Canada4Gold
Registered User
- Dec 22, 2010
- 43,033
- 9,219
The exact amount of escrow for each season is not known until the season is over. The players and league agreed to a 50/50 split but every team doesn't spend to the cap so they had to decide on a point to make the cap as putting it exactly on the point that requires every team to spend to the cap to achieve a 50/50 split wouldn't work as the players would never get 50% that way. The point I believe they agreed upon is halfway between the cap and the floor(but I'm not 100% certain on that). Meaning if the average team spent more than that point the players were getting more, and the league less resulting in escrow. The other thing they did was give players what's called a cap escalator. They would choose to leave the cap where it was naturally by not using the escalator, or use it at any percent up to 5%. What that does isn't get the players more money but artificially raise the cap so that free agents that year get more, but in turn everyone has to pay back more in escrow to even it out. They made the choice to hike it up the full 5% year after year after year. Every year in fact until 3 years ago. They didn't seem to care about those escrow payments back then when it was getting any of them artificially overpaid.
As for the actual numbers, as I said they vary year to year. If more teams are spending closer to the cap with more LTIR guys(among other factors I'm forgetting or may not even know about) the escrow payments will likely be higher at the end of the year. If not they'll be lower.
And in fact if so many teams were near the floor, andI've never heard of this happening, but if it was so drastic that the average was below that midpoint line resulting in the league getting more than 50% I would assume escrow payments would go the other way with the players getting escrow payments made to them.
Like I said above, the cap isn't set up in a way such that every team spending to the cap exactly equals a 50/50 split. That's not missing money. When the set the system up they knew many teams would spend below that, perhaps underestimating it at the time when they set up that point(ergo escrow). The 81.5 million cap wasn't set up expecting that every team spending 81.5 million dollars results in a 50/50 split. It was expecting every team to spend on average 73.7575 million dollars and thought the 81.5 million dollar cap would achieve that(the underestimating I was referring to earlier). Maybe it worked well back in 2005 when the cap was set up and has changed since with teams spending more IDK. The cap number would have been ~81.09 but the 0.5% escalator they used bumps it up to 81.5. Had they used the full 5% escalator as they had done for years it would have been ~85.15, Teams would have spent more than they are now. Panarin likely gets a bigger contract, so does all the RFAs by an extra few hundred K probably. And boom, every player in the league has to pay a bunch more back in escrow.
I'm not sure what we're projecting the cap to be at the moment I haven't seen a number, the thing I know is inflation continues to go up every year. The cap will naturally rise. Some years more than other obviously. And the PA doesn't have much of a trick left in it's bad to stop it as they only have the 0.5 decrease in the inflator down to 0% which will only have a very tiny impact, smaller than previous years.
Last year the cap was 79.5%, but that's with the 1.5% inflator they used, with 0 inflator it would have been 78.325. This year without the inflator it would have been as I said about 81.09. It naturally went up about 2.76 million dollars this past year. It actually only went up 2 millipn because the reduction in the inflator from 1.5% to 0.5% hindered it. Assuming the PA drop to 0% next year that will hind it again(by about half of what it did this year), but it will still go up. The amount will be determined by how much growth there is this year.
It's so confusing because it has to be. You can't put set the cap so that it requires every team to spend to the max to get a 50/50 split because that won't happen. They're currently setting it too low because more teams are spending closer to the cap than perhaps they anticipated which means players are getting too much and have to pay it back in escrow. But there's no perfect place to put it to prevent escrow because when they set the cap for a year it's unknown what HRR will be, it also unknown how much each team spends that year. Escrow is inevitable. They could perhaps do with a new system of determining the cap to lower escrow, but that would have to be a gradual change as a lot of teams would suddenly be screwed if the cap dropped by 5 million suddenly.
The players don't like escrow, but it's not going away anytime soon, even with a 0% inflator. It won't go away until they change the system used to determine the cap as more teams are spending closer to the cap than what would be required for to meet the average line for 50/50 revenue split.
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