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Basic Fan Guide to Understanding NHLPA vs NHL Deferral and Escrow Battle
If you’re having trouble understanding what the latest issue is between the NHL and NHLPA over salaries for next season, this should help.
While it’s a bit tricky to understand at times, it’s difficult not to choose a side in the latest debate over players salaries. There are those who believe the players have a right to fight for what was agreed upon with the new CBA (Collective Bargaining Agreement). There are those who believe the NHL has a right to ask players to reevaluate that agreement considering the huge losses in revenues owners and the league are facing. Finally, there are those who believe this is just more selfishness from both sides as bigger things are going on around the NHL and as the world tries to cope with financial and emotional losses.
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The debate will wage on, likely long after this most recent dispute is resolved. Nonetheless, salary deferral and escrow adjustments is a reality in the here and now and both the NHL and the NHLPA need to address it if there’s any chance of playing professional hockey by the year 2021.
On the surface, the argument is pretty simple. The owners and the players both know that they’re to split NHL-related revenue right down the middle. A 50/50 split was agreed upon and it’s the reason escrow (withholding a percentage of player salaries) exists — so that if the players salaries exceed that 50%, the owners can even things out or vice versa. So, when you look at NHL players saying they don’t believe they should have to take less money in the coming season (should there be one), it’s hard to understand why the players would balk at concessions knowing that if they don’t decrease or prorate their pay, the owners will lose money hand-over-fist, putting teams and a season in jeopardy.
It’s not quite that simple.
A few reliable hockey insiders have examined more closely what the players real issue is and why they left a conference call with the league last week less-than thrilled. TSN’s Darren Dreger noted the players feel like they’ve already given and given. He adds that there’s a general feeling amongst the NHLPA that if the shoe was on the other foot, and the owners were asked to reevaluate a favorable position, the players would be ignored and dismissed almost immediately. To be honest, the players are probably right.
Here’s another way to look at it…
Player agent Allan Walsh explained while a guest on Tim and Sid this week that the players feel the discussion was already about the escrow and deferrals issue was already settled. Most notably, the players understanding was that the NHL had accounted for potential losses during the pandemic and calculated into the equation worst case scenarios. At that time, the NHL knew what they were doing and had estimated for the tough times that lay ahead.
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Walsh suggest that the players are now upset that just a few months later, the NHL wants to change the terms of that deal.
Walsh notes:
“There was a worst-case scenario, a moderate-case scenario and a best-case scenario contemplated between the parties when they negotiated the deal, so to come back four months later, when we might be looking at the worst-case scenario of no fans in the buildings or most of the regular season, and possibly playoffs, to then say, ‘Hey, you know that worst-case scenario we talked about during the negotiation? Yeah, we’d like a do-over on that and we’d like you guys to defer another 16 per cent and we’d like you guys in years four, five and six of the deal to take another three per cent a year of escrow. For the pleasure of giving this all back to us, we’ll let you play the 2020-21 season.”
Walsh said the players absolutely feel like the owners are putting the weight of the season on the players shoulders and pointing a proverbial gun at their heads.
Was This Really The Worst Case Scenario Anyone Envisioned?
The argument from the owners and the NHL side seems to be that nobody could have seen coming what is now facing all parties involved. The NHL did their best to make the NHL playoffs a success — and to their credit, they did so with no positive test cases and crowing a Stanley Cup Champion. But, the league took a huge loss focusing mostly on logistics and formatting.
No one expected that same situation would still be dragging on nearly six months later. And, because it is, and because the NHL is such a gate-driven league where fans in the stands is critical, the losses the teams and league is looking at were far too difficult to accurately predict.
At the same time, the owners aren’t really asking the players to flat out prorate their salaries. Some would argue that there’s no reason the players should be allowed to play only half of the games typically played in an NHL season, but make close to their full salaries.
The NHL offered up two options. First, there were changes solely focused on the upcoming season. They suggested deferred compensation (holding salaries back to a later year) went to 20 per cent; escrow to 25. The other option was deferred compensation to be raised to 26 per cent for next season and escrow would not touched until years four-to-six of the CBA, rising from six per cent to between 8.5 and nine.
Are the Players Going to Budge?
If there’s a pathway to getting this all resolved, it will likely be through salary deferral. Friedman notes that increased escrow is going to be a hard sell to the players but deferring their salaries to another time and date might be a place they’ll make sacrifices.
In the end, everyone wants to try and get something done and for the NHL to be as close to playing by January 1, 2021 as possible. Both sides will give here. It’s just a matter of how much to get the league going again and get back to focusing on formatting and logistics.
Next: A Few Fans In Arenas for 2021 NHL Season Won’t Fix Money Problems
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