Escrow is what’s holding things back
Jun 26, 2020
11:51 pm ET1 min read
The NHL and the NHL Players’ Association are reportedly close to deciding on a new collective bargaining agreement, according to ESPN’s Greg Wyshynski. The new deal will apparently include remedies for losses that the league experienced in revenue as a result of the season suspension that came as a result of the coronavirus pandemic.
At the earliest, per Wyshynski’s source, a deal could come on Sunday, but another source described that timeframe as “really fast.” Neither the league nor the NHLPA commented on the issue.
As things currently stand, the league and players not only need to agree on a new CBA moving forward but also the return-to-play protocols that would restart the 2019-20 season this summer. All the members would need to vote on both issues, but that hadn’t happened as of Friday evening, per ESPN. One of the bigger hurdles the situation faces is the question of where the two hub cities for the season will be located.
There are also hurdles facing the CBA specifically. Escrow is the hot button topic for the players, which is a system where a percentage of withholding from players’ paychecks each season. Under normal circumstances, that system maintains a 50-50 revenue split between players and owners in the form of either going to the owners if there’s a shortage in revenue, or being refunded back to the players if revenue markers are met.
But these under normal circumstances given that there’s a global pandemic going on that shut down sports pretty much all over the world for a couple of months. As things stand, escrow is expected to be 35% under the current set up — as the ESPN report notes, last season’s escrow loss was about 9.25% for players.
The CBA being discussed would cap escrow at 20% for the next two seasons, with things returning to the old system afterward. The success of this set up is contingent on the salary cap freezing for the next two seasons, and increased revenue from a new TV deal and the official arrival of Seattle’s NHL franchise. There is also talk of a 10% salary deferral for players, which both sides have apparently agreed upon.
A six-year term is being discussed for a CBA extension. The current CBA is set to expire in September 2022.
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