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Players, Penguins Paychecks About to Be Slammed by NHL Escrow

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NHL return Pittsburgh Penguins Washington Capitals

Lose big money now, or lose that same money and jobs over a few years. The NHL players are about to bear the brunt of the COVID-19 work stoppage over the coming two, maybe three seasons. While owners will eventually get 50% of revenues, an appreciating product, expansion fees, and growing TV revenues, players will have to make up the current losses to owners. Factoring taxes, local taxes, escrow, and additional NHL escrow make-goods, the Pittsburgh Penguins players, and the rest of the puck-rakers are about to get hosed.

First, a quick primer. The players and NHL owners split hockey-related revenues 50/50. At the end of each season, the bean counters add the toonies, loonies, and bucks, then project how much the NHL will make in the next season. The league and players union generally assume revenues will grow by a few points from the previous year, and that is how they set the salary cap.

The players put about 15% of their salaries in escrow. If the league exceeds revenue projections for the year, the players get their 15% escrow back, though that hasn’t yet happened. More commonly, the escrow is divided among the players and owners to ensure a 50/50 split.

The NHL and NHLPA are working through the night on Tuesday to finalize details for the NHL hub cities, but also CBA details, including current escrow distributions. Escrow was a pressing issue in CBA negotiations before the COVID-19 pause. Now it’s become a monster that no one likes but neither side can contain.

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