Did owners give players ‘sweetheart deal’ on paycheck escrow?

0 Comments

It was one of the big sticking points of negotiations for next season (and it is still not officially finalized): How much money would be pulled out of player paychecks to go into an escrow account to balance the league’s finances?

The sides reportedly settled on 17% of players’ checks going into escrow for the next couple of years (money the players almost certainly will not see again). That is a sweetheart deal for the players, one agent told ESPN’s Brian Windhorst, who relayed the story on his Hoops Collective Podcast (hat tip Real GM).

“I was talking to an agent yesterday, who felt that the NBA gave the players a sweetheart deal,” said Brian Windhorst.

“I agree,” replied Bobby Marks.

The CBA splits “Basketball Related Income” roughly 50/50 between the players and owners (the formula is more complex than that). Each year, 10% of player paychecks are held back in escrow if league revenue falls short of projections. If that happens, the league takes whatever money is needed to balance the scales from the escrow account and returns the rest to players (most years, players get the full 10% back). With the league 10% short of projections last season and expecting to lose as much as $4 billion in the coming season, the owners could ask for a lot more than 10% to balance the numbers.

The escrow percentage is what much of the saber-rattling over the start date of the season was about — many players may not have wanted to return that quickly, but they also wanted leverage in the negotiations for next season. The players got less money taken out of their checks, but that is spread over a couple of years — which essentially is a no-interest loan from the owners to help the players cover their ends.

The two sides are still negotiating the details of next season, but the deal should be announced in the coming days.