Bettman confirms the league is looking at Jan 1st start date

[Crown Royal]

Originally Posted by Strange Brew

I just haven’t researched this, as I fundamentally don’t understand how you have true revenue sharing with a hard cap on escrow.

If there is a shortfall on revenue in excess of the escrow cap does that get funded by the owners? I thought there was talk about a mechanism to somehow recover over time through future escrow, which means future players would be funding a current year shortfall. Although any future recovery, if such a thing exists, likely wouldn’t extend beyond currently negotiated CBA.

Revenue is 50-50, if owners pay more than 50%, there is escrow payments, if owners pay less than 50%, there is equalization payments.

The reason escrow/equalization payments can happen is the cap is based on the previous season's revenue and that is only used to determine the mid-point of the cap. There was also an escalator the NHLPA could use to artificially raise the salary cap by up to 5% (I think it was 5%), and they used it to the maximum almost every single year. There is also the impact of front and black loaded contracts, but for the sake of simplicity, lets say they balance out.

So, with the combination of an artificially inflated salary cap and most teams spending to the limit, near the limit or even over (due to LTIR), it is resulting in players making more than 50% of revenue.

With the CBA extension they have capped how much players will have to repay in each of the first couple/few years, however the remaining balance will be deferred and the cap will remain flat until the outstanding escrow payments are paid back. I also believe it all has to be paid back by the end of the new extension.

[Strange Brew]

A season without gate revenue and artificially inflated salaries will transfer wealth from future players to present day players. But maybe that’s ok with the players as they hope that future revenues will grow and current year players shouldn’t have to feel all the pain of the pandemic.

But if the season is shortened, I could see an argument to reduce salaries. Let’s say you play 41 games. Should the player in the last year of a $8 million contract make the full $8 million less 20% for escrow? With no cap on escrow, said player would likely make maybe $2 or $3 million (assuming lower gate revenue). That is a big shortfall funded by future players playing full seasons.

[Crown Royal]

Originally Posted by Strange Brew

A season without gate revenue and artificially inflated salaries will transfer wealth from future players to present day players. But maybe that’s ok with the players as they hope that future revenues will grow and current year players shouldn’t have to feel all the pain of the pandemic.

But if the season is shortened, I could see an argument to reduce salaries. Let’s say you play 41 games. Should the player in the last year of a $8 million contract make the full $8 million less 20% for escrow? With no cap on escrow, said player would likely make maybe $2 or $3 million (assuming lower gate revenue). That is a big shortfall funded by future players playing full seasons.

I think that escalator to artificially inflate the cap is gone in the extension.

Reduced salaries or escrow, it won't make a difference to the NHL I don't think as they'd likely get the same amount of money regardless.

But players nearing retirement, they would absolutely love to stick it to future players, the NHLPA has a history of caring more about the current bottom line than the future and I don't see that changing. But, I agree with you and think they should pro-rate the salaries if there is a shortened season.

I would assume though there won't be any arguing about what to do thou8gh, because it is extremely likely there are provisions for more shortened seasons in the CBA extension.

one huge thing for the players and league the new US TV deal coming up, as TV deals for sports have been ridiculously high, even WWE got a billion dollars from Fox for Smackdown (2 hours a week) for 5 years.

[bizaro86]

Originally Posted by Strange Brew

A season without gate revenue and artificially inflated salaries will transfer wealth from future players to present day players. But maybe that’s ok with the players as they hope that future revenues will grow and current year players shouldn’t have to feel all the pain of the pandemic.

But if the season is shortened, I could see an argument to reduce salaries. Let’s say you play 41 games. Should the player in the last year of a $8 million contract make the full $8 million less 20% for escrow? With no cap on escrow, said player would likely make maybe $2 or $3 million (assuming lower gate revenue). That is a big shortfall funded by future players playing full seasons.

Its pretty common in union environments for future employees to take the brunt of cost savings initiatives and/or not get any benefit from gains. Future players paying more escrow so current players pay less is an example of this.

Examples include the airlines, where pilots make peanuts for the first couple of years, and gains go to the more senior people. Another example would be pensions, where very often existing employees keep the top tier DB plan, and new hires get something less lucrative.