V Foundation CEO Shane Jacobson, Commissioner of the NHL Gary Bettman and NHL Players Association Executive Director Marty Walsh (Photo by Joel Auerbach/Getty Images)
A well-informed source in the NHL has informed RG that the league and its players have received some long-awaited financial good news: effective January 30, 2025, the escrow withholding rate will drop from 6% to 0% for the remainder of the season.
But wait. Not only is the NHL canceling escrow, but, because projected profits are expected to be that much higher than previous predicted, they’ve also agreed to pay the players anywhere from 2-6% of their extra earnings.
This unprecedented move reflects a significant rebound in league economics and sets the stage for a substantial increase in the salary cap, projected to rise to $92-93 million for the 2025-2026 season—and, with this latest development, potentially even higher.
The cancellation of escrow payments is a landmark moment for players, signaling the resolution of financial strains that have lingered since the COVID-19 pandemic. During the pandemic, the league suffered substantial revenue losses, particularly in the shortened 2019-2020 and 2020-2021 seasons. Players bore a significant share of the burden, repaying substantial escrow debts to balance hockey-related revenues (HRR) under the terms of the Collective Bargaining Agreement (CBA).
A Post-Pandemic Comeback
The pandemic left the NHL in a precarious financial position, with games canceled, arenas empty, and revenue streams severely diminished. The NHL and NHLPA’s return-to-play plans required players to defer portions of their salaries and accept higher escrow rates to stabilize the league’s finances. At one point, escrow rates soared as high as 20%, a stark reminder of the economic challenges the league faced.
Fast forward to today, and the landscape has transformed. The league’s current economic health—driven by increased revenue from media rights deals, record-setting ticket sales, and international expansion efforts—has exceeded projections. This robust financial recovery has finally allowed the NHL and NHLPA to reduce escrow withholding to 0%, a move that players have eagerly anticipated.
What Does This Mean for Players?
For players, the elimination of escrow payments is more than just a financial windfall. It represents the culmination of years of sacrifice and a return to a more equitable financial partnership with the league. Players will see an immediate boost in their take-home pay starting with the January 30 payroll, providing a tangible reward for their patience and resilience.
This shift also signals a turning point in the NHL’s economic narrative. Escrow has long been a contentious issue in labor negotiations, with players often voicing frustration over the unpredictability of their earnings. While escrow is a necessary mechanism to maintain a 50-50 revenue split between players and owners, its reduction to 0% underscores the league’s newfound financial stability.
The Rising Salary Cap
The cancellation of escrow payments coincides with projections of a substantial increase in the salary cap. The current cap of $88 million, which has seen only incremental increases since the pandemic, was poised for a significant jump to $93 million for the 2025-2026 season. Now the cap will likely climb higher, but it will require an agreement between the NHL and NHLPA.
This increase will have profound implications for team-building strategies across the league. Teams previously constrained by a stagnant cap will have greater flexibility to re-sign star players, pursue free agents, and invest in long-term contracts. For fans, this translates to more competitive rosters and a higher level of play on the ice.
A Sign of Things to Come
The NHL’s decision to eliminate escrow payments is a clear indicator of the league’s strong financial footing and its ability to rebound from the unprecedented challenges of the pandemic. It also serves as a harbinger of a new era of growth and prosperity, marked by increased player compensation, enhanced competitive balance, and continued investment in the sport’s global appeal.
While challenges remain—including the ongoing need to grow the game in non-traditional markets and navigate an ever-evolving media landscape—the league’s current trajectory inspires confidence. For players, teams, and fans alike, the return to economic stability represents a collective victory.
As the NHL looks to the future, the elimination of escrow payments and the anticipated salary cap increase are pivotal milestones.
Marco D'Amico is a beat reporter covering the Montreal Canadiens and the NHL Draft, while also being a recurring guest on TSN690 and BPM Sports. His work primarily on NHL CBA breakdowns and prospect analysis, all while covering the Montreal Canadiens on a day-to-day basis.
