Jan 062006
 

One has to wonder if the NHL is playing funny with numbers again. This time with the predicted revenue for the season which has reduced the escrow players are getting deducted from their paychecks.

Current projections call for league-wide revenues of around $2.1 billion, some $300 million more than the $1.8 billion the new CBA had based this season’s framework on.

If revenues hit $1.9 billion this season, the total escrow payment at the end of the season will be about 6.9 per cent and if revenue hits $2 billion, the escrow payment would be in the range of 1.7 per cent.

So, the escrow is getting reduced to 4% from 12% which, if it doesn’t change any further, would put the average season rate at 7.4%. But what about the $2.1 billion predicted revenue. Even with a shortfall of $200 million players would still be paying too much escrow on $1.9 billion in revenue as they should be paying 6.9% on that revenue. At $2.1 billion in revenue the players will get everything back.

So one can only assume that the owners have very little confidence, even halfway through this season, in the $2.1 billion in predicted revenue since they still seem to believe that revene estimates could still be off by as much as 200 million. This seems odd since most revenue streams are already known. TV, radio, broadcast revenue is known, season tickets have been sold and individual tickey sales should be pretty predictable at this point. So why the cautiousness?

A while back I read someone (wish I had a link but I don’t remember who wrote it) believing that the NHL was putting out these rosy revenue projections as a way of helping Ted Saskin regain the support of his players. One thing the players haven’t liked in this CBA is the escrow but should they be promised a big fat check at the end of the season returning the escrow deductions maybe they won’t feel so bad about it. L0oking at these numbers, maybe there is some truth to this. It’s worth considering at least.

  One Response to “Is the NHL misleading us?”

  1.  

    I wouldn’t put too much stock in a percent or so here and there. I think in general the Escrow is supposed to be cautiously safe, so that in the end it should be higher than it needs to be.

    Also, don’t forget that we’re still only half way through the year, and there’s still the big uncertainty in the playoffs. For example, if we end up with Toronto-LA in the finals, I would imagine there would be more cash in the pockets overall than NJ-Edmonton, for example. Right there could be over 50M difference right there, which isn’t being taken into account right now.

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