Escrow key issue as NHL, union near labor deal
Deals get done when things get quiet. That’s the old saying that could bode well for the prospect of long-term labor peace in the NHL.
On Sept. 15, the NHL Players’ Association declined the opportunity to re-open the collective bargaining agreement early, two weeks after the league had done the same. Had either side done so it likely would have meant a work stoppage before the start of the 2020-21 season.
Instead, the two sides have been engaged in discussions but have not said much publicly about the talks. They were negotiating last week, sources said, and it’s possible they could extend the CBA beyond the 2021-22 NHL season. The deal is currently set to end on Sept. 15, 2022; had either side opted out, it would have expired on Sept. 15, 2020.
Although they have not given interviews, in statements issued on their decision not to opt out, both NHL Commissioner Gary Bettman and NHL Players’ Association Executive Director Don Fehr said there are things they’d like changed in the current CBA.
Fehr, in his statement issued Sept. 15, said the two sides have been talking about extending the deal.
Bettman, in a Sept. 1 statement said, “It is our hope that a continued, sustained period of labor peace will enable us to further grow the game and benefit all constituent groups: NHL players, clubs, our business partners and, most important, our fans.”
The current CBA was reached after a 119-day lockout in 2012-13 that ended after the players agreed to reduce the share of league revenue they receive to 50%. Some have said the players lost leverage by not opting out and demanding a new labor deal in 2020.
The owners have business reasons to want labor peace as well. The NHL’s television deal with NBC ends after the 2020-21 season. Additionally, the Seattle expansion team is set to debut in October 2021. The Seattle Times reported that the players not opting out was “a huge break” for the future team.
It’s no secret the biggest issue for players is escrow. Under the CBA, a certain percentage of the players’ contracted salaries are held in escrow.
It’s a system that began after the 2004-05 lockout, in which owners locked out players for an entire season. The purpose of the escrow is to ensure a hard salary cap.
The money is held until total revenue is determined; any amount over the escrow is returned to players. From the 2013-14 season through the 2018-19 season, the average escrow has ranged from 16.96% to 11.5% last season. The escrow for the upcoming season has not been determined, but the salary cap was set in June at $81.5 million.
That’s lower than the $83 million that was expected. One reason is that the NHLPA set a 0.5% growth factor on the cap. The CBA allows the NHLPA to implement a growth factor or escalator up to 5% to help determine the salary cap for the next season. The union had been applying the full 5% escalator for most years following the NHL lockout.
But in the past three years, the union has opted for a lower percentage growth factor — 1.35% for the 2017-18 season, 0.5% for the 2018-19 season and 0.5%, again, for this upcoming season.
“They didn’t push the escalator this year. So escrow isn’t going to be as big as an issue,” said one agent, who added he’s hopeful about an extension.
Another agent noted that a lot of players today weren’t around in 2005 when the NHLPA agreed to the salary cap and the escrow, and many don’t understand it or like it. “How would you feel if someone took 13% out of your paycheck?” this agent said.
Still, this agent is also optimistic about labor peace. “I have never seen the union and the NHL in the past as close as they are now.”