Wednesday, January 28, 2009

Updated Escrow Projections

As I mentioned last night, I said I would take the format that Daniel Tolensky provided Saturday in his article over at HockeyBuzz and update it in light of new updates of the Escrow percentage and revenue growth via TheFan 590 and Paul Kelley, the Executive Director of the NHLPA.

As a quick reminder, Kelley said yesterday on TheFan 590 in Toronto that the NHL expects revenue growth at the end of this season, ranging from 1 to 2 %; but more and more its looking like 1%. Along with this, Kelley stated that the second half escrow percentage, which is the amount of player salaries that are held back from them in order to cover any shortfalls of the league and its clubs, will rise to 22.5% from the first half percentage of 13.5. Kelley then confirmed that this would give an average of 18% for the season, which is the number I used in my projections.

As I stated last night, the players will lose money this season due to escrow, it just depends on the bottom-line revenues at the end of the year which will determine how much. So, non-playoff team players, root for 7-game series all around. Without further adieu, here's what I came up with (click to enlarge if necessary):

A couple of quirks I ran into while running these numbers:

- In his +2 Revenue Scenario, Tolensky had an overpayment/shortfall % of 12.9 %. But when I ran his numbers again, I figured it to be 11.43%. Triple-checked and I'm not sure how he came to his number.
- In that same scenario (basis for this report), he has the interest at Escrow at 0.10%. Of a million, this would equal $100,000. Since I doubt the league would be paying 100K per player in interest, I changed this to .01%, or 1%, which equals 10,000. I'm not sure where Tolensky got his figure, but for now, this works.

What to take away from all of this. Focus on the Shortfall dollar and percentage figure. This is the amount of money the players are going to have to foot to bring the leagues clubs out of the red ink. If the league grows by 1%, this figure should be between 205 and 215 million, depending on how the revenue shakes out. This means that players will be handing over anywhere from 10 to 13% of their salaries. For the player making the league minimum of $450K, this means that close to $59,000 will be taken from them. Granted, I think they'll be alright with their bills, but that is still a significant amount.

Please comment if you think anything is wrong, or would like me to explain anything.

More later.

1 comment:

  1. I noticed a typo.

    The Escrow Interest % is supposed to read as 1 %