NHL Finances, Escrow and the Flat Cap, a Discussion
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- Опубліковано 27 вер 2024
- Well, as we get set for another free agency season, it's a good time to talk about how things look as the NHL gets ready for a likely final season of the flat cap.
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The only thing I learned here is that Shannon needs to do a power rankings video based on the financial health of all teams.
That's actually a good idea
I would love that too, great idea!
I hope he does that, that’s a clever idea.
I thought he did
100%
Personally I love hearing about the financial side of hockey
Thank you shannon for all your hard work to allow new watchers understand the more confusing side of the game. Been a watcher since 45k subscribers, ive enjoyed watching this channel grow to what is today
I find it hilarious how many people comment before watching videos.
Perhaps unpopular opinion but I enjoy these business-oriented videos. It's definitely interesting to think about the behind-the-scenes operations of the league and that it really is a production / performance that they provide every night, and it's not cheap to run it. I really think any fans who wanna complain about the flat cap or just complain about the cap in general should have to watch these videos. It's not a sexy watch but there's a reason why things are the way they are.
I LOVE the hard cap. Over the long term it keeps the league competitive.
And I'm saying this as a Lightning fan who would love to keep all of our fantastic players but can't. It still makes hockey more competitive and fun overall.
Another reason why they've consistently needed escrow is that the cap is based on the cap mid-point (halfway between the cap limit and the cap floor), so if the revenues are estimated correctly and the average team is at the midpoint then there would be no escrow. It hasn't worked out that way though. The average team is way above the midpoint. The simplest thing would be to just base the cap on the most recent real numbers, and then adjust the players salary for that year upward (hopefully) after the fact. But both the players and the teams like having the illusion of more money to spend/receive.
No idea how practical this actually would be, though I feel like the 50/50 split should be based off what the league made in the last season instead of what they are projected to make. In my mind that should keep the numbers more clean and eliminate the need for escrow
It can take 3 years to know though
and owners have been known to hide assets. Many don't count luxury boxes because "it's a different expense" They like to get creative when it comes to keeping the money in their own pockets. That includes keeping it from other owners. Not just the players. Then it goes to court and it can take even longer to get the money
@@atanlyons1 you'd be hard pressed to be able to clear a box as an expense
Lawyers need work, they've got to get a cut. They love these complicated situations, they get paid to put teams into these messes, and paid to take them out... Either way, they're always paid!
There are so many fees and taxes, including the states and some cities of each hockey arena where they play.
I'm hoping Shannon will do a breakdown of the actual fees, percentages taxes taken out,(perhaps he's done one already and I missed it)
My math has David pastrnak making $11.25 million dollars per year, by the time he gets it into his Czechia bank account - it's about $3.75-$4.25 mil.
Their agents take 4%. So David Pastrnak's agent gets $450,000 per year according to this formula... He gets the manicures while Pasta gets the bruises.
We need leeches in the world. 🙄
This man just pops off with banger video after banger video
A near static cap next season is going to be a boon for teams like the Kraken with cap space available .
Outstanding presentation.. You would have to be one of the most professional sports media people in the industry, please keep it up!
Excellent video...Very well done and very informative
Bettman should have his salary escrowed at the same rate as the players & we'll see how he'd like that. The players' representatives should of negotiated that as a condition into the agreement.
Bettman only has, maybe, 5 years left as commissioner. I'm sure he wouldn't have a problem pulling a Jeremy Roenick.
@@csolivais1979 The scary part is thinking about how much more he's gonna wreck the league and its' credibility. Maybe one more lockout before he retires? It would be fitting.
@@ElmerFudd16 you might think he is wrecking the league, but all he cares about are that his bosses are happy. And they are happy, or a majority of them. Else he would be fired. And if the owners want another lock out, they will get it.
@@ElmerFudd16 that's if the players don't strike over the escrow
@@csolivais1979 Ok, the owners through Bettman are destroying the league.
Don't base the cap on projections. Base it on 45% or so of the final numbers of the prior full seasons' revenues. Not the season immediately previous but the one before. You can then have the owners pay 5% of revenues equaling the prior season, if this season matches, into an escrow account plus 50% of revenues exceeding the previous years. This can then be distributed to the players by the NHLPA by whatever rules they desire.
For example, if this started in the 2026-2027 season, the cap would be based on 45% of the revenue from the 2024-2025 season. After the numbers are finalized for the 2025-2026 season, the league can publish the salary cap for the 2027-2028 season, so GMs and agents can go to work, and the players all get their remaining 5% from 2025-2026.
The players will still get their 50%. The owners and players get a nearly two year cushion against any potential downfalls in revenue, everyone is unhappy, and all is right with the world.
Fuck getting rid of the hard cap. Hard cap is part of what makes the league better than others, soft cap is one of the biggest weaknesses the NBA has.
Just do a running balance. The balance can tilt either way within A threshold and if it goes over the threshold then you alter the next cap increase to adjust
This channel is great.
You could try a cap adjustment on deadline day this would make the trade deadline alot more active and exciting
This way you can have a smaller projected cap and if the league makes more money add to the cap at the deadline but make sure to keep next years cap reasonable and not raise it too much even if that means it drops from where it was at the deadline
Thank you for the information
I just got back from PantherLand from inside the FLA Live Arena and I'm glad I was able to snag an Adidas PrimeGreen authentic home red blank jersey with the 2023 Stanley Cup patch on the correct side. WHEW! Gonna sent it away to get Tkachuck's name and number sewn on!
Great video! I didn’t know how NHL finances work.
Love you buddy!
it would be nice if the league would learn to market their players... protect their stars. Show case them... The NHL has CONSTANTLY chased the NOW dollar, instead of the growth dollar. You saw it with the Roots TV deal. A deal in which the players association has 0 say in. That deal may have been "bigger" but the league shrank because not everyone had Roots. The league makes money inspite of TERRIBLE business decisions. All I hear is "owners take ALL the risk." Where's the risk if they're paying themselves first? How bout they get creative in their revenue streams. NFL, and NBA are constantly looking for new paths to money.
Whenever I read the phrase "financial terms were not disclosed" in a business deal I assume the numbers involved were embarrassingly low. That's what I assume regarding the Fanatics deal. Adidas is going through its own upheaval right now with the fallout of its Yeezy brand and its on/off relationship with US sports and culture. With the relatively quick turnaround I think Fanatics was the only brand to put in a bid; it was either them or nothing. The deal with Adidas worked out to $70m per year. I seriously doubt Fanatics will pay anything near that high, so whatever it is represents a significant drop for the league. And that's bad. Add it to a team playing in a 5000 seat arena, ratings being down, what do we make this up with? More ads? Anyways, great stuff as always.
I read it a different way as a PR professional (bear with me LOL). Financial terms are targets. Meaning, it's a point to attack when a deal is already unpopular, as this one is. However, it also violates the rule of transparency, because not disclosing looks worse than a bad number -- since the number will always be worse in the public eye.
The financial side of major league sports is more complex than I'd imagined, for sure.
So it sounds like to me the biggest problem is they are basing the cap based off projections. Could they start basing the salary cap changes off what the actual revenue was from the last season?
I enjoy accurate stats, so this matters.
Welcome back
Now instead of a huge leap next year, they should try to estimate and half it out over this year and next
I strongly believe if they didn't do the bubble playoffs in 2020 and the bubble season 2021 they wouldn't get the ESPN deal. We would still have to hear Pierre McGuire's random nonsense
FIRE BETTMAN. THROW OUT THE HARD CAP. ITS TIME FOR NBA DEAL.
"My team would be fine if the salary cap went up."
NO IT WOULDN'T! If the salary cap hit $90 million this summer, then salary demands for Free Agents would skyrocket and you wouldn't be able to sign anyone regardless.
I just don’t want another lock out.
Great video! Could you do a video on which team you should root for if you are a new fan?
the hard cap literally has cemented parity. As the only league with a true cap you are penalized for good development and or scouting. It would so cool I think if they came up with a formula where if you keep your home grown talent you are charged less against the cap. As you pointed out this is why teaMs do the LTIR dance. It’s a rule so use it. That could be easily changed.
It is a bit ridiculous. NFL has a hard cap, but they're is all kinds of wiggle room teams can find
@@mannyoliveira776 there are 2 issues, for one, 50% of the money still is going to the players so no matter what you do, its the same amount in the end. For 2, there are players who play both forward and defense. So which group do they count against?
That’s really not true though. Teams aren’t punished for growing their own talent. Entry level contracts and restricted free agency, and the discounted buyout window gives teams huge opportunities to get value from their home grown talent compared to free agency.
Basically every bad contract in the league is a free agent who’s aged poorly there are very few bad contracts given to rfas due to the control teams have over those players.
I know the players complain about the escrow... but the alternative would have been that the salary cap would have dropped and not by a little either...
One thing I've always liked about the NHL was the ad-free jerseys and helmets. Now that they're adopting the "European model" they're ruining the product for me. Just look at how horrible most of the Finnish top league jerseys look, you can barely see the logo of the team.
With the CBA expiring in 2026 there may be a chance we have a possible labor dispute that year.
in the case that players due some of advertising revenue from jerseys and equipment they were; that revenue could be used to cover any shortage of projected revenue from hockey operations for the year, with the rest going to increase salary cap?
A great video topic would be to show how much revenue the league lost out on based on player buyouts
Horray for financial videos!
What can players do on their own to meet responsibility for missed revenue projections?
I really don’t want a lockout my wall isn’t that interesting
I think everyone thinks 50/50 is totally fair. As to the hard cap, I have something I want, I want you to be able to sign that third deal with a player YOU DRAFTED, at a 50% cap rate, and let's say that's for 2 or 3 players on your team. What do you think players can ask for going forward? I don't think the public will support something other than 50/50. Just escrow?
If an owner didn't have business interruption insurance covering most of the Pandemic losses, that's on them. I bet most did and exclude it from their income and expense statement for technical accounting reasons.
Could the NHL just agree to do set the cap to the year behind not the current year? What would be the opposition to this? Wouldn't that get rid of the the Escrow?
...are the,Coyotes being relocated to Escrow...?
Players if they are against escrow have to remember that the other 50% of revenue if I understand correctly goes into arena staff, their coaching staff and other operating expenses... so yeah not sure how that will go over if escrow becomes an issue in 2026
I would imagine that only 10% of the players understand the difference between revenue and net income.
@@jefflarson1652 I can count to potato, majority of the league.
11:59 If the money players owe will be paid off next season, why will escrow continue beyond that time?
What I have NEVER heard of before is how much the League and Teams are taking in from Gambling. I know this is a sensitive topic but shouldn't that be included in HRR?
considering Pat McAffee got a pretty huge check from Fan Duel... I can imagine the leagues are eating well with their new incomes
How do teams circumvent the salary cap?
But it is the middle of the day, I don't want to go to sleep. 😁
More to the topic, Shannon, do you happen to know what the NHL's fiscal year is? Does it start at the draft, maybe at free-agency, or possibly when training camps open?
I would imagine it falls in line with the league year. So probably July 1 to June 30
Why are the salaries pre escrow counted against the cap? Should be post escrow. This isnt taxes.
Because how would that work if they don't know what the escrow is going to be? It's normally not until a year or two after the season being played that escrow is determined.
@@csolivais1979 they're charged up front. They get reimbursed at the end of the year
@@mattwilliams7454 but they do not always get reimbursed. Sometimes players lose that money. And from my understanding, escrow isn't the same percentage every year.
Can you discuss the league’s tv deal contracts
Honestly, this is the reason they keep bettman to undervalue the league untill they cam reach a long term agreement lol
Shannon almost said: Your mouth is writing checks you @$$ cant cash
Players: WE WANT PROFIT SHARING!
League - massive losses during covid
Panarin: THOSE ARE YOUR LOSSES NOT OURS!
tldr - stfu Panarin.
Canucks need more cap space to resign Myers and pick up more swedes!
Not exactly an exciting topic, Shannon. Gonna save this video and play it back as a cure for insomnia on nights when I can't sleep... 😅
This will always be the 4th best NA league till that rat goof Gary gets bounced
MLS is gonna pass it in popularity/ratings soon, if it hasn't already.
@@ElmerFudd16 no chance. MLS will never be as popular as any other North American league because it’s the only league where the most talented players in the sport don’t play in NA. If soccer grows in popularity in the Americas, it’ll be the European leagues before MLS
No other league does "escrow". (Connor McDavid if he were a NBA player would be making 2-3x what he does in the NHL). While the NHL has the lowest revenues of the "big-4" (MLB 10B, NFL 19B, NBA 10B, NHL 6B), they also have the 2nd least / most amount of contracts (NFL - 53, MLB - 25, NHL - 25, NBA - 12).
MLB (back in the day) used to claim they were losing money.. Things exploded when the LA DODGERS claimed they were losing money. So, the players said, "Fine, you're losing money? Show us the books". That ended the claim of MLB losing money.
NHL players need to do the same.
Bettman is the worst of the big-4 commissioners, not because of the: lockouts, (related to salary), the quasi-failed "Arizona experiment" (27 years is a decent enough sample size), the lack of (proper) marketing, the failed TV contracts (not to mention the network that covers the NHL continually dissing / disrespecting / demeaning the NHL), the loss / failure of regional TV broadcasts (Seriously, just HOW?) - but all of that.
The Ottawa Senators, a team that hasn't made the playoffs since 2017, has a valuation of over 800 million dollars (Per Forbes 2022). Their operating income (OI) is 47 million (compared to the LA Kings 88 million), and player expenses (PE) (per Forbes was 57 million). Revenue? 157 million.
R -OI - PE = a profit of 53 million.
Bettman's "role" is to placate the fans, act as a spokesperson for the league, and line the owners pockets with as much money as possible. He has failed the first, is ok in the second, and outstanding in the third.
NHL owners are penny wise and dollar foolish.
Players do have access to the books. I do like that you trust the numbers you quote and doubt the NHL's reporting on their finances, ignoring the billions lost over an 18 month span. Did Forbes have access to all of the NHL's revenue and expense numbers? Nope, it's an approximation based on numbers provided to them.
@@TheHockeyGuy So how did the NHL, and apparently ONLY the NHL lose money during Covid? Other leagues shut down or suspended games, or went with a shortened season.
Furthermore, and more to the point, why are the players held accountable for ownerships commissioners inability to manage or generate income?
@@georgeblair3894what are you talking about? They all lost money. The players have access to all the nhls books
Every league lost money. The bubble playoffs cost roughly 100 million and then there were few to no fans in attendance the following season league wide over a 56 game schedule. Of course the league lost money. They were paying the players based on a financial model that 2020 blew up.
Why shouldn't the players assume 50% of the losses if they get 50% of the profits?
@@georgeblair3894 the nfl dropped their salary cap down the year covid happened. Also the nfl most of the contracts aren't fully guaranteed money. So you can sign a deal worth 40 million, but only 4 million is guaranteed and you can be cut at anytime.
20k of 100k hurts you far more than 2m out of 10m. It is a lot of money but it's not equal
That's assuming costs don't go up with income. The reality is, the costs do go up with an increase in income.
@@TheHockeyGuy Those costs are optional. Anyone can live on 40k a year. If you make 10m, there is no inherent increase in living costs; you choose to increase your costs
So when a player makes millions, they shouldn't get a better home, vehicle or any other life upgrades? I would also disagree that anyone can live on 40K a year. I wouldn't be able to afford a rent on a house making that amount.
A lot of these players have wives and kids to take care of which is expensive as well. I am not saying they're poor, but losing 20% of their income is not great, especially if that escrow amount varies as much as it has in recent seasons.
@@TheHockeyGuy I'm not saying it's a good thing, I'm simply stating that you cannot possibly think looking 20% on 100k is just as bad as loosing 20% on 10m
Financial literacy is sorely lacking. More money =/= more cost. Don't wanna lose money? Be smarter with it. You don't have to buy a 3m dollar home just because you can.
If you want to buy a house in Vancouver, you're spending 3 million to do it. More money does equal more costs. Should I have stayed in a small apartment rather than move into a house when I had the money to make the move?
So many comments from people who didnt watch the video. Sad.
It helps the video, who cares?
why keep wearing the trans pride jersey?
thats an all star jersey
Can you continue the "Great Series" playlist once summer starts? I thoroughly enjoyed it. I am sure you ended off on 1990 on your second go around. Also, would you be down for making a video going over your least favorite Bruins and Stars playoff games, similar to what you did for the Canucks? 😍
the narrative of players being greedy is flat out ridiculous. sports as a whole, not just hockey, generates billions of dollars in revenue. old men in suits sit in the press box and make billions off the backs of the players and then use their power to get the media to say that the players are greedy so they can use their greed to make more and more money. Who would you rather the billions in revenue goes to? The players who create it, or some old farts who sit around and do nothing? I hate the narrative that players are greedy or overpaid when billionaires drain these guys of their lives and toss them aside when their done. Getting as much of the revenue as the players do now had to be fought for, the owners would pay the players nothing if they could.
NHL on the playoff patch: "We don't sacrifice on revenue!"
NHL on the Coyotes: "Having a traveling circus NHL team in Arizona is all part of the leagues vision."
Thanks for the explanation, Shannon.
Re: the "well, they're millionaires" argument...
For every Connor McDavid, there's several Greg McKegg, Seth Griffith, and Brad Malones (just picked 3 players off Edmonton's roster who are likely going to retire in their early 30s having made ~$4 million over 10 years). Which is a LOT more money than I'll ever see, and could absolutely be a lifetime's worth of income for many families... but they're likely to need to find other jobs in order to support themselves and dependents unless they were smart with investing and saving. It's still a *bit* hard for most of us to feel sorry for a someone who's made $2.5 million in post-tax lifetime earnings doing a job they (hopefully) loved, but it's a bit easier to sympathize with them than with someone who's made $50 million or $100 million.
If you raise the cap next year, then the 2023-24 free agent class will sign bigger contracts and every other player pays more escrow which would be the vast majority. Won't happen though it would be good for the league as cap crunched teams would have flexibility. I think too an increased cap would mean a higher overall number of contacts and more players getting opportunities ie more teams maxing out their 50 contracts.
Sorry , but one other point , I feel alot of players don't mind the current salary cap system , alot of players retire while collecting LTIR salary , and even tho that player will never play again (weber, Carey price ) the LTIR contract Still has value in the nhl today , especially if the contract has a high AAV but low salary because it was structured with large single payments instead of higher inseason salary.
Does anyone know if playoff revenue counts towards the number used to set the salary cap? I think it does, but I'm not sure because players don't collect pay cheques during the playoffs. @THG
no. Players are paid a stipend. It's why the leagues always want to increase playoff games. More money for them because the players make their money during the seaons. Owners make the real money in the playoffs
@Donnie Lyons so all hockey related revenues generated during the playoffs is strictly for the owners separately from league revenue?
Playoff revenue is included. That's why a Seattle final would have been great for the cap.
I don't think the players realize that if escrow goes then current players are going to end up short changed. The league & owners will set their forecasts low then when revenues come out to be larger they will add it onto the salary cap 2 or 3 years down the line, so the players will get their 50% of revenue but it will be to players coming after you've left.
NHL is making interest off of holding these funds.
I’m willing to bet that if the NHL makes more than their projections the players don’t get anything other than was put in the contract right? Or is it always 50/50 no matter if they make an extra hundred million or something just for the sake of an example
No, if the revenues are higher than expected, the cap is raised.
Ok, my head is hurting. Glad we have you keeping an eye on things on behalf of fans.
Almost everywhere else salaries (for example European football and hockey leagues) were cut during the pandemic. At the same time also governments gave subsidies. So the situation that NHL is unique.
Just as long as nhl doesn't turn into mlb or nba. The current cap along with the crazy contracts for many teams doesn't add up. How can u tie up 25 percent of ur cap to two players and still be able to keep the other players under contract and happy? It's already becoming an issue with many teams and it will get worse moving frwd unless things get adjusted.
Why would the NHL not want to be more like the NBA and MLB? Those leagues are massive especially NBA.
@Jay Kowsh Way too many crappy teams. Also easier to buy the championship than to actually earn it.
@@biglebowski3961 The NHL should always strive to be as popular as the NBA.
@Jay Kowsh That would be nice but I doubt it will ever happen. Hockey has certain type of audience. Football and basketball attracts broad range of viewers. Hopefully hockey can grow and become more popular in the US going forward. Would like to see more prime time games shown by major networks.
Can salary cap be raised while keeping ticket prices from going up too much?
Hockey players crying about money are the least of my worries, but a good video for those who don't grasp escrow. Love the 50/50 split, it's fair.
The salary cap is outdated and needs to be terminated, if anything the leave needs a salary floor and make it $70M that all teams need to hit each season.
do players get a share of advertising revenue on jerseys and equipment they wear?
On escrow, is there an independent party to verify how much the league makes in a year? In other words, do we just take the owners' word that they made a certain amount of money? I'm thinking they'd try to manipulate that number to be as low as possible to keep as much of the players' escrow money as possible.
Whoa I am gonna need a bunnie if you are going to do this video right now.
Great content bud
If I just paid over $22 for a beer at Rogers Arena, my sympathy towards the woes of billionaires and millionaires fighting over escrow goes down a bit. I really miss the days before the salary cap, when I barely paid attention to salaries, because tracking that information didn't have anything to do with whether the team I cheered for could build a competitive roster within the cap construct. If the team carried a player with a bad salary it was the owner's problem and didn't impact the fans. Now we've all been turned into armchair GMs and I miss when we could ignore the financial side of things. You'd hear about someone making millions, shake your head, and you were done with it.
Okay, grandma let's get you back to bed
@@Maubreyo someone must have given their phone to a kid at daycare.
@Gordon MacDowell Yes, even a child can see how dumb your opinion was.
Great video
Love the videos. Idea for a summer video: What would it look like if the NHL, AHL, and ECHL turned into a promotion/relegation system like European soccer. I know AHL and ECHL teams are NHL affiliates; but it’s more interesting pretending a team like Idaho could make it into the NHL like Luton Town made the Premier League.
👍🏾👍🏾
Damn posted for 50 seconds and there's already 22 views? I was trying to be first!
Awesome content!
Unrelated: Shit hit the fan for your favourite band Rammstein.. You might want to check it out.
Already saw that and nothing's proven at this point.
@@TheHockeyGuyAbsolutely. Let that be handled properly by the courts.
I just don't understand why nobody talks about a luxury tax system like the NBA. Like nobody in the NHL media even talks about it.
I mention it in this video.
Awesome 😎 can't wait to hear it.
@@coreypnorris Can''t wait to hear what?
@@TheHockeyGuy can I ask where please? I was listening to the whole thing and didnt catch that part. I was busy as I usually am listening to your videos.
The NHL has a hard cap. They're not giving that up for a luxury tax because they would never get the hard cap back. Owners in the NHL don't generally give up control over the costs.
I'd hate getting my escrow for 2022 in 2024 inflation affected dollars. Hope they make at least 5% APR on all escrowed accounts. Wonder if a player's agent gets their % based on net pay or on gross?