The NHL Lockout
The rookie salary cap was gutted when teams took advantage of a loophole, adding lucrative "bonus" payments on top of the "maximum" base salary. It began in 1997, when the Boston Bruins gave two rookies, Joe Thornton and Sergei Samsonov, the maximum salary allowed under the rookie cap. But those contracts also had bonus clauses that would roughly triple the base salary if certain criteria - such as statistical benchmarks - were met. From then on, all high draft picks began demanding and receiving similar contracts. The multimillion dollar offers made to a few free agents served to "raise the bar," leading to comparable salary increases for comparable players. This movement was led by a few wealthy teams, like the Rangers, Flyers and Red Wings. But it drove up the market value for players throughout the league. Teams did not use their leverage with restricted free agents. At contract time, most under-31 players have two options: sign and play or stay home and earn nothing. Despite holding this obvious bargaining advantage, teams often gave in to salary demands, offering players huge raises and long-term contracts. For example, in 1997 Joe Sakic of the Colorado Avalanche signed a three-year, $21-million US "offer sheet" with the New York Rangers. But Colorado exercised its right to match the offer and retained him. Sakic went nowhere, and the only result of the Rangers' gambit was to more than double his salary. In the same year, Paul Kariya of the Anaheim Mighty Ducks sat out the beginning of the season, looking for a big raise. As a 23-year-old, that was the only leverage he had. The Ducks caved, giving him a two-year, $14 million deal. Other huge contracts for top forwards soon followed. More damaging still is the fact that many of the hefty contracts went to mediocre players. In 1999, the Rangers signed Valeri Kamensky to a four-year deal worth $13.45 million. He scored 14 goals the previous season. A year later, St. Louis gave Dallas Drake $9 million over four years. He averaged 14 goals per season over the life of the contract. These deals helped "raise the bar," boosting the market value of players with similar stats and abilities.
Much of this free spending was funded by expansion money as the NHL added teams throughout the 1990s (hefty expansion fees were divided among incumbent teams). There was also the expectation that the ...
... middle of paper ...
...ence of other pro leagues suggests that salary caps come with their own problems. In the NBA, teams looking to make trades or sign free agents often find their hands tied because they have no room under the salary cap. In the NFL, strict payroll limits force teams to cut good, talented players every year. For fans that have seen a favorite star leave town or watched a great team broken up for salary cap reasons, the cap is little more than a form of enforced mediocrity. It's a system that punishes teams for drafting and developing well, and for winning. An NHL salary cap would likely be accompanied by more liberal free agency, which would mean a lot more roster instability. Under such a system, the slash-and-burn approach of the 2004 Boston Bruins - they went into the summer with just six regulars under contract - might be commonplace. But some teams might prefer this flexibility.
The players want to preserve some version of a "market system" with salaries decided by individual teams. They see a salary cap as an unfair restriction in a system where they already have little leverage or freedom. In its most recent detailed proposal, on December 9, 2004, the NHLPA proposed:
Anyone who has been involved in an organized sport, whether it is backyard football or a high school sports team, knows that these sports all have organizations that are responsible for setting rules, determining conditions of play, and penalizing individuals who infringe the rules. Some of the organizations like the National Football league and the MLB are familiar to most people, the rules they follow are not generally understood by anyone who is not closely associated with the sport. Most fans and sport critics assume that what is happening inside these organizations are of little concern to them. However, this is not the case. In the MLB, the New York Yankees spend an excessive amount of money every year to obtain big name players. A luxury tax was put into effect for teams that go over the spending limit. However, the Yankees are the only team that pays the tax because they are the only team that exceeds the spending limit. The players, coaches, fans, and I have argued that a salary cap would be the best possible way to allow teams in the Major Leagues an equal opportunity getting to the World Series.
Labor market theory is one of the most integral economic theories needed to dissect the inefficiencies in professional sports. Looking first at the type of market these leagues function in, one can see that they do not necessarily meet all the criteria that a competitive market requires. The big four sports leagues in the US have a set number of teams which creates barriers for entry. Only when an expansion is agreed upon by the league, such as NHL has done for the upcoming season, are teams allowed to enter, and even then, it is limited to a maximum of a few teams in recent history. Additionally, the league makes it virtually impossible to exit, as selling of a team is the closest they come to exiting the market. Through
A salary cap gives all the teams an equal chance to sign players. It also keeps teams with a lot of money not able to acquire every all-star they want , or any player who is a free agent. Some Major League Baseball teams like the Anahiem Angels and the Atlanta Braves are owned by very wealthy people and companies. The Anaheim Angels are owned by Disney.(Worisnop, 128) So with no surprise the Angels can produce a team which can be very competitive, and have several all-star players. Just recently they exercised this advantage by signing Mo Vaughn for ninety million dollars over seven years.(Antonen, 2) There were at least four other teams that wanted to sign this all-star, but the Angels easily had the money, and outbid everyone who wanted to sign him. If there was a salary cap in Major League Baseball then the Angels would have thought twice about giving that much money to one player. With the its roster for one year. So giving one player 12.8 million dollars for one year does not really make sense if the salary cap is fifty million dollars a year. That would leave only 37.2 million dollars for the twenty-four other players, which equals each player getting on average a little less than one and a half million dollars a year.
As long has there has been business, Management and Labor have warred against each other for a bigger piece of the pie. Major League Baseball is no different. In the early years of professional baseball the owners controlled the salaries of the players and decided where they could play and what they would be paid. The players were bound to their team by the Reserve Clause that stated, the services of a player will be reserved exclusively for that team for the next season. This resulted in keeping the player’s salaries artificially low because the players were not allowed to offer their services to any other team. The Reserve Clause was in effect for more than One Hundred years of baseball history. It was challenged several times but the owners had won every time, until in 1970 when the St. Louis Cardinals traded outfielder Curt Flood to the Philadelphia Phillies. Flood refused to play for the Phillies and sued to become a free-agent. Flood’s case was in court for several years going all the way to the Supreme Court. He was never able to play in the Major League again. While he did not win his case, he laid the groundwork for a later case that involved two pitchers, Andy Messersmith and Dave McNally who filed a grievance against the league contending that, because they didn't sign contracts with their previous teams they were free agents. The owners and the Players Association agreed to submit to binding, impartial, arbitration in order to settle this case. On December 23, 1975 the arbitrator Peter Seitz ruled in favor of the players and the Reserve Clause was broken, and the era of free agency began in the Major Leagues. In 1976 when free agency began the average player salary was only $52 thousand dollars, but it has increased steadily ever since. By 1990 the average salary for a Major League Baseball player had risen to $589 thousand dollars. This Year baseball will start the 2001 season with an average player salary of more than $2 million, about 40 times higher than the typical wage in 1976 when free agency began.
The 1994-95 baseball strike was the fourth strike in 22 years and has been known as the worst strike in sports history. The major impact was approximately 948 games canceled along with the World Series resulting in millions of dollars lost. Team owners proposed a salary cap agreement to the players due to difficult financial situations the league was experiencing. The owners said that teams needed to share broadcasting revenues to make it equal amongst the teams to prevent market clubs from falling. This meant that smaller teams would not lose their bigger players to teams that c...
Before the 1980 Winter Olympics began, the US Olympic hockey team was not expected to do as well as they did. They had many powerhouse teams to beat and the team was just a bunch of college kids who wanted to play hockey. In the end, they had performed one of the greatest upsets in the history of hockey by defeating the USSR, the whom many thought of as the greatest hockey team in the world.
Business deals happen every day; Contracts expire, renew, and are negotiated without the public knowing for many large corporations and even sporting leagues. However, some contract changes cannot escape the media’s attention. The National Football League (NFL) is facing an expiration of its Collective Bargaining Agreement (CBA) (NFL Lockout Now One Month Old). Currently, the agreement has expired and NFL team owners have selfishly chosen to “lock” the players out. The term lockout means that the players are essentially not allowed to participate in any team activities or duties until the owner’s rescind this lockout. While many believe this is simply a battle between team owners and a player union, it can only appear to most as a selfish act of the NFL owners trying to rich, greedy men in expensive suits, and the only people they are hurting, are the fans of football.
So everybody would get paid fair. While others may say or wrecks family history because if you have generations and generations go to one college than they started to get paid it might wreck that history because they will pick the highest paying one. That is not true though because if salary caps were put in everybody would get paid the same. In summary college athletes should be paid because they are too busy to have a job, the NCAA has enough money and they can put in salary caps so everybody get paid
While looking at these numerous problems I remember at a time my uncle told me that the business of soccer is good business, there is so much wealth to the be tapped if done correctly. The bad transfer system makes it difficult for European based players to move the United States. Average players like Kaka have tried to move to clubs like Los Angeles and have had deal not been able to go through because we have an Americanized sports version of a salary cap, so that everything is fair. In life and sports “Survival of the fittest” so why make an artificial environment that counter to nature? Players who deserve high wages like superstars deserve it and should have to suffer for one who performs subpar. These caps makes superstars like Kaka, Fran...
The economics of baseball has grown since the beginning and has become more complicated every year. Baseball players are now making millions of dollars to do something that they love and enjoy. It's not their fault the money they can receive has reached the million mark, even for some of the less talent of ball players. This has happened to all sports, but especially to the American pastime. Baseball is more of a business than just a game and many things have made it this way. A lot of reasons have contributed to the rising salaries there is today and it will not stop there. The amount of baseball contracts will keep rising each year.
Poplawski, Wade, and Michael O'hara. 2014. The Feasibility of Potential NHL Markets under the New Collective Bargaining Agreement. Journal of Sports Economics. (1): 64-77.
...ecks and be treated as a farm system for the NFL, NBA, or MLB. If these athletes started getting paid now, at the college level, then the major leagues of these sports would suffer tremendously and lose marketability and money. A final solution to not having players get paid or receive certain benefits is maybe these head coaches of certain universities should not be getting the average 2 million dollars a year to be a coach, in some cases more than the presidents of these universities.(Chicago Tribune) There could be major strides made by simply merging that athletes shouldn’t get paid in whole dollars, but should receive paid benefits in which they would not have to worry about starving, losing scholarships due to injury or sub-par play. That I think would make the world for college athletes a better place, where both the schools benefit and the players benefit.
Sports are one of the most profitable industries in the world. Everyone wants to get their hands on a piece of the action. Those individuals and industries that spend hundreds of millions of dollars on these sports teams are hoping to make a profit, but it may be an indirect profit. It could be a profit for the sports club, or it could be a promotion for another organization (i.e. Rupert Murdoch, FOX). The economics involved with sports have drastically changed over the last ten years.
...to settle for less, and in compensation a possible retirement plan or some form of benefits should be assembled. The only athletes that I truly disagree with are the ones that can’t differentiate between “needs” and “wants”. Luxuries are wants, and necessities are needs; if they could settle for less (yet still reasonable) money they would avoid lockouts and holdouts, and continue to entertain our society, which is their whole purpose.