2023-24 escrow 6% collected, possible 3% refund

[Noldo]

Do you think that there would be any appetite for either party to discuss about option years for contracts?

NHLPA could see it as path towards non-guaranteed contracts (definitely no-no for them) and since the player pretty much would had to be paid the contracts AAV for any option years (to ensure smooth cap calculations), there may not be that much appetite from the owners side either.

 

[SI]

What are the chances that the Cap goes beyond the 5% cap rise? Is it set for 87.675? Or do folks think the next announcement is that the cap will be above that?

 

[Tawnos]

What are the chances that the Cap goes beyond the 5% cap rise? Is it set for 87.675? Or do folks think the next announcement is that the cap will be above that?

I think the chances are pretty small any time soon. The players just got done paying back the big escrow debt. If the limits on cap increases are the reason why escrow is now in such a good place after years of being a burden, it's hard to imagine them wanting to mess with that.

Which means that if the league wants it, they're going to have to offer the players something in exchange. At the same time, limiting the cap increases keeps their regular expenses lower. I would imagine they're not going to be very interested in it either, at least right now. If they're refunding players every single year, they might be more motivated to look at it again.

I could also be wrong about all of that, but it's just my sense on it.

 

[StreetHawk]

6% escrow and a net of 3% at the end is really ideal for the PA. They don't want it back to where it was at pre covid where it was 12-14% of their salary that had to go into escrow.

 

[SI]

Revising my question - with the move to SLC + relocation fee - HHR projection for 2024-25 most likely will be higher and may even climb over 7 B.

MOU states only 5% max increase but like this season the revenue proves that cap can be higher than the 5% as well as having escrow stay at 6%

IMO, More $ in the system or the pot is good for the league certainly for the NHLPA. Any chance they revisit this? Even with 4+m increase I think you will still teams with a 21-22 man rosters and LTIR usage

 

[Golden_Jet]

Revising my question - with the move to SLC + relocation fee - HHR projection for 2024-25 most likely will be higher and may even climb over 7 B.

MOU states only 5% max increase but like this season the revenue proves that cap can be higher than the 5% as well as having escrow stay at 6%

IMO, More $ in the system or the pot is good for the league certainly for the NHLPA. Any chance they revisit this? Even with 4+m increase I think you will still teams with a 21-22 man rosters and LTIR usage

relocation fee or sale of team is not HRR.

 

[mouser]

Revising my question - with the move to SLC + relocation fee - HHR projection for 2024-25 most likely will be higher and may even climb over 7 B.

MOU states only 5% max increase but like this season the revenue proves that cap can be higher than the 5% as well as having escrow stay at 6%

IMO, More $ in the system or the pot is good for the league certainly for the NHLPA. Any chance they revisit this? Even with 4+m increase I think you will still teams with a 21-22 man rosters and LTIR usage

An incomplete list of things which aren’t included in HRR:
- Team sales
- Relocation fees
- Expansion fees

 

[SI]

An incomplete list of things which aren’t included in HRR:
- Team sales
- Relocation fees
- Expansion fees

Thanks for clearing that up -

I guess with revenue trending up and SLC will have a positive contribution instead the blackhole that was Arizona.

@mouser - do you see them revisiting this 5% max increase?

 

[Golden_Jet]

Thanks for clearing that up -

I guess with revenue trending up and SLC will have a positive contribution instead the blackhole that was Arizona.

@mouser - do you see them revisiting this 5% max increase?

There’s a clause in MOU if you go read, that allows for that possibility, but both sides would need to agree, but there was more details involved in MOU.

 

[SI]

There’s a clause in MOU if you go read, that allows for that possibility, but both sides would need to agree, but there was more details involved in MOU.

I do not see that listed in the MOU.

I know that both parties could agree to go beyond that maximum, but will they without the PA conceding to something?

 

[mouser]

I do not see that listed in the MOU.

I know that both parties could agree to go beyond that maximum, but will they without the PA conceding to something?

It's in item #2
For any immediately upcoming League Year for which the NHL and NHLPA anticipate a Shortfall (as defined in Section 50.11(a)(i)) based on Preliminary or projected HRR, the parties may (but are not required to) increase the Upper Limit for that upcoming League Year by up to an additional 5% (over and above the increases dictated by the provisions above) so long as both the NHL and NHLPA agree to do so by the June 15th prior to that start of that League Year.

Earlier in the season there were media reports the NHL was willing to go beyond 5% but wanted some sort of concession in return. Reports were the NHLPA was not receptive to the unnamed requested concession(s). The only concession I've seen suggested in the media is increasing Escrow withholding beyond the MOU limit of 6%, but there could be others.

If a temporary Escrow withholding bump is the only item the NHL wants it seems reasonable to me that the two sides should have room to reach an agreement. If Escrow withholding had been 10% this season instead of 6% the players would have been received a 7% refund instead of the projected 3%--no change in final take home pay. Increasing Escrow does mean a larger portion of the player paychecks would be tied until the final HRR tallies are done months after the season ends, but any interest earned on the funds held in the Escrow account are paid to the players.

I'm not anticipating it will happen, but wouldn't be at all surprised if the NHL and PA reach agreement on a higher than 5% cap increase in the next two months.

 

[cowboy82nd]

Offer player and team opt-out in contacts which benefits both sides imo. It helps player to give leverage over a team to extend or trade him or he can opt-out for a bigger contract or to another team. It benefits team if they want opt-in or opt-out of a player at the end of a contract for a player. Idk why it’s not in already every other league has it

And how would you go about this? On this Opt-out contract, would the player still receive his money? Would the contract still be part of the cap for the team?

 

[DaBadGuy7]

And how would you go about this? On this Opt-out contract, would the player still receive his money? Would the contract still be part of the cap for the team?

Yes, all it would be is that a player can negotiate an opt-out within a year or two before the contract is over. That’s basically it, the contract would be over if they opted out and they would be a FA. This is how it is in the other major sports in NA.

 

[Golden_Jet]

Yes, all it would be is that a player can negotiate an opt-out within a year or two before the contract is over. That’s basically it, the contract would be over if they opted out and they would be a FA. This is how it is in the other major sports in NA.

What would the players give up in negotiating, to get that deal, as owners wouldn’t agree to it in a CBA.

 

[DaBadGuy7]

What would the players give up in negotiating, to get that deal, as owners wouldn’t agree to it in a CBA.

Well the owners themselves want to limit the length of long term contracts to 6 from I remember LeBrun reported a few years back. That would be a fair compromise imo, but neither is likely to happen.

 

[StreetHawk]

Yes, all it would be is that a player can negotiate an opt-out within a year or two before the contract is over. That’s basically it, the contract would be over if they opted out and they would be a FA. This is how it is in the other major sports in NA.

So how does an opt work impact the cap if the player had either a front or back loaded contract? Is the team eating $3 mill of dead cap for the money over cap hit paid to the player?

 

[DaBadGuy7]

So how does an opt work impact the cap if the player had either a front or back loaded contract? Is the team eating $3 mill of dead cap for the money over cap hit paid to the player?

If it’s like in the other sports, the remaining money owed is gone and he is FA, that’s basically it. The player is forfeiting the remaining years and amount to become a FA, the team would not that contract counts against the cap.

 

[StreetHawk]

If it’s like in the other sports, the remaining money owed is gone and he is FA, that’s basically it. The player is forfeiting the remaining years and amount to become a FA, the team would not that contract counts against the cap.

I’m asking if the player was paid $27 mill to date but his cap charge was $24 mill total to date if he opts out then the team would have to eat a $3 mill charge? Is that how that would work?

 

[Tawnos]

If it’s like in the other sports, the remaining money owed is gone and he is FA, that’s basically it. The player is forfeiting the remaining years and amount to become a FA, the team would not that contract counts against the cap.

That doesn't really address the question because salary and cap hit aren't the same thing. If a player opts out of a front loaded contract, the team got the benefit of a lower cap hit without the year or years that lowered the AAV. And reverse for a back loaded deal.

The only way options work is if the AAV is calculated before the option year(s). For example, a 3 year $12m contract, carrying an AAV of $4m for those three years with an option for a 4th year at $3m. The cap hit in the 4th year would be $3m. The problem with that is that it's also just known as an extension.

 

[DaBadGuy7]

I’m asking if the player was paid $27 mill to date but his cap charge was $24 mill total to date if he opts out then the team would have to eat a $3 mill charge? Is that how that would work?

That doesn't really address the question because salary and cap hit aren't the same thing. If a player opts out of a front loaded contract, the team got the benefit of a lower cap hit without the year or years that lowered the AAV. And reverse for a back loaded deal.

The only way options work is if the AAV is calculated before the option year(s). For example, a 3 year $12m contract, carrying an AAV of $4m for those three years with an option for a 4th year at $3m. The cap hit in the 4th year would be $3m. The problem with that is that it's also just known as an extension.

Here’s how the NBA option clauses work and this website explains it the best, full answer here
NBA Salary Cap FAQ

There are three types of options:

• Team Options give the team the right to invoke the option. There can be only one option year (except in the case of rookie scale contracts).
• Player Options give the player the right to invoke the option. There can be only one option year.
• Player Early Termination Options (ETOs) give the player the right to terminate the contract early. An ETO can't occur prior to the end of fourth season of the contract (which implies that the contract must be for five seasons). An ETO is not allowed in a veteran extension (see question number 58).

A contract may not contain more than one option, either in the same year (such as a player option and a team option in the same year) or in different years. The exception is rookie scale contracts for first round draft picks, which contain a team option before both the third and fourth seasons. No other options are permitted in rookie scale contracts. See question number 47 for more information.

Here's a summary of the differences between an option and an ETO:

• Options can be included in any multiyear contract, but ETOs are allowed only in five-year contracts.
• Options can be held by the player or the team, but ETOs are always held by the player (i.e., there's no such thing as a team Early Termination Option).
• Option years may not have a lower salary than the previous season. ETOs have no such restriction.
• A contract with a player option can be extended (see question number 58) when the option is not exercised. A contract with an ETO may not be extended if the ETO is exercised.
• When determining the amount of a trade bonus (see question number 99), option years are not counted as part of the remaining value of the contract, but years following an ETO are counted.

Obviously NBA is a soft cap that is very convoluted as opposed to the NHL hard cap that is very cut and dry strict for the most part. My best guess that an option contract would have to be straight-on that isn’t front or back loaded since the option year salary has to match the prior year salary. There would have to be major differences for it to work in the NHL, but I think it’s worth a shot if it allow for more flexibility.

 

[Tawnos]

Here’s how the NBA option clauses work and this website explains it the best, full answer here
NBA Salary Cap FAQ


Obviously NBA is a soft cap that is very convoluted as opposed to the NHL hard cap that is very cut and dry strict for the most part. My best guess that an option contract would have to be straight-on that isn’t front or back loaded since the option year salary has to match the prior year salary. There would have to be major differences for it to work in the NHL, but I think it’s worth a shot if it allow for more flexibility.

Yeah, I suppose you could restrict it in a similar way. Instead of "option year has to match prior year salary" you could make the restriction "option year has to match prior year cap hit" (also known as the AAV of the full contract).

 

[mouser]

I’m asking if the player was paid $27 mill to date but his cap charge was $24 mill total to date if he opts out then the team would have to eat a $3 mill charge? Is that how that would work?

That's how it works in the NFL, where signing bonuses can be spread across multiple seasons, but generate dead cap when a contract is traded or terminated.

Here’s how the NBA option clauses work and this website explains it the best, full answer here
NBA Salary Cap FAQ


Obviously NBA is a soft cap that is very convoluted as opposed to the NHL hard cap that is very cut and dry strict for the most part. My best guess that an option contract would have to be straight-on that isn’t front or back loaded since the option year salary has to match the prior year salary. There would have to be major differences for it to work in the NHL, but I think it’s worth a shot if it allow for more flexibility.

The NBA doesn't do contract averaging like the NHL does, or the NFL partially does for signing bonuses. In the NBA a player's cap hit is equal to their pay each season.

 

[StreetHawk]

That's how it works in the NFL, where signing bonuses can be spread across multiple seasons, but generate dead cap when a contract is traded or terminated.



The NBA doesn't do contract averaging like the NHL does, or the NFL partially does for signing bonuses. In the NBA a player's cap hit is equal to their pay each season.

correct on NBA. Curry's deal goes from like $48 mill in year 1 to high $50 mill in year 4. Cap charge is the salary.

NHL would have to make the team eat dead cap from an Opt Out as they want to ensure that all salary paid hits the salary cap.