Quote:
Originally Posted by VilleN
I think part of the reason is the cap stagnation since COVID. Teams are waiting to see what happens with the cap so they can plan accordingly. So for now, things are a bit locked up because of that.
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The cap was over inflating before then covid too. Existing players were paying for this through escrow. I would say covid revealed existing issues, more than being the caise of them.
I see the current situation is a culmination of a lot of things, that reached a tipping point, then compounding on top of each other.
Like GMs have been signing bad contracts and making "sacrifice the future of the present" decisions for years.
- Every bad decision incurred some debt, but this debt was hidden with a quickly rising cap and other teams willing to take bad contracts.
- The cap rising at an unsustainable rate could not go on forever, escrow was growing too much, then covid really slowed everything down.
- With the cap growth slowing it limits both how much bad decision debt a team hide in their own cap, as well as limiting how much cap is available to teams willing to take cap.
- The end result is a lot of demand from teams finding their debt harder to manage than expected. But also lot less supply of cap space
- Markets react to these supply and demand changes as markets do. Cap space and cost controlled assets (draft picks, prospects, rfas) spike in value, debt assets crash in value.
- People holding assets whose value dropped try to hold onto these assets hoping they increase in value.
Give it time, the market will correct itself. Assets can only be held so long, eventually someone will have to break and take the hit. The lack of cap space will also force new contracts to be more in line too. This will move the supply & demand balance back to a more balanced position in the future.