The escrow rate for the season, which began Jan. 19 because of the lockout, started at 10 percent, but the NHL and the NHL Players’ Association agreed to raise the rate to 20 percent in early March, drawing from a provision in the collective-bargaining agreement that allows the sides to adjust the rate based on revenue and revenue projections during the season.
“We expect that effective rate will be somewhere between 10 and 15 percent,” Daly wrote in an email, referring to the amount held back this past season.
The escrow system was put in place in the previous CBA, which ended the 2004-05 lockout, as a mechanism to keep the amount distributed to NHL players at an agreed-upon percentage of hockey-related revenue. That percentage was 57 percent under the old CBA and is now 50 percent under the new CBA.
The salary cap for last season was $70 million and has been set at $64.3 million for the 2013-14 season. Daly noted that players “have received money back every year since there has been an Escrow. Eight years now.”
The NHL and the NHLPA will determine both what the escrow was for last season and what it should be for next season in October, Daly said. The two sides set the escrow four times during the NHL season, depending on revenue projections.
There has been some concern in the hockey community that the escrow rate could be very high next season because of the lower salary cap and because clubs used “compensation buyouts,” a feature in the new CBA, to buy out the contracts of some players, making those players free agents. NHL clubs exercised the buyouts on 18 players and the money comes out of the players’ share of revenue, leading one agent to say he was worried the escrow could be as high as 25 percent because of the buyouts.
Daly dismissed that, stating, “I don’t expect an escrow rate at 25% — or even approaching 25% for next year.”
The buyouts are paid over twice the length of an existing contract. So, for example, when a club buys out seven years remaining on a player’s contract, that player is paid the money over 14 years.
“Compliance buyout payments are charged against the (players’) Share in the years in which they are paid,” Daly wrote. “Thus the impact will be spread out over many years.”
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