As the pause continues, it’s no surprise the NHL is preparing for a severe loss in revenue. It’s not to suggest they would rush to play, but like most of us, the league is facing serious financial issues. It’s already started inside the league office.
Just filed to ESPN: the NHL is temporarily cutting league office employees salaries by 25%.
According to sources, the NHL is hoping that the temporary pay cut among league office employees will prevent them from making any layoffs during this uncertain time.
— Emily Kaplan (@emilymkaplan) March 24, 2020
But the players may be the ones that get hit the most.
Hall of Fame hockey scribe Larry Brooks reported NHL players were alerted to a staggering amount of earnings lost due to the pause.
The NHL has informed the NHLPA that revenue losses could range from the best-case low of a couple of hundred million dollars to a worst-case amount of up to one billion dollars, The Post has learned. -Larry Brooks, NY Post
The NHLPA spoke with player representatives and explained the escrow share could reach a loss of 21% if the season and/or playoffs are canceled. Under the current labor agreement, it’s possible player contracts would be paid only 65% of their salary for 2019-20.
The season is approximately 85-percent complete. The discrepancy reflects a combination of the 6-to-10 percent of revenue generated by the playoffs and the fact that a full playoff would come at the cost of the remaining 15-percent of the season that would not be played. No wonder the players are pitching the idea of resuming the season in some form and playing for the Stanley Cup in August and September.-Brooks, NY Post
For a team like the Golden Knights who were expected to make a deep run, the pause takes significant money out of the players’ pockets. Playoff shares, according to the NHL are distributed by “A single lump-sum payment of $6,500,000 shall be made by the NHL to the players on account of a player fund, which shall be allocated to the players on clubs participating in the various playoff rounds and/or based upon club finish, as shall be determined by the NHLPA, subject to approval by the League.”
Without the postseason, players stand to lose a good chunk of change, and because of their escrow agreement, they stand to be impacted financially even more than the owners.
Players and owners split the NHL’s “hockey-related revenue” 50/50 (players get their share in salaries). At the end of the playoffs every year, both sides get together and count up how much money the NHL made that season. They then use that number to estimate how much it’ll make the next season (a five per cent bump is a typical ballpark guess). The salary cap, which is designed to make sure the players get 50 per cent of the revenue and no more, is then set based on that number.
But because it’s impossible to predict exactly how much revenue will come in, a percentage of every player’s paycheque is held in escrow until the money is counted at the end of the season (it isn’t always the same, but 15 per cent is a good ballpark number). If the NHL does really well and exceeds the revenue projection by a significant amount, all that money is returned to the players. But if it doesn’t, the owners get to keep however much they need to ensure they end up with exactly 50 per cent of the revenue. –Jesse Campigotto, CBC Sports
It’s not an ideal agreement for the player (which is why you continuously hear the term “escrow” when CBA negotiations come up), and it’s really bad with the potential of a shortened season without playoffs. Somehow reviving the season could soften the blow and mean more revenue for the league and less of a hit for the players. According to Brooks, a discussion is expected to take place between the union and the league. They will try and settle some of the financial differences.
These include, a) taking this year’s escrow and rolling it into next year; b) returning the refund still due from the 2018-19 season once the financials are reconciled; c) adding the projected escrow increase to the two paychecks still owed the players for this; and, d) deferring the escrow over a period of years when the new television-rights deals kick in after being negotiated. -Brooks, NY Post
It’s tough to call the players greedy when they’re caught up in an economic freeze like we all are. Sure to a different scale, but players are getting stiffed too. The only way to break that spell is for business to return to usual. There are glimmers of hope the season will resume, and one thing that could generate motivation is money. It’s possible the 2019-20 season isn’t done yet.