As salary cap draws into focus, escrow discussions again raised

Other topics raised during NHL Commissioner Gary Bettman’s annual state of the league address prior to Game 1 of the Stanley Cup Final will be covered in additional detail, but one important note to be shared is that 2017-18 salary cap figures continued to come into focus. The new figures were similar those Sportsnet’s Chris Johnston shared in March. Johnston, on Monday:

Projected 2017-18 NHL salary cap: $73M-$77M, depending on if NHLPA exercises 5% inflator.

— Chris Johnston (@reporterchris) May 29, 2017

That 5% escalator, as it is every spring, is the touchy subject. This is because the escalator necessitates a larger percentage of player paychecks being put into escrow, which, for the first quarter of the 2016-17 season, was 15.5%, according to TSN’s Frank Seravalli. “That means every NHL player will have 15.5 per cent of salary deducted from his paycheque and put aside until after all of the 2016-17 season’s hockey-related revenue is counted to ensure a perfect 50-50 revenue split with owners,” Seravalli wrote in October as an easy to understand appraisal.

“One of the issues that we hear from the players association that causes concern to the players is escrow, and obviously the higher the cap goes, the more exacerbated the escrow problem becomes,” NHL Deputy Commissioner Bill Daly said during Monday’s media availability. “So certainly our position with the players association has been we’ll manage the cap tighter and keep it lower to try to address the escrow situation for you if that’s your preference.”

In the past, there have been rumors over a partial, 2.5% escalator – this was reported by LAKI and The Globe and Mail in the 2015 off-season – but to this point, the partial escalator hasn’t appeared to have been floated publicly in 2017. While there are regular and valid complaints that surface around this time of the year that the NHLPA is putting too much money into escrow, in the past the players have voted every off-season apart from one following the 2004-05 lockout – the 2006 off-season, according to the Sports Business Journal – to incorporate the 5% escalator and lift the salary cap ceiling at the expense of player escrow withholdings.

The finalized salary cap is usually announced around the week of the NHL Draft; last year, Renaud Lavoie of TVA Sports reported late on June 16 that the NHLPA had agreed to the full, 5% escalator.

This affects a Los Angeles Kings team that may not be as cap-strapped as it had been during several recent off-seasons but is still among the clubs that spend to the cap and have scant margin for error amidst its negotiations and player personnel decisions. The most important piece is RFA Tyler Toffoli, and as of the second week in May, no substantial negotiations between the club and the player had taken place. More is expected to become known on his negotiations this week and next.

Financials are still evolving due to expected roster turnover, the expansion draft and free agency, but at this moment, the Kings have approximately $63.04 invested in 17 players for the 2017-18 season, based on financials provided by Cap Friendly. (Jeff Zatkoff’s cap hit is not included in this sum, though Adrian Kempe’s is.) Hypothetically, were Marian Gaborik to be placed on LTIR at the start of the season – a highly speculative mechanism that could be used to regain nearly all of his $4.875M cap hit at the start of the season should he still be recovering from the medical procedure on his left knee – Los Angeles would have approximately between $10M and $14M to allot to up to six players. In addition to Toffoli, who will command the highest percentage of the remaining share, other restricted free agents include Nick Shore, Andy Andreoff, Kevin Gravel, Paul LaDue, Jonny Brodzinski and Michael Mersch, among others.