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Escrow

Mar. 6, 2020 at 12:43 p.m.
#1
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So I'm very confused on Escrow but I've seen it come up with the rumored cap increase. I was wondering if someone could help me out with learning what it is/how it affects things. If there is even a good resource I could be pointed towards that would be greatly appreciated. I'm sure there is some where on here but I can't find anything and don't really know where to look. Thanks in advance if anyone can help me out
Mar. 6, 2020 at 1:07 p.m.
#2
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Escrow is essentially a percentage of the players' salary that comes out of their paycheck's relative to the cap. The higher the cap is, the more escrow they have to pay. The players obviously hate this, so it's highly unlikely that the cap goes up much more than the lower end of the projection, given that the player's association has a say in it.
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Mar. 6, 2020 at 1:12 p.m.
#3
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Quoting: krakowitz
Escrow is essentially a percentage of the players' salary that comes out of their paycheck's relative to the cap. The higher the cap is, the more escrow they have to pay. The players obviously hate this, so it's highly unlikely that the cap goes up much more than the lower end of the projection, given that the player's association has a say in it.


Oh ok that makes sense, I had no clue what it was, thanks a ton!
Mar. 6, 2020 at 4:35 p.m.
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Adding on to what krak said, it's essentially tied to league revenues.

Hockey-related revenue (HRR) is split 50-50 between the owners and the players, per the CBA. Due to the inability to know for certain how much HRR will come in for the respective fiscal year, a percentage is taken out of players' paychecks and held in 'escrow' which is basically an account that holds the money for future dispersal. Once all of the accounting for the league's fiscal year is completed, it is determined how much of that escrow money goes back to the players in order to ensure the 50-50 split. Since player salaries almost always grow at a faster rate than HRR, players will almost always lose money in the end and won't recoup a lot of the escrow payments.

If the cap grows organically (through increased revenues rather than through the NHLPA-induced escalator) escrow payments will still occur, but likely won't be as high.
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