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Conferences Economics of the NHL Topic #4
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ShamesFan

 
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"A different perspective"
02-Mar-03, 05:16 PM (EDT)
I found this piece via the Hockey Alliance site and wow what an amazing job. I mostly disagree with the conclusions but the work is phenominal.

Congrats to whomever put all that work together.

Standing on the other side of the tracks though, you glossed over the biggest reasons why small market teams (maybe fans would be more accurate) are crowing for a salary cap.

Salary Inflation - When the Flames won the Cup (did that really happen?) in 1989 their total salary was among the highest in the league and about $11 million. By 1999 they were at over $31 million yet in the bottom third of league payrolls. Perhaps the same can be said for all leagues, but in the capped leagues at least there's a difference, which is.....

Predicable costs - In 1989 the Flames made 5.5 million profit. In 1999 they lost 8 million. Using some arbitrary numbers for the sake of easy math, assume their 'other' expenses in 89 were about 3.5 million. That would mean on revenues of about 20 million player salaries were 55% of the total. Ten years later, player salaries would have had to be 80%-100% of revenues depending on how fast you think the 'other' expenses have grown. Bear in mind too, that this means the teams reveues have doubled in that ten year span and yet they haven't even come close to keeping pace with salaries. NBA and NFL salaries may have grown just as quick, but have their respective teams financial losses?

Competitiveness - Your analysis suggests all leagues include haves and have nots and leagues with caps are actually less competitive in terms of variety of teams winning championships. Both assertions may be statistically true but I'd argue you missed the important points. First, its the size of the discrepancy between the haves and have not's that matters. There will always be variation of course, but in the capped leagues there's a 20% difference on the top and bottom ends versus about 50% for the NHL and MLB. Put another way, the rich are far richer and the poor are far poorer. Second, the winning percentage comparisons aren't that useful when you factor in expansion. All the leagues have added teams over the last number of years and the differences in winning percentage probably have far more to do with how free agency, expansion drafts, the % change in number of teams etc have affected competitiveness then salary issues.

I appreciate that mine is a pretty narrow viewpoint - coming from 1 fan of 1 team forced to work in Canadain pesos no less - so take it for what its worth. I got a tonne out of the article but I diasgree that a cap won't help. At $35 mil a team indexed to revenue growth player salaries could stay exactly where they are and every team in the league could be competitive. If that's too rich for places like Calgary to survive so be it.

And if you've gotten this far, thanks for hearing me out.


 

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A different perspective [View All], ShamesFan , 05:16 PM, 02-Mar-03, (0)
  •  Thanks!, Sparkyadmin, 03-Mar-03, 08:26 AM, (1)
 

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