Can you give a real example.
Say cap is 50mil.
Thanks to MArc for a good calculation. I'll just add to it by showing the two faces of the escrow payment:
Players lose their escrow payment in 2008-2009 (but actually still get paid escrow LOL):
A memo from NHL commissioner Gary Bettman to the governors itemized just how the players’ money in the escrow fund was split up. It was the second time since the system was implemented in 2005 the players did not get 100 per cent of their salaries (they lost 2.5 per cent in 2006-07), but it was the first major haircut with 12.9 per cent coming off their compensation.
Actually it's not as bad as it sounds because here's the split:
League makes $2.58B the year before in a bad economy. (btw, CAD$ = 0.85 USD$ at that time). NHLPA removes 18% of player salaries in escrow - they usually take out too much to be on the safe side.
$2.58B*56.74% = $1.47B in player salaries (2007-2008), round to $1.59B (ESTIMATED from previous year's growth)
$1.59*18% = $287M in escrow for 2008-2009
That year, NHL teams actually paid the players ~$1.7B. The league only grew 0.6% (they made $2.6B) so the players were paid $207M too much (this number is the real number with no rounding according to the article.)
So the $287M in escrow became $80M players, $48.7M RS, $28M midpoint top-up, and $130M to all teams. Essentially the players took more than 56.74% that year so some of their salaries were reimbursed to the owners to make the split 43.26/56.74 exactly.
In contrast, in 2005-2006 the players got all their
money back plus some:
The NHL Players' Association informed its membership Wednesday that the league's 700-plus players will receive all of their escrowed payments plus interest as well as additional "shortfall" payments of between 3.5 to 4.5 percent.
The math here is the same as above. Estimate revenue based on last year plus growth. Remove a certain (large) percentage from player salaries. Do final accounting at end of year, then either pay back the players or pay back the owners.
There's an excellent mouser post in
another thread:
btw, here are the figures I have:
+ Means owners paid extra to players.
- Means players returned to owners.
All %'s are as a portion of the total player compensation.
2005-2006: +0.40%
2006-2007: -2.76%
2007-2008: +0.48%
2008-2009: -12.90%
2009-2010: -9.4% [I added in this number from the Shoalts article above]
2010-2011: -4.0% (-2.3% after the lawsuit, again from the article)
I have no 2011-12 numbers but I see in some reports that the players expect to get 8% of their salaries back.
The use of the escalator is not discussed here but that is an interesting internal conflict in the NHLPA by itself.