The View From Wisconsin

In the labrynithe world of attempting to follow the NHL's labor situation as a hockey fan, it's a bit hard to tell the difference between the league's proposal (a strict salary cap) and the players' proposal (a luxury tax).

Here's a basic rundown of the differences between the two for easy reference:

Salary Cap

Sets an absolute, arbitrary limit on player salaries.

Teams that go over the limit lose players, draft choices, heavily fined.

Limits player salary levels due to percentages and minimum salary requirements.

Limits player movement due to inability of teams to get a player "under the cap".

Does NOT guarantee that teams can get out of a financial hole.

Actually encourages teams to find loopholes (such as backloading contracts, signing bonuses and "personal services" contracts).

Luxury Tax

Sets a maximum amount that can be spent on player salaries without being taxed

Teams that go over the limit are subject to a minimum tax, and a maximum of the amount over the limit they go.

Does not limit player salary levels as teams do not have a maximum amount to stay under; Teams that do well one year can spend more the next year.

Allows player movement as teams that have the money and can spend it on players can not only pay for the star players, but for the penalty on going over the tax limit.

Funds from teams that go over the tax level are distributed among lower revenue teams by a league-approved formula.

Main drawback is that if no teams spend above the maximum level, there is no tax revenue to share with low revenue teams.

All in all, I think I'd rather live with a Luxury Tax system than a Salary Cap system. The NHL, however, does not see it that way.

# posted by Joseph Houk @ 6:25 PM - 0 comments