Business of Hockey

Artemi Panarin speaks out on escrow, return to play

Calls for players not to return until escrow is resolved

Artemi Panarin has voiced his opinion on escrow and the NHL’s return to plan plans. It isn’t pretty.

It’s clear that Panarin wants to play. It’s also clear that he, like many others, has concerns about COVID-19 and the precautions being set up by the NHL. Remember that New York is currently the only state that is seeing a reduction of cases. While he voices a concern, that is not his main concern.

It’s with escrow that Artemi Panarin has a major issue. Escrow ensures a 50/50 split on hockey related revenue (HRR) by taking a percentage of salary out of each player’s paycheck into an escrow account. That money is held until true revenues for the season are determined, then used to square up the owners and the players. The rest is then returned to the players. It isn’t a fun process. In fact, it’s rare that the players ever get 100% of their gross salaries.

The players do need to accept blame for their poorly negotiated CBA. That piece is on them. However the owners did negotiate in bad faith. Expansion revenue is not considered hockey related revenue (HRR). After the Seattle expansion news, that’s $1.15 billion that the players didn’t get a chunk of.

That is poorly negotiated by the players, but shady by the owners. Sports leagues thrive on a solid working relationship. The NHL is the only league to lose a full season, and has lost two over the past 25 years through three lockouts. The relationship needs repairing. This isn’t the way to do it.

Panarin isn’t alone in his thoughts about escrow. Ryan Kesler is one of many who agrees with Panarin.

Now Kesler’s understanding of escrow is a little misguided, but the sentiment is there. The players are obviously fed up with escrow and having money taken out of their pockets. There is no clear path to resolution, given that Panarin has called for players not to report to camp for the playoffs until this is resolved. That is also unlikely to happen.

Panarin’s concern probably isn’t going to impact the NHL’s return to play this season. It likely won’t impact next season either. However something like this could derail any further CBA negotiations. The current CBA expires after the 2021 season.

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  • my only comment is that since there inherently is risk returning and playing now that automatically creates a leverage and bargaining scenario so I don’t think he is out of bounds here voicing his cba concerns. (not unlike mlbpa)

    also when is the last time nyr had a voice that counted in these matters? (obviously you need the level of player)

  • Brilliant solutions never satisfy stupid people.

    If you are truly going to have a 50/50 revenue split, before the revenue is known, you cannot guarantee salaries.

    The reality is that all hockey players make a lot of money and numerous owners don’t. The labor woes are 100% on the players, many of whom simply can’t understand why baseball, football, and basketball players make more.

    I grew up in a world where teams exploited the players, but that is no longer the world we live in. A few guys are underpaid, guys like Panarin and Crosby who actually create fans for the sport, i.e., more than just help a team win. But many leverage teams’ need to win and the market to make way more than they deserve.

    • While you are correct in stating that 50/50 split could not be guaranteed without a system similar to escrow, I think the players are right to want a deal in place before they play again. My understanding is that under the current system, the owners will simply keep all of the escrow because the revenue won’t equal expected revenue. This means that the players will in fact bear the burden of the pandemic, as opposed to sharing it with the owners. A deal where players pay some escrow as they would in a normal season that actually played itself out is in my eyes a more just solution to the 50/50 split problem.
      By the way, while some owners may not “a lot” of money, that is quite frankly their problem. Teams are a financial asset that may or may not perform the way they want it to. Not making money means maybe you should change your business model, or sell the team if it’s really not worth it. Even in years where owners may not make “a lot” their franchises increase in value. The Coyotes are the least valuable franchise, and they saw a 3 percent increase in their value last year, to have a total value of 300 million. That is more than any player can make in a career. Painting the players as the bad guys because they want to be well paid for their services during the brief time in their lives when they can capitalize on their skills is both exactly what the owners want, and a ridiculous financial misinterpretation of the dynamic between players and owners.

      • “players are right to want a deal in place before they play again”

        It may be reasonable to want a deal in place, but it is immoral to insist on it at this point and it is not right to want what is immoral.

        As for this season, the argument is about whether the owners take the hit for the pandemic or whether that hit is split 50/50. And the players want the owners to absorb a higher portion of the hit. Actually, in any case, even if the owners get what they are contractually entitled to, they will bear most of the loss (as of course they should – as you say, they are a business).

        The NHL can’t change its business model. The players’ union and courts pretty much rule that out. And owners are investors, they need to make money or shut down the league. Someone else talked aboiut billionaire owners – they did not become billionaires by being owners – they became owners because they were already billionaires. Mario Lemieux did not buy the Penguins because he wanted to make money; it was an act of love.

        Politics are a big problem here. Most people seem to love unions or hate unions – very few are willing to say unions are good here and bad there.

    • ALL hockey players do not make a lot of money. Most, if not all, teams, have players making the league minimum, which is $700,000 per year. Yeah, that’s a lot of money, but considering that an NHL player making the minimum is almost certainly going to have a VERY short career, it’s worth fighting for every penny. As for the owners not making money, they’re supposed to be astute businessmen. If they can’t manage their business profitably, why should the players be forced to subsidize them?

      • Let’s be clear. The players are giving no money whatsoever to the owners. The owners give money to the players. The money flow is in one direction. The players do not subsidize the owners in any sense of the word.

        The owners are businessmen, yes. One part of being a successful businessman is not overpaying your employees.

        Incidentally, the reason escrow is a problem is because the salary cap is set too high. I do believe that players at the minimum should not face escrow.

        • Yes, the salary cap is set by the owners and the NHLPA based on a set of criteria they came up with in order to protect the weaker franchises. They’ve artificially depressed player salaries … and then just to add insult to injury they throw in an exorbitant escrow clause while cooking the books to have “revenue” appear to be less than it really is, thereby forcing more of the escrow to be withheld at the end of the season.

          Maybe the better solution would be to support a slightly lower soft cap with a 100% (or just pick an appropriate %) tax on any amount over that figure, distributing the proceeds to the teams under that figure on a proportional basis. I don’t believe the onus should be on players when the players can’t participate in the rise of franchise values due to the NHL expanding irresponsibly — but that’s just my opinion.

          • Ignoring the franchise fee, expansion benefits the players by creating more jobs and more competition for their services. It hurts owners by forcing them to divvy up national television revenues.

            Truthfully, giving 50% of revenue to the players is absurd. Teams have lots of expenses and that other half would soon be gone. They have to cook the books at least a little to survive. Sure, the players should try to keep them reasonably honest but there is no point in worrying about the franchise fee.

            You probably know what the excrow deal is, but I didn’t actually and will mention it. The teams estimate 50% revenue for the year at an average of $70M per team. They set the salary cap at $80M (15% above) and the floor at $60M and it all works perfectly if revenue comes in as expected and the average team spends $70M. But of course the average team spends $77M on player salaries and so players would be getting 55% of revenue without the escrow. They would not need an escrow if they just set the salary cap at $73M, but either way, Panarin ends up with $10.5M per year. But it’s more prestigious for him and the league if we say his salary is $11.6M.

          • Actually it usually increases the value of each franchise — and when you cover more markets you increase TV viewership which in turn means more TV money down the line.

            Re: the games they play with the books, I’m guessing you have no idea just how bad it really is. 😉

  • I support the Players … it’s a ludicrous system that has always been manipulated by the owners.

    Side Note: Tom Brady channels FDR, continues to hold ‘illegal’ workouts.
    I guess once a cheater always a cheater. 😉

  • A lot of fans blame these work stoppages on the players. “These greedy millionaires,” I’ve heard it a million times. However, the fans forget about the billionaire owners. The players did get a raw deal on the most recent CBA. The players know this and still voted to continue the most recent CBA rather than have a work stoppage. If the players want a better deal when this CBA expires then they’re considered greedy and selfish. It’s ok for the owners to be this way and dig their line in the sand. I don’t agree with that. I’m a union man myself. The amounts of money don’t matter. The players are just like my fellow Local #1 plumbers. You have to fight for the best deal possible. Even if the fans don’t like it. They don’t have to pay The Escrow.

  • The series of long labour disputes over the years has resulted in losing fans and popularity.

    The NHL lost the status of the number 3 spot in North America professional sports and as a result revenue is falling. Bettman is more concern with playing hardball with the players then he is in growing the game.

    • As far as I know, he’s the only commissioner of a major sports league to have overseen THREE lockouts during his career.

      • Let me kind of correct you, Bettman is the only Commish to have a work stoppage for every end of the CBA during his reign since he took office.

  • Yawn! Ooo, which side do I pick? The billionaires or the multi-millionaires? It’s such a hard choice.

    Almost ALL of these guys make more than almost everyone in a matter of weeks, if not days, and some in just a few minutes. Spare me the “we’re just like everyone else” non-sense. None… and I mean NONE… of these players or owners are suffering at all financially. You can take the league minimum, cut it in half, and that is still waaaaay more than over 90% of people make in a year.

    I’m always surprised they have the gall to even air this bs out publicly. And then try to get real people to sympathize?!? It is just so out of touch. I choose no sides in these debates. It costs me hundreds of dollars to take my kids to ONE game. Gimme a break, they’re all a bunch of greedy pigs.

    • Totally agree. The fans are the customers. And like all customers these days they get less and pay more.

    • Then just watch them on TV — if enough people do that in protest it might have some effect on prices — like if enough people didn’t buy their overpriced food.

      Remember though, the players pay a big price physically to play … and they have a limited number of years to make their money in the sport. These are supposedly the 700 BEST players in the world at any given moment — some of the best “entertainers” in the world, why shouldn’t they have the right to get the most out of what they do? The owners can own for life and pay no price other than money — which usually they already have way too much of. I don’t want to suggest that sports isn’t a business, I get that … but pride of ownership should count for something and there should be a certain responsibility to the public at large. Again though, just my humble opinion.

  • Very, very few hockey players play solely for the money. For them, it’s a love of the game and the camaraderie that you develop with your teammates. For most owners, it’s an investment and a business, looking for maximum revenue from ticket sales, concessions, merchandise marketing and TV deals. If owners don’t make enough, they can plead for tax breaks from local politicians, trade players to reduce expenses or, if all else fails, sell the team. Players can only play hockey until their bodies and their skills succumb to the ravages of the game and of time. Who can blame them for trying to get what they can in the relatively short time they have to get it?

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