One of the potential sticking points of NHL Collective Bargaining Agreement discussions will likely hinge on the percentage of revenue players receive. Currently set at 57%, many team owners want the playing field more leveled. The term “50-50″ is brought up a lot in the media.
So if the players are going to give up 7% of total revenues – or $210M of the reportedly $3B the NHL is worth – in order to split revenues with ownership 50-50, what seems to be the bargain going back the players’ way?
How about escrow withholdings from player salaries? Since the new CBA went into affect, escrow has widely ranged from as low as 8.5% to as high as 25% of total player salaries lost to escrow accounts that are held to the end of the season. (If you are Sidney Crosby, for example, your average salary has lost between $739,500 to $2.175M in a year over the term of his last contract to escrow.) This money is designed to provide a pool to ownership where player salaries have disproportionately outweighed profits. If that has not been the case, escrow has acted in effect like a player’s savings account they get to completely withdraw at season’s end.
Is fair removing the escrow clause in return for 7% of total revenue? According to Capgeek.com on 10 July, an average loss of 16.8% of contract money to escrow between the high and low mentioned above means a bit less than $290M per season in player salaries would be in their pockets verses in escrow.
So how does such a notion play out if the players would get $290M back and the owners would gain only $210M in total revenues?
For owners, if you assume the annual $3B will increase over time, they will, at some point, overtake what they gave back to players by wiping out the escrow clause. Advantage there goes to owners unless they stay stagnant at $3B in revenue over the years or lose money. As a whole, this is good for the game as it promotes ownership innovation to gain revenue.
For players, more of their negotiated salaries are in their pockets from the start of the season. Win, players. Unless revenues go up dramatically through owner innovation which could have been applied to an increase in the salary cap.
In the end, as with all other negotiations, some balance will have to be struck to keep a more even keel between percentages of revenues and escrow held for the sake of owner profitability.