Dec 162008
 

Mark Spector of Sportsnet.ca is reporting that there could be an increase in the percentage of the players salaries that are kept in escrow. The players have always paid money into the escrow account which is set up to ensure the owners don’t pay the players more than the percentage of revenues the players are set to receive as determined by the CBA.

This season the NHL and NHLPA initially set the escrow to 12.5% meaning 12.5% of every players salary would be put into the escrow account. The 12.5% number represents the highest level ever required. But Mark Spector is reporting that in January that number could increase to 13.5% which would be the first time the escrow hold back percentage has increased, and not decreased, mid season. What this means is the NHL is more pessimistic about revenue projections than they were before the season began (but don’t tell Gary Bettman, he thinks everything is just fine).

A while back I discussed the impact of the falling Canadian dollar on league revenues and the salary cap for next season. If this increase in escrow payments is an indication of little or now growth in league wide revenues this season it may be a safe assumption that at best the salary cap stays the same next year with a greater potential for it to drop by possibly up to $3 million and if the economic downturn continues the following season could see the salary cap drop even further. If this happens several teams could find themselves with serious salary cap problems.

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