It’s official: the NHL has locked out their players and worries persist that a deal won’t be reached in time to rescue the season. Large disparities in multiple areas are keeping the league’s board of governors and the players’ association from coming to a functional agreement. In this entry I’ll explore another of the key issues in the ongoing negotiations – escrow.
-picture courtesy of wnyhockeyreport.com
Escrow, as it is used in the NHL, sees the league withhold a certain percentage of the money from each player’s contract. During the summer following each season, based on the league’s revenues, this money is redistributed to ensure the profit split of 57% for the players and 43% to team owners was met. The end result of this system is that players are not guaranteed to receive the full value of their contracts. On two occassions since the implementation of escrow, players have actually been paid a small premium based on large league profits. However, after the other five seasons under the recently-expired CBA players have given up some of the salary from their contracts, including figures as high as 12% in the summer of 2010. The NHL wants to reduce the cost of player salaries, and higher escrow payments are one way they seek to do this. Obviously, the players’ association is strongly against this, so we see another of many stalemates at the bargaining table.
Sources:
– http://www.tsn.ca/nhl/story/?id=404989 (article by Bob McKenzie)
-Twitter accounts of hockey analysts Pierre LeBrun (@Real_ESPNLeBrun) and Darren Dreger (@DarrenDreger)