[News] Daly: 2016 salary cap projects to be $74 million with escalator

[sureLoss]

Pierre LeBrun @Real_ESPNLeBrun
Bill Daly says salary cap projection given was around $74 million with the escalator, but a flat cap without the escalator.

Pierre LeBrun @Real_ESPNLeBrun
Cap projection in Pebble Beach at Board of Gov was around $74.5 million, so today's projection just a tad lower

[Cole436]

Nice. An extra 3.6 million will be a nice relief with the forwards that have to get signed within the next two years.

[Racki]

that's good news because John E. Hockey gets more expensive every day

[sureLoss]

Originally Posted by Cole436

Nice. An extra 3.6 million will be a nice relief with the forwards that have to get signed within the next two years.

$2.6 million

[DJones]

So the NHLPA can just use the escalator every year? Why wouldn't they? Are their any downsides?

[sureLoss]

Originally Posted by DJones

So the NHLPA can just use the escalator every year? Why wouldn't they? Are their any downsides?

The downside is the players will likely have to pay more escrow to compensate using the escalator.

[Enoch Root]

Originally Posted by sureLoss

$2.6 million

Interesting number, because I was looking at it a couple days ago with the dollar rebounding a bit.

The last thing we had heard was that it could go down $3 or $4M, but that was right at the peak of the dollar slide (1.4700).

Since then, the CAD has rallied about 11%. So I did some quick and dirty math.

If the middle of the range is about $60M, then HRR is about:

60m x 30 teams x 2 = $3.6B

if Canadian revenues are about 35% of the total (I don't know this for sure, just vaguely remember that number from the CBA debates), then we get:

3.6B x 35% = $1.26B coming from Canadian$ sources. So an increase in the value of the CAD of 11% means:

$1.26B x 11% = $138.6M / 2 = $69M / 30 teams = $2.3M increase to the cap from the rebound in the dollar.

[Enoch Root]

Originally Posted by DJones

So the NHLPA can just use the escalator every year? Why wouldn't they? Are their any downsides?

Once they know the actual HRR, salaries are adjusted. The PA can use the escalator all they want, but all it really means is that the net escrow charge is higher.

In the end, salaries are a function of the actual HRR, regardless.

[Street Pharmacist]

Originally Posted by Enoch Root

Interesting number, because I was looking at it a couple days ago with the dollar rebounding a bit.

The last thing we had heard was that it could go down $3 or $4M, but that was right at the peak of the dollar slide (1.4700).

Since then, the CAD has rallied about 11%. So I did some quick and dirty math.

If the middle of the range is about $60M, then HRR is about:

60m x 30 teams x 2 = $3.6B

if Canadian revenues are about 35% of the total (I don't know this for sure, just vaguely remember that number from the CBA debates), then we get:

3.6B x 35% = $1.26B coming from Canadian$ sources. So an increase in the value of the CAD of 11% means:

$1.26B x 11% = $138.6M / 2 = $69M / 30 teams = $2.3M increase to the cap from the rebound in the dollar.

This is on actual revenues though. Money made is money made, and bills paid are already paid, no?

[Enoch Root]

Originally Posted by Street Pharmacist

This is on actual revenues though. Money made is money made, and build paid are already paid, no?

I'm sorry, what?

[Street Pharmacist]

Originally Posted by Enoch Root

I'm sorry, what?

They've already made the revenues and paid the bills while the exchange was what it was. You can't add exchange now can you?

[Enoch Root]

Originally Posted by Street Pharmacist

They've already made the revenues and paid the bills while the exchange was what it was. You can't add exchange now can you?

We're talking about next year's revenues. All you can do with the Canadian revenue is use the current fx rate.

[Street Pharmacist]

Originally Posted by Enoch Root

We're talking about next year's revenues. All you can do with the Canadian revenue is use the current fx rate.

Ah. I thought you meant the actual cap may come in higher. You mean the future revenue

[Enoch Root]

The cap is calculated using estimates for next year's revenues. And then the NHLPA can utilize the escalator to bump it up as much as 5%.

Then the escrow is applied to salaries.

Then, after the season, actual revenues are calculated, and from that, the actual amount of HRR that should be allocated to salaries.

Then, assuming the actual number doesn't eat up all of the escrow, whatever is remaining gets reimbursed to the players to make their salaries correctly reflect the actual revenues.

[Enoch Root]

Originally Posted by Street Pharmacist

Ah. I thought you meant the actual cap may come in higher. You mean the future revenue

We are talking about the cap for next season here.

[Street Pharmacist]

Originally Posted by Enoch Root

We are talking about the cap for next season here.

Which is based on hrr from this season, no?

[Enoch Root]

Originally Posted by Street Pharmacist

Which is based on hrr from this season, no?

read post #14

[Lanny_McDonald]

Is the cap going up only because the players executed their escalator? It can't be based on revenues. The sagging Canadian buck and the poor performance of the Canadian clubs is certain to hit the cap. 23% of the teams account for 40% of the revenues, and that 40% is going to shrink. because of the dollar and poor seasons. Players will likely pay for this in the long run.

[MarkGio]

You would think eventually the players would stop escalating since they're already taking a beating on the escrow payments each year

[MarkGio]

A rising cap helps the Flames trade Wideman, but a stagnant cap helps the Flames by hurting the competition (ie, Chigaco, LA, etc.)