BigEastDeac
Well-known member
- Joined
- Mar 20, 2011
- Messages
- 1,278
- Reaction score
- 74
No, that is pretty much how I understand it. I just think it's a bit hypocritical of players who have signed front loaded contracts that can take real dollars from other players to complain about a provision that will essentially do the same thing to players who sign future contracts.OK, it is Friday afternoon and I’m clearly not getting any more work done today, so I’m going to lay out my understanding of the escrow process and “make whole” at a high level. Bear with me. If you guys think I am misunderstanding anything, let me know, I’m trying to understand how this would work.
So the players (and I assume the teams) pay a portion of their earnings into escrow accounts. At the end of the year, it is determined what the annual revenue total was, and the escrow accounts are used to ensure a 57/43 split. So if GMs have committed more than 57% to players, the players don’t get the full value of their contract for that year as they don’t get their full escrow payment back. If GMs have committed less than 57% to players, the players get more than the value of their contract to get to a 57% split.
From what I’ve read, over the term of the last CBA, the players got about 97% of their salaries. So, averaging over time, GMs tended to commit around 57% of revenue to player contracts.
Let’s say next season they are able to get to a 50/50 split somehow. The NHL makes $4B, so $2B is allocated to the players. Since GMs seem to be close to the split, let’s say they committed $2B to the players. The players paid, maybe, 10% into escrow. So there is $200MM in escrow that will be refunded in full to the players to get them to $2B.
Now, let’s say there are deferred payments due to “make whole.” The players have still paid in $200MM of their $2B in contracts to escrow. The players would be getting the $2B that is their 50% share. But, before the distributions are made, they need to pay off the deferred payments associated with “make whole” to players under contract this season. So part of that $200MM is paid to “make whole,” and whatever is left is refunded to the players. So all players would be getting less than their 2013-2014 contracted salary, and less than they would be getting if there wasn’t that “make whole” provision.
It seems players that sign a contract under the new CBA will be screwed the most. The escrow payments they made from their contracted salary will be used to pay off “make whole” for the other players and they only get a portion back.
Meanwhile the owners are getting the same $2B (50/50 split) that they would've gotten if salaries were rolled back. The league figured out a way to make an offer and say "no rollbacks" without giving up a single cent. Sketchy.
Am I missing something?
The solution should be for the NHLPA to meet owners somewhere in the middle on this make whole provision. The players keep talking about concessions, but they really haven't conceded anything.