Saturday, October 08, 2005

Payback Time

In a post a couple of months ago, I estimated that the players would most likely have to forego another portion of their salaries to escrow. According to a TSN report, this will be the case for at least the first quarter of the season.

TSN's opening-day salary research indicates the excess spending is at least $110 million higher than the $907.5 million cap or ceiling, an aggregate total of at least $1.0175 billion. In order to balance that "over-spending," the players owe the league at least $110 million and it translates into a minimum 10 per cent withholding on their pay cheques for the first quarter of the season.
This is of course based on an estimated $1.7 billion in revenues - or a $400,000 decline from the previous season's. If this holds true to the end of the season, then the players would take another 10% pay cut on top of the 24% they already gave to end the lockout. Naslund's contract, for example, would go from $6 million this year to $5.4 million; Iginla's from $7 million to $6.3 million; Heatley's from $3.5 million to $3.15 million; etc.

The good news - well sorta good news - for the players is that hockey fans have come back strong - there is relatively-high renewal rate on season ticket sales, a new OLN TV deal to replace the one with ESPN, a new 10-year digital radio deal (XM) - and it is possible revenues won't decline as much as expected. If this is the case, the (excess) escrow amount will simply be returned to the players, though I'm sure this is small consolation to the players who, in the meantime, are paying back some of the money they have earned to bring back the game.
posted by J.J. Guerrero, 10:28 AM


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