– how does escrow work in sports contracts?
In: Economics
In the NHL, teams salary caps are set based on the league’s predicted revenue for the upcoming year. Since this also effects how much the players are eligible to be paid, the league and the NHL Players Association agreed to hold a percentage of player’s salaries aside until the end of the season when the year’s revenue can be counted after the 2004 lockout. This means that if the league meets their revenue targets, players get the withheld money back. If the league doesn’t, the players only get a portion of that money back. It isn’t a great deal for the players, but the agreement came as part of a larger negotiation between the owners and players.
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