Apparently, with no hockey to watch, I am passing the time running
numbers in Excel. I was thinking a little bit more about the NHLPA’s
bullshit
claim that the
NHL should have used either their ten year revenue average of 9.4% or
five year average of 7.8% instead of the 3% number they used when
determining the impact of the NHLPA’s last proposal. I debunked
that
a few days ago, but I thought of another interesting angle - if the
players association really believed that revenue average, then I think
they would be willing to accept a salary cap. Here’s why:
Based on the NHLPA’s proposal, it’s pretty clear they want the average
team payroll to be around $50 million. Their proposed payroll tax
doesn’t even start until you get to $45 million and is a pretty lame
20% until you get to $50 million (at that rate, a $50 million payroll
would be taxed only $1 million) The current average team payroll is
around $50 million and would be $40 after the NHLPA’s proposed 24%
salary rollback. (Note – I realize $40 million appears to be a rollback
of 20%, but there are some components of team payroll like benefits and
payroll bonuses that are unaffected by the rollback.) Now, under the
NHL’s proposal, the salary cap would be linked to overall revenue – as
revenue goes up, salary cap goes up too. If revenues really went up by
7.8% per year, in three years the team salary cap would go up to $49.7
million. At 9.4% growth, the salary cap in 07-08 would be $51.7
million! So you get the NHL’s cost certainty while still driving
salaries up to a level that the players want.
This disparity is really obvious when you look at the NHLPA’s revenue
projection using
five year historical league averages of revenue and player cost growth.
In this model, revenue increases at 7.8% per year and player costs at
7.3%. If that were really true, wouldn’t the salary cap system actually
be better for the players? Since their share of the overall revenue
would stay the same, that would mean the total paid to players would
also grow at 7.8% per year. At those rates, the NHL’s plan of linking
player costs to revenue would mean nearly $20 million more for the
players in 07-08 than their own plan.
So either the NHLPA is really bad at math, they want the owners to
make more or even they don’t believe their own bullshit. I’m guessing
door #3.