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Volume 21 No. 2
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NHL, union at odds over escrow refunds

As the NHL and the NHL Players’ Association prepare to negotiate a new collective-bargaining agreement, a dispute over player escrow from last season continues to escalate, with the league and union disagreeing last week about whether the union asked the league to release millions of dollars to players.

Players put 12.4 percent of their 2010-11 salaries, or about $200 million, into escrow, and the NHL agreed that they should get about 8.4 percent back. Normally, players get their escrow refunds from the previous season in October, but this year, the NHLPA took issue with the NHL’s calculation of how much is due back to the players.

The amount of money in dispute is a small portion of the $200 million, sources said, with both 1 percent of total salaries or a total of $25 million being referenced.

NHLPA Executive Director Don Fehr, in a letter to agents in October, said the amount in question could amount to “many millions of dollars” to players. NHL Deputy Commissioner Bill Daly, when asked last week how much money was at issue, said, “Hard question to answer. I don’t think it amounts to 1%.”

Beyond that, however, Fehr in his letter to agents said that the union had asked the NHL to release the amount not in dispute to the players while the two sides work out a resolution on the contested amount, and that the league refused. Daly last week said the union had never asked that the undisputed money be released to NHL players. “No, we never received a request to distribute escrow,” Daly wrote via email in answer to questions submitted by SportsBusiness Journal.

The dispute over the escrow funds affects not only money due to the players, but also money due to low-revenue NHL clubs, as a large portion of the escrow that does not go back to the players goes to those clubs as part of the league’s revenue sharing.

NHLPA spokesman Jonathan Weatherdon said last week that the union made verbal requests on two occasions for the NHL to release the money not in dispute to both the clubs and the players. Daly, however, said via email, “I don’t recall any conversation related to interim payment being made to the players.” He added, however, that he does recall that sometime in late September or early October that the union suggested releasing some of the money to the clubs for the purpose of revenue sharing, but not to the players.

“We said, ‘Thanks, but no thanks,’ because the CBA expressly contemplates that we come to a complete and final resolution of all outstanding issues before anything is distributed,” Daly wrote.

The dispute, sources said, relates to what the NHLPA contends is revenue that three clubs — Washington, Nashville and Phoenix — should have counted as hockey-related revenue, or HRR, but did not. The NHLPA had no comment on that point. Daly, via email, declined to specify any points of disagreement, noting that there are “a large number of open issues regarding a large number of clubs — as there are every year.”

Fehr, in his letter to agents in October, wrote, “The [escrow] reconciliation process is normally completed in October. This year, however, we have a number of unresolved disputes with the owners concerning the proper calculation of HRR which potentially amount to many millions of dollars. In short, we do not agree that HRR as currently calculated captures all revenue from which players are entitled to share.”

Fehr also wrote, “However, recognizing that this process will delay both escrow payments to players and revenue sharing payments to the teams, we proposed making an interim distribution to both teams and players in the immediate future, and then make final distributions once the final reconciliation is concluded. However, the League did not agree to this approach, meaning that no distribution can or will take place until the open issues are resolved.”

A number of news outlets reported around the time of the Fehr letter to agents, which was dated Oct. 14, that the union had asked that the money be released to players and the NHL refused. Daly last week called those reports inaccurate.

The escrow provision was agreed to as part of the current CBA, which ended the 2004-05 NHL lockout and the purpose of which is to ensure that players receive an exact percentage of HRR. Ever since it was put in place, NHL players have made it clear they do not like the escrow system, but it is not clear whether they will seek to get rid of it in the next CBA.

Fehr has said he expects to begin negotiating the new CBA after the All-Star Game on Jan. 29.

Player-side sources said last week that the dispute regarding the escrow has raised tensions between the two sides.

Daly, when asked whether the dispute could hurt negotiations for a new labor deal, said, “I don’t [see] any impact on CBA negotiations.”