Brad Marchand isn’t holding back, is he?
The Boston Bruins’ mercurial winger recently sparked a social media hailstorm with his war of words with the Carolina Hurricanes.
Then he turned his sights to the Arizona Coyotes.
A tissue? How much money is coming out of his paycheck.
Stung after a 7-1 loss to Carolina on Jan. 18 and some post-game jubilation on Twitter by the Hurricanes, the Bruins forward tweeted, “You’re still the reason we’re paying 20% in escrow .
Commenting last week on the Coyotes’ potential plans to temporarily play their games in a 5,000-seat arena at Arizona State, Marchand tweeted, “Well…the only way for them to get 5,000 fans to their games now is to give 4,500 for free so wouldn’t change much.
Marchand doesn’t give up — on the ice and/or off it. And the coyotes have averaged 11,703 fans in 21 home games this season.
But what does that have to do with his paycheck?
Creating the NHL Escrow Account
Following the 2004-2005 lockout, in an arrangement agreed to by the owners and the players’ association, the players and owners shared what is known as “hockey-related revenue”, or all money the league makes from the game itself, from ticket sales, concessions, merchandise, etc. The amount is set annually on the basis of estimates approximately 16 months in advance.
Since no one can accurately predict the league’s full revenue this far in advance, the league is withholding a certain amount of money from players in the 50/50 split until the figures for income for this year are available. If the total league revenue does not match the total player salaries, a percentage of the players’ escrow is taken to reach the 50/50 split, and the rest is returned to the players.
The number has remained fairly stable in the years since the lockdown. Over the past 10 years, the average escrow accounted for approximately 9.5% of player salaries.
Last year it jumped to 20%.
So when Marchand went on the canes, he blamed them, in part, for the escrow numbers being so high.
Is it the canes’ fault?
The pandemic, which has slumped NHL revenue, is the main reason for the current high escrow total.
After COVID-19 forced a league shutdown, followed by a modified return to play, the NHL and NHLPA worked together on a new CBA and negotiated a cap on how much players in receivership would have to pay over the next six seasons.
Given the revenue shortfalls expected post-pandemic, the parties agreed to a high escrow amount early on, but that would eventually shrink to well below the 10-year average.
The 2020-21 escrow count has been set at 20%. This year, the number has been capped at 18% (it is actually 17.2). In 2022-2023, it is capped at 10%, then at 6% over the following three seasons.
So escrow is not always 20%, as Marchand tweeted. This was last year, but it is expected to decline rapidly from next year.
Is escrow the only deduction for players?
Commitment is only part of what players have taken out of their salaries each year. They must also pay federal, state, and local taxes like everyone else. They pay their agents. They pay NHLPA dues.
They also paid when on the road playing games. Most states that have major league teams have had a “days of service” tax – commonly referred to as the “Jock Tax” – which requires players to pay state income taxes on the number of days that they work in those states.
While the “Jock Tax” may seem small, consider that in 2016, Carolina Panthers quarterback Cam Newton owed California about $137,000 in taxes as a non-California resident, according to a SportsIllustrated.com report. Newton, then paid $20 million, spent time in California – which had a 13.3% income tax rate – preparing for and playing in the Super Bowl in Santa Clara and later season games regular against the Raiders (then in Oakland) and Los Angeles Rams in the 2016 season.
Some states, including Florida and Texas, have no income tax. That can make teams in those states more attractive when it comes to salary negotiations — think Florida Panthers goaltender Sergei Bobrovsky, who makes $10 million a year. There is also no “Jock Tax” for visiting teams.
Player escrow amounts differ from league to league – they’ve typically been around 10% in the NBA, for example. In the 2018-19 NHL season, the escrow holdback was 12.9%. Of this total, 3.25% was returned to players.
A numbers game
Marchand was right about the 20% escrow figure. There was a 20% salary escrow for the 2020-21 season which was shortened to 56 regular season games due to the pandemic and played in 2021. Many teams were severely limited in attendance and revenue in the league suffered, keeping the salary cap at $81.5 million.
NHL revenue has dropped to around $2.9 billion for 2020-21, according to Forbes magazine. Revenue projections for 2021-22 are estimated at $5 billion, Commissioner Gary Bettman said recently.
But back to Marchand’s claim about the Canes…
According to recent NHL franchise valuations in Forbes, the Hurricanes were ranked 27th in the league with a 2021 valuation of $550 million. The Bruins, on the other hand, were fifth with $1.3 billion. One of the NHL’s Original Six franchises, the Bruins generate more annual hockey revenue than the Canes.
(The Coyotes, financially troubled for the past decade, have a $400 million valuation by Forbes, last in the NHL.)
In 21 home games this season, the Canes have averaged 16,855 fans and rank 17th in the NHL, just ahead of the New York Rangers. The Bruins are No. 7 with 17,850, or 100% capacity.
Meanwhile, Marchand is paid $6.125 million a year by the Bruins, which means his escrow total was around $1.2 million in 2021 and around $1.05 million this season. at the rate of 17.2%. He and his family live in Boston, where he apparently pays the appropriate state and local taxes.
It’s not fun to have that much income on a paycheck no matter how much you earn. But as salty as it is, blaming the rods for the amount of escrow he owes is a bit of a stretch.
At least the Bruins don’t have another game in Raleigh this season, so Marchand can’t complain about paying a jock tax in North Carolina, too.