

     
  17. You have chosen to ignore posts from Sportsnutty. Show Sportsnutty's posts

    Re: Brave New (Salary Cap) World, or How Stan Bowman

    I was thinking along the same lines. Money well spent... but also... timing it so that you have very productive players on ELC's and cheaper 2nd contracts. Along with well-paid vets, there needs to be a younger producing group too.
    Lets GO BRUINS!!!

     
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