I hear a lot about escrow and how much the players hate it, but I don't really understand what it is. What is escrow? How does it work? How is the escrow rate calculated? How does it relate to HRR, the CBA, the last lockout, the possible next lockout?
Posted Jan 28, 2016, 8:34 PM UTC · edited
A percentage off of the players play gets placed in a trust over the course of the season (earns interest there). After the year is done the league learns how much actual money was made (Hockey Related Revenue), since in the CBA playera and teams split HRR 50-50. The money in escrow is used to pay the league when the salaries are higher than 50 percent of revenue to true up the sides (league made less than what the contracts pay). The left over (or all of it if the league made enough to reach their 50%) gets given to the players at the end of the season with the interest. I think on TSN earlier this week they said since the cap only twice has the leagued payed out the full escrow.
Escrow is a certain portion of salaries retained, with the promise of returning it once the year end 50/50 HRR split between the owners and the players.
With the revenue stagnating, or even dropping (in part to the falling Canadian Dollar) that money hasnt been reimbursed much, if at all. I'm not sure how the rate is calculated, but it has something to do with the revenue already collected, and the projected total for HRR