Artemi Panarin: Players won’t report without a new escrow agreement

Artemi Panarin of the New York Rangers dropped a bomb on the NHL in a post about escrow

Artemi Panarin posted a statement on his Instagram and Twitter accounts that puts him squarely in the middle of the negotiations between the NHL Players Association (NHLPA)  and the owners.  Escrow is the biggest sticking point in a new contract and Panarin basically said that without a resolution, there won’t be a postseason.

Here is Panarin’s complete statement and it’s a doozy:

“I am very much looking forward to the playoffs with the New York Rangers. I have concerns not only about the health of players and their families but also about the long term prosperity of the NHL. For nearly two decades, the Players have protected the owners income with escrow, including throughout this pandemic crisis, even as owners’ equity continues to grow exponentially. It is time to fix the escrow. We as players cannot report to camp to resume play without already having an agreement in place. We are all in this together. Also, I know the process for selection of the Hub Cities is ongoing. I sincerely wish that my teammates and I could train and play games at MSG and bring employment and economic opportunity safely back to New York City for Ranger fans and all New Yorkers.”

Panarin addressed health issues facing the players and league in the return to play.   He was careful to be complimentary about the Rangers and New York City.  He stressed that the players are partners with the owners in seeking a healthy future for the NHL.

Most importantly, he said that without a new collective bargaining agreement (CBA)  in place and the escrow issue resolved, players cannot report to training camps that are supposed to begin on July 10.

The escrow issue

It’s important to understand the escrow issue that is so important and irritating to the players.  Here’s how it works.

Under the last CBA, the players and the owners agreed to split all hockey related revenue 50/50.  The players get their share in salary and the owners get theirs from ticket sales, television rights and concessions etc.  In order to guarantee that the owners will get their 50%, a percentage of the players’ salaries is withheld until the season is over and all revenue numbers can be reviewed. If owners revenue does not hit the 50 % mark, the difference comes out of the escrow amount.

This year, the escrow percentage withheld was 14% of salaries and with losses from the pandemic, it’s anticipated that much of the money held in escrow won’t be returned so the owners can be made whole.

The salary cap is based on that 50% revenue split and has traditionally increased by 15% annually, based on revenue projections.

When the CBA was first negotiated, players use to get  their escrow back as most teams did not spend up to the salary cap.  Now, with the salary cap rising and most teams spending close to the cap, hockey related revenue has fallen short of the 50% and players have been losing about 10% of their annual salaries.

Jonathan Toews has been complaining about this for years, famously telling a Chicago newspaper last year, “All I see is that I’ve signed a contract and to me, it’s not exactly being honored. So I don’t care what business you’re in, to me, that’s kind of ridiculous.”

He has a point.  A player signs a contract in good faith, but has no control of how the teams are managing their money.  If they don’t do a good job, his salary goes down.  The owners’ position is that even if salaries go down, the players are still getting their 50%.

For Artemi Panarin, escrow can add up to millions. This season, he is supposed to be making $14 million in salary and bonuses, but if the full 14% comes out, he will lose $1.96 million.  While it’s easy to say “poor Artemi,” you can also see why a player may feel that an executed contract is not being honored.

That’s why Panarin drew a line in the sand and said that without the issue resolved, they won’t report.  While many will say that Panarin is being greedy and making $12 million is a helluva salary, don’t forget that escrow affects all NHL players.  Imagine if you agreed to a salary of $75k from your job and $10,500 was taken away because your bosses didn’t make their number.

While the current CBA doesn’t expire until after the 2021-22 season, the league and the NHLPA are working on a new deal.  The COVID-19 pandemic has raised the stakes substantially with the league needing agreement from the union in order for the season to proceed. If the league makes no concessions on the escrow front, this season is as good as dead.

There have been some possibilities raised if escrow is not going to go away. There is some income that doesn’t count as hockey related revenue and if that is added in, it could help.  One example is the fee paid when a team enters the league.  The owners of the new Seattle franchise will pay the league $650 million to join the NHL.  That money is split between all NHL teams except the Golden Knights.  Adding that revenue to the overall pot could help get the owners share get closer to their target.

The league has been seeing an increase in revenue from legalized sports betting.  There have been projections that sports betting revenue could hit the $200 million mark, as much as they are making now from their current NBC television rights deal.  That counts as hockey related revenue and could greatly offset owners’ expenses.

A new national television deal is the other issue that is looming,.  The NHL’s contract with NBC expires after next season and they are expecting a substantial increase on the $200 million they make each year.  That’s projections is based on lucrative deals recently negotiated by the NBA and the English Premier League.

That’s another reason that Gary Bettman is so determined to get this season re-started.  A ratings bonanza on NBC when play resumes this summer will put the NHL is a very good negotiating position.

The problem with all of this is that the two sides are currently negotiating  a new deal with all of these variables up in the air and it is happening concurrently with the negotiations about conditions for the return to play.

Out of the blue

If you look at Artemi Panarin’s social media posts, you will see a lot of his dog, Riziy along with scenic shots of the beach and numerous hockey highlights.  This post came out of the blue and must have surprised many people. Coming from the most popular and highest paid player on the team in the media capital of the world, it is significant.

He got an immediate tweet of support from Ryan Kessler.

Players tend to leave the talking to their team reps   For the Rangers, that means Jacob Trouba with Ryan Strome as his alternate. There’s been no word from either of them or the league, but considering the explosive nature of Panarin’s post, there will be a lot of chatter in the coming days.