SALARIES TIED TO DWINDLING NHL REVENUE: Players never saw this hit coming

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SALARIES TIED TO DWINDLING NHL REVENUE | Sports | Players never saw this hit coming
Players never saw this hit coming

Jan 24, 2009 04:30 AM

Damien Cox

MONTREAL-Zach Parise is 24 years old, one of the brightest young stars in the NHL and a pro athlete pulling down millions of dollars in annual pay.

Yet as of yesterday, Parise seemed unaware he was already out almost $170,000 in salary for this season, with another $310,000 or more still to lose.

The New Jersey Devils forward, a participant in tomorrow’s NHL All-Star Game, is one of hundreds of NHL players who are about to be struck by the bombshell that the deteriorating North American economy is about to take enormous bites out of their paycheques.

According to the projections of NHL Players’ Association boss Paul Kelly, his members will collectively return about $217 million back to the league this season as NHL revenues plummet.

For the first half of this season, NHLers have had 13.5 per cent deducted from every paycheque as an escrow payment. That’s been happening for four years since the last collective bargaining agreement was signed, a way for the league to make sure the players’ share of overall hockey revenues doesn’t exceed 54-56 per cent.

In two of the last three years, the players got all their money back with interest.

In the 2006-07 season, they got it all back save 2.5 per cent. So the escrow, to most NHLers, was essentially annoying paperwork, more theoretical than practical.

Now, not only will players not be recouping the escrow, that bi-weekly deduction is expected to immediately jump to 25 percent based on an NHLPA recommendation.

“That’s news to me,” said a surprised Parise, scheduled to earn $2.5 million this season. “I hope you’ve got a bad scoop there.”

Sorry, Zach, no bad scoop. In fact, despite the best efforts of Kelly, NHLPA director of player affairs Glenn Healy and other senior union executives, it’s clear many NHLers will be caught totally off-guard by what essentially amounts to an enormous pay cut.

“Soon, one-quarter of our paycheques may be gone,” said San Jose defenceman Dan Boyle. “Everyone out there is taking some kind of cut. It’s tough for everyone.”

True, except that pro athletes are often blissfully disconnected from the economic problems of ordinary people. With no limits on the escrow payments, NHL players could be facing salary losses for the next three years after deciding yesterday not to terminate the current CBA.

“Players don’t like it,” said Kelly. “But they understand it.”

So much focus has been paid this year to struggling franchises in Phoenix, Tampa Bay and Nashville, plus the potential impact of the dropping Canadian dollar, that the perception was that the league had worrisome problems.

But when the players agreed to link league revenues to their incomes in 2005, they stood to benefit when times were good, and will now get hammered because times are very bad.

One of the reasons the union wants the escrow to jump immediately is that the players’ association itself is liable for any shortfall at the end of the season. If that were to climb into tens of millions of dollars, it could bankrupt the union.

More than ever, players will now understand their financial well-being depends on the economic health of the league after years of drawing ever-increasing salaries regardless of TV contracts or whether arenas were full or not.

Players may now be less supportive of efforts to prop up money-losing franchises, or at least motivated to have franchises moved to more profitable markets. Kelly yesterday called for the league to give the association more input on TV deals, international competition, expansion and franchise relocation.

“If this is a true partnership, then … give us those rights and privileges,” said Kelly.

NHL players, quite obviously, are still going to be very well compensated. But four years after missing an entire season due to labour problems and only getting back to work after accepting a 24 per cent salary rollback and a salary cap, cold economic reality is about to hit them again like a Gordie Howe elbow to the nose.