Thursday, August 5, 2010

Guest Blogger #16: Should Cap Space Be Commoditized?

By Stuart Borne

I really liked the Blackhawks last year, not only for what they accomplished but the way they went about their business. Young, fast, exciting team that kept the pedal to the metal.

Watching the dismembering of this team is painful even if you are not a fan. We are two years away from a new CBA and I think it’s never a bad thing to reflect on what we have learned about life under the existing agreement. One thing I think I have learned is what is happening in Chicago is bad for the game.

I want to offer a couple of solutions:

Make CAP Space a commoditized asset and let it be traded and under the next CBA. At first this may look like the rich get richer but I think this could help both the haves and have not’s.

Look at Dallas who are likely to be at least $10,000,000 under the Cap. If you believe what Tom Hicks has been saying in the press Dallas will probably lose money at $10,000,000 under Cap.

Now if they sold that Cap space dollar for dollar to Chicago (clearly now a NHL have), Chicago could divest it players that put them over the Cap in an orderly way over two or three years. Maybe in the second year they only have to buy $5,000,000 in unused Cap space because they have sufficient expiring contracts that they don’t have to consider selling off important players. Maybe they trade one these players for Cap space and can keep more of their team together.

The haves should like this system for reasons I have suggested, the money in the system for players is the same so the players like it and the have-nots who are pushing for a new way to calculate the cap to reduce it $11,000,000 like it because they get another asset to generate revenue.

The NHL should like it if the Union agrees that this revenue should not count as hockey related revenue, so it will not impact the cap either up or down and franchises that are losing money are stabilized with the additional revenue.

Would the NHL have loved to recoup some of it’s investment in Phoenix by selling some of it’s unused cap space? How many more teams could have been in on Kovulchuk if they could buy cap space to bridge them until they had enough expiring contracts to afford him without the subsidy? Certainly could reenergize free agency and trades which are becoming pretty boring under the current system.

This is essentially a revenue sharing system where each team can look at their own situations and use their assets they way they feel they need to run their business.

We know the NHL have-nots will be pushing for a reduction in the cap or cannibalizing the system to determine the revenue that the cap is figured on. This approach is a colossal waste of time.

Remember the players roll back their salaries 25% as a part of the last CBA and to make a 20% reduction in the cap without a corresponding reduction in salaries make the system unworkable. AND there is no way the players are going to go there again with Don Fehr at the helm.

If you think about it the rollback was even more unprecedented than the imposition of the cap. Besides it is going to be pretty hard for the owners to make the argument you gave what we wanted but we don’t want it any more.

It seems to me that in hockey collective bargaining the owner hardliners are the ones losing money, get them the possibility of more revenue and they become neutralized.

The truth is that generally the have-not owners are more upset with the haves than the players, but they have little recourse against the haves so they take it out on the players. Anything that gives the have-nots a chance to stay in the game without losing money at the expense of the haves ought to make them happy.

Two other tweaks that should be considered is a reduction of the buyout amount to ½ of the current value so the owners can say they have taken a step toward contracts that are not guaranteed. There is no justification for a player that can’t play at the level of his contract reaping a reward for failure. At the same time those buyouts should not count against the cap. The pain of team paying 50% of the contract amount for a player not to play is pain enough for bad decisions. Not allowing them to use the cap space to rebuild when they want only hurts the fans.

4 comments:

Rob Y said...

That's not a terrible idea but how do you go about determining who gets to buy the cap space? Cause I'm sure there are about 5-6 guaranteed big market teams who would want the cap space. And how do you determine how much cap space one team can buy? I think the first step in moving forward would be to add a luxury tax for teams, especially teams that go so close to the cap limit and would like to go over.

wonderin said...

The same effect can be achieved by simply raising the max cap limit but I think there is a concensus among the lesser markets to keep the bigger markets in reach so they can remain competitive...making themselves less competitive may actually backfire and result in lower revenues thus exascerbating their problem...

Anonymous said...

That's a different way of looking at it and not a bad idea. You are penalizing teams for breaking the cap ceiling but still allowing them to keep their team together.

I always thought an interesting way to fix it would be a "hometown discount" kind of system. i.e. if you have young players which you've developed (i.e. the Hawks with Buttfooglien, Ladd, Versteeg, Niemi, etc.) you should be able to get something like half of their salaries counting against the cap. This would allow you to keep your own.

That being said let's be honest: The Hawks had to dismantle that team because of their huge free agent contracts (Brian Campbell gets over $7 mil a year and Hossa gets quite a bit as well).

A big plus of the cap (besides a more competitive league) is that teams are putting more stock into developing their own players and locking them up. Heck even the Rangers are trying to do this.

LI Joe said...

chi as mentioned right above me did themselves in with hossa and campbell and huet contracts. those were all huge mistakes

the 1/2 cost of homegrown would clobber the rangers and helpa team like the isles. so i would be very against that

the cap s*cks period. the next cba will be even more owner friendly with various loopholes closed like parking guys in ahl and extremely front loaded deals. the owners will easily win a waiting game - and both sides know it.

one more about the cap. the rangers ocirca 91-97 would never have existed - not even close. we'd be now waiting 70 yrs for a cup if a cap existed then. and not because we bought a team per se. but we would have lost some home grown guys and or not been able to make deals for guys like messier.

i hate the cap. because of it we have little hope for at least 3-4 yrs