Escrow a big reason why NHL players may opt out of Collective Bargaining Agreement
Jonathan Toews just wants to be paid what his contract says he should be paid.
Not a dollar more. Not a dollar less.
But that's not the way it works in the NHL because of a dirty little word -- among players anyway -- known as escrow.
Every year, players have a percentage of their salary deducted and placed into an account until the league determines how much of that pool must be paid to the owners to achieve a 50/50 revenue split.
In the early days of the current collective bargaining agreement (CBA), players actually received their escrow back, plus a bit more. But the rising salary cap has enabled owners to dole out heftier contracts -- and revenues have not kept up.
So players are losing in excess of 10 percent of their annual salaries.
Along with participation in the Olympics, escrow is a big reason the NHL Players' Association may opt out of the current CBA by Sept. 15. The two sides would then have until next season to agree upon a new CBA. If they don't, the 2020-21 campaign could be shortened -- or in jeopardy altogether.
"We've had several bargaining discussions with the league, and have future meetings planned," NHLPA spokesman Jonathan Weatherdon told the Daily Herald in an email.
A request to speak with Donald Fehr, the executive director of the NHLPA, was denied by the organization's media relations senior manager.
The NHLPA executive board will join players from around the league in Chicago on Wednesday to discuss the situation. If the NHLPA does not opt out, the current CBA would run until 2022.
"There's obvious incentive for the NHL owners to have (escrow)," Toews told me as last season wound down. "They get money back, depending on their performance. So now that responsibility falls on the player."
Toews made $13.8 million in the first three years of his current contract, $12 million last season and is set to make $9.8 million in 2019-20.
"I'm no financial expert," the Blackhawks' captain continued. "All I see is that I've signed a contract and to me it's not exactly being honored. So I don't care what business you're in -- to me that's kind of ridiculous.
"They've done a good job of making the players look like the greedy ones in the past several lockouts, and I wouldn't be surprised if they tried to do it again. To me it's pretty black and white."
Fans already know how little trust there is between the NHL and the NHLPA.
After all, the entire 2004-05 season was lost, and the 2012-13 season was shortened to 48 games after a deal finally was reached.
Before the cap was implemented in 2005, the league said it spent about three-quarters of hockey-related revenues on salaries.
Now, escrow allows owners to pay themselves back to achieve a 50/50 split with players. Players lost 13.83 percent of their salary in 2015-16 and 12.7 percent in 2016-17. Final numbers are not yet in for the last two seasons.
"I don't think anybody thought it was going to get to where it was or it probably would have been a bigger deal," said Chris Kunitz, who played for the Hawks last season and retired in July. "For my take, you agreed upon a certain salary to be paid, and if they're taking 13.5 percent of that you think, 'Wow. (We) should have probably done a little more thinking.' "
St. Louis' Jay Bouwmeester and Toronto's Jason Spezza had two interesting takes on what has transpired over the years.
Let's start with Bouwmeester, who wonders if the league is doing everything possible to grow the game's popularity -- and in turn -- its revenue.
"You look at some of the buildings that you go into and they're half empty or more than half empty," Bouwmeester said. "It's usually the same buildings. You wonder what's going on here? What's the plan to negate that and move ahead with this grand scheme that they had initially?
"That's beyond my pay grade -- how to grow the game and grow the revenue."
Spezza, who admitted he has benefited from the rising salary cap, takes a more practical approach to the escrow dilemma.
"You have to look at it in a way where it's just a mechanism to create the 50/50 partnership," he said. "Would it be a better system if there was no escrow and the cap didn't go up? I think it'd be a cleaner system for guys to understand.
"Now, would guys be making less? Who knows? I'm not an economist."
The NHL also could have opted out of the CBA by Sept. 1, but on Aug. 30 the league alerted players that it would not do so. Commissioner Gary Bettman issued a statement that said the league wants "to continue building the momentum we have created with our players."
Bettman also went on to say he understands not everything is perfect.
"In any CBA, the parties can always identify issues they are unhappy with and would like to see changed," he said. "However, our analysis makes clear that the benefits of continuing to operate under the terms of the current CBA -- while working with the Players' Association to address our respective concerns -- far outweigh the disruptive consequences of terminating it following the upcoming season."
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Contract contractionEach season NHL players have a certain percentage of their paychecks put into an escrow account until the league determines how much of that money is needed to achieve a 50/50 revenue split between players and owners. Below is how much players had taken out the last four seasons and what percentage of their contracts they ultimately earned.
Season Escrow withholding rate % of contract earned
2015-16 16.96% 86.17%
2016-17 15.5% 87.3%
2017-18 11.5% ?
2018-19 12.91% ?
NOTE: Final numbers are not in for the past two seasons.
Source: NHL Players' Association