[News] UPD: NHL and NHLPA are working on deal to amend and extend CBA until 2025

[Fighting Banana Slug]

I too am somewhat baffled as to why the NHL players are so against escrow. There can be plenty of fights about what constitutes HRR, but the players must know that their compensation is tied to whatever that HRR is for that year. It will never happen, but would they rather be paid the full amount, and then cut a cheque back to the owners if there needed to be a clawback at the end of the year? I don't see that as being any better.

[Enoch Root]

Originally Posted by iggy_oi

I don’t think the issue is that the players don’t understand how escrow works. I think the players just want to be paid what their contract states. I understand that the league wants their guaranteed 50% of HRR but I can also see why the players don’t feel as though it’s fair to have a percentage of their salaries being withheld because, as you said, the teams are spending too much money. The players have no control over how much a team decides to spend on salary above the cap midpoint, yet the players are the ones who are being forced to assume the financial risks associated with those decisions even if they play for a team that spends below the midpoint.

The teams also have no control over how much other teams spend. The system estimates the total pool, then adjusts it fairly. There is nothing sinister going on, their contracts explain this system thoroughly.

And the players are not taking the risk, though I am not surprised that you would try to state that they are. The system is very clear: 50% of HRR goes to players, regardless of whether the original contracts under-paid them, or over-paid them. Unfortunately, despite this very clear split, they have people whispering in their ears that they are taking the risk and they are being shafted.

As several people have stated, there are other ways to do it which would minimize the escrow. But that doesn't change the bottom line: the players get 50% of HRR, regardless.

It also shouldn’t be difficult for anyone to understand why the players want to be paid what their contracts state. How many people do you know who have a portion of their salary withheld to safeguard their employer from their own potentially poor decisions? My guess is probably not very many.

Both I, and my wife, have a portion of our salaries withheld, for the same reason the players do: actual revenues aren't known until the end of the year.

Again, this isn't some sort of plot against the players, nor is it a protection against GMs that overspend. It is simply a mechanism to ensure the accuracy of all contracts, and that the players receive what they are supposed to receive.

It also speaks volumes that you would manage to spin it in a way that suggests the players are somehow being wrong done by.

[Locke]

Originally Posted by Fighting Banana Slug

I too am somewhat baffled as to why the NHL players are so against escrow. There can be plenty of fights about what constitutes HRR, but the players must know that their compensation is tied to whatever that HRR is for that year. It will never happen, but would they rather be paid the full amount, and then cut a cheque back to the owners if there needed to be a clawback at the end of the year? I don't see that as being any better.

Yeah, and what happens if they dont have the money when the time comes?

[iggy_oi]

Originally Posted by Textcritic

It is more than a little naive to shift the entire blame for escalating top-end salaries on GMs who have "decided to overspend," while simultaneously ignoring the rather crucial role that players and player agents have played in the process. Salaries continue to escalate because players have wrested a tonne more leverage in their negotiating positions, and are singularly focused on maximizing their individual earning potential to the detriment of canibalising their lower-earning NHLPA counterparts.

I’m not ignoring the role that players and their agents have in the process. I’m also not ignoring the fact that players have no control over how much GMs will offer them, and no control over how much GMs will offer other players after they sign their contract. Also it isn’t high end player contracts that are solely to blame for GMs spending above the salary midpoint.

In other words, GMs pay exorbitant asks because the alternative is the greater of two bad options. GMs contributed to the problem, but also did so with a proverbial gun cocked and pointed at their heads.

Which is precisely why the league should adopt a model similar to what the NBA has. As I mentioned in my post, I think this is where they are going to end up. Since both sides play a role in creating additional financial risk for the league and it’s owners, both sides should be responsible for accepting the consequences of their actions. Under the current system only the players do so it isn’t surprising that they would want to change that.

[iggy_oi]

Originally Posted by Enoch Root

The teams also have no control over how much other teams spend. The system estimates the total pool, then adjusts it fairly. There is nothing sinister going on, their contracts explain this system thoroughly.

I don’t think anything sinister is going on, it’s what’s in the CBA. However I do understand why the players don’t like the current system and would like to change it.

And the players are not taking the risk, though I am not surprised that you would try to state that they are. The system is very clear: 50% of HRR goes to players, regardless of whether the original contracts under-paid them, or over-paid them. Unfortunately, despite this very clear split, they have people whispering in their ears that they are taking the risk and they are being shafted.

How do you consider potentially losing a percentage of their salaries as not being a risk for the players? I don’t think the players are being “shafted” because the current format is in their CBA, but that same format absolutely puts them at risk of earning less than the salary agreed to in their individual player contracts.

As several people have stated, there are other ways to do it which would minimize the escrow. But that doesn't change the bottom line: the players get 50% of HRR, regardless.

I don’t think the players are looking for a larger slice of the overall HRR pie, although they could be. But as you and others have stated, there are other ways of structuring the CBA that would eliminate the need for the escrow. The players have made it clear that they don’t like having a portion of their salary held back so I’m surprised that so many people are critical of them for trying to change that when there are reasonable ways to do so.

Both I, and my wife, have a portion of our salaries withheld, for the same reason the players do: actual revenues aren't known until the end of the year.

I’m not sure whether or not two people qualifies as “very many” but in any event whether it’s the players or you and your wife, my opinion on having salary held back would remain the same, that is to say I don’t agree with the practice. If it works for you and you’re happy great, I’m happy for you both. But I can’t fault the players for not wanting to continue under those terms if they aren’t happy with it.

Again, this isn't some sort of plot against the players, nor is it a protection against GMs that overspend. It is simply a mechanism to ensure the accuracy of all contracts, and that the players receive what they are supposed to receive.

It also speaks volumes that you would manage to spin it in a way that suggests the players are somehow being wrong done by.

Again, the players are not being done wrong, they agreed to this CBA. However they clearly don’t like the current practice and would like to change it with one of the many options available and I don’t fault them for that. Not one bit. How far they are willing to take the fight to have it changed, and whether or not they are successful in doing so remains to be seen.

[Macho0978]

Originally Posted by sureLoss

The Hockey News is reporting that the Players' deadline might be extended to Jan 1 and that both sides are working on a deal to amend and extend the current CBA to 2025

https://thehockeynews.com/news/artic...-be-on-horizon



Article also says the proposed plans on how to mitigate escrow will be released Tuesday.

Isn't this a big risk for the Owners? No agreement would always lead to a lockout as a strike hurts the owners way more. If they extend to January 1 and no deal is agreed upon would this not give the players the upper hand to exercise their opt out and strike right before the playoffs?

[iggy_oi]

Originally Posted by Macho0978

Isn't this a big risk for the Owners? No agreement would always lead to a lockout as a strike hurts the owners way more. If they extend to January 1 and no deal is agreed upon would this not give the players the upper hand to exercise their opt out and strike right before the playoffs?

This is an extension to the deadline for the NHLPA to opt out of the current CBA before the start of the 20-21 season. There is no risk of losing any part of this season by extending the deadline.

[Fighting Banana Slug]

Originally Posted by Locke

Yeah, and what happens if they dont have the money when the time comes?

Don't worry about the money.

Signed, Jack Johnson's Mom and Dad

[Locke]

Originally Posted by Fighting Banana Slug

Don't worry about the money.

Signed, Jack Johnson's Mom and Dad

I hear they're next in line to run the PA when Fehr retires.

[powderjunkie]

I wonder how many agents manage to tie their % to the stated contract value, rather than the actual take-home dollars? They'd have a bit of an interest in not ELI5 escrow to the players...

[Resolute 14]

By definition, it is impossible for the league to overspend or underspend. The players, by contract, collectively get 50% of HRR. And they have gotten that every year of this CBA. If they are letting narcissistic twits like Alan Walsh convince them that they are getting shafted despite getting exactly what they agreed to, well, Enoch Root's argument that the players are naive and ignorant might actually have merit.

[Resolute 14]

Originally Posted by Macho0978

Isn't this a big risk for the Owners? No agreement would always lead to a lockout as a strike hurts the owners way more. If they extend to January 1 and no deal is agreed upon would this not give the players the upper hand to exercise their opt out and strike right before the playoffs?

No. The opt out allows either side to end the CBA following the 2019-20 season. It wouldn't end immediately.

Extending the deadline doesn't cost the owners much, really. Though one always needs to be careful extending a carrot to someone like Don Fehr, who would rather take your entire hand with it.

[opendoor]

I don't think the reason for the hate for escrow is all that complicated. The mechanism by which the upper limit is calculated combined with the NHLPA inflator that they keep using makes it so the cap rises faster than revenues. The result of this is that players with existing contracts are effectively giving up part of their salary to subsidize players who sign bigger new deals under the inflated cap levels. And the means by which they lose that money is increased escrow payments, hence the hate for the current setup.



That said, if the players felt so strongly about this they shouldn't have pumped the cap up by using their 5% escalator every year. Though it looks like they've finally learned their lesson the past couple of years.

[powderjunkie]

There's also the fact that 30 teams are likely to be over the 'midpoint' by the time the season starts...CBJ would have liked to be over if they could have retained a pricy UFA or two. The other 4 teams currently under will almost certainly exceed once they sign their RFAs...

[Enoch Root]

Originally Posted by opendoor

I don't think the reason for the hate for escrow is all that complicated. The mechanism by which the upper limit is calculated combined with the NHLPA inflator that they keep using makes it so the cap rises faster than revenues. The result of this is that players with existing contracts are effectively giving up part of their salary to subsidize players who sign bigger new deals under the inflated cap levels. And the means by which they lose that money is increased escrow payments, hence the hate for the current setup.



That said, if the players felt so strongly about this they shouldn't have pumped the cap up by using their 5% escalator every year. Though it looks like they've finally learned their lesson the past couple of years.

Existing contracts aren't subsidizing new, inflated contracts - all contracts are adjusted pro-rata. So the largest (new) contracts take the biggest hit. But all players share the adjustment at the same percentage.

The problem, as you pointed out, is the escalator, which pushes contracts up at a rate that is faster than HRR growth. This results in new contracts getting disproportionately high raises. It is also help feeding the trend towards the top players getting a larger and larger portion of HRR.

And, as you also pointed out, it is the players that drive the escalator.

The players are not victims here. It is a system that guarantees that they receive exactly 50% of HRR. The players are frustrated by the execution of the system, but it is the players' own actions (more accurately, their agents and leaders) that cause those frustrations.

[Resolute 14]

You're both right, really. The NHLPA usually maxed out the 5% inflator because it gave teams more cap space to spend, which for the players meant bigger contracts and the illusion of more money. However, since revenues often didn't cover the inflator, the players with existing contracts very much did end up losing more so that larger new contracts could be signed.

[Parallex]

Originally Posted by powderjunkie

There's also the fact that 30 teams are likely to be over the 'midpoint' by the time the season starts.

Yeah, if they want to permanently tackle escrow they should narrow the band (higher floor, lower ceiling), and find some different way to account for LTIR.

[sureLoss]

Here is what the hockey news says is being worked on to mitigate escrow:

https://thehockeynews.com/news/artic...ners-heres-how

· There has been conversation between the two sides about either freezing the upper limit of the salary cap or, rather than tying the cap to revenues, having it rise by a pre-determined amount (say, $2 million a year) or percentage (say, two percent).

· As it currently stands, the NHLPA has the option to impose a five-percent inflator on the salary cap number. This is really, really low-hanging fruit and will almost certainly be abolished. “The five percent is gone,” said one league source. “And now it’s a matter of needing your revenues to grow at a greater rate than the growth in the upper limit. So you either freeze the upper limit, which would bring a more dramatic reduction in escrow, or you fix the upper limit for a number of years.”

· Unless you’re intimately involved with the finances of NHL teams, it’s difficult to tell how much money this would save, but in the current CBA, the Workers’ Compensation Premium, half of which is paid by the employer and the other half by the employees, both contributions are credited to the players’ share of revenues. There has been talk that if the league’s contribution were taken out of the equation, that would lessen the players’ cut of the pie. That would obviously reduce escrow.

[Resolute 14]

That first quote is exactly the right way to do it. Drag the cap increase until you reach a sweet spot where escrow is close to 0 for most seasons.

[opendoor]

Originally Posted by Enoch Root

Existing contracts aren't subsidizing new, inflated contracts - all contracts are adjusted pro-rata. So the largest (new) contracts take the biggest hit. But all players share the adjustment at the same percentage.

They are though. Imagine two scenarios:

Scenario #1:

-Cap stays relatively flat and lines up with revenues
-new contracts are signed in a similar marketplace to existing ones
-little to no escrow holdback, so contracts are paid out at nearly their dollar value


Scenario #2:

-cap jumps up (due to inflator, optimistic projections, etc.) but revenues don't match
-new contracts are inflated due to a leaguewide surplus of cap space as a result of the big increase
-high escrow holdbacks to account for the disparity between cap level and HRR

The end result of scenario #2 is that players with existing contracts give up a larger portion of their contract to escrow holdbacks in order to create more cap space for a few free agents. That's the subsidization I'm talking about.

And it's not at all surprising that players with existing contracts would want things to line up more with scenario #1 than #2 and that's likely what they'll work towards.

Though I do agree it's pretty much all the players' faults as they kept bumping up the escalator every year which is responsible for pretty much all of this.