NHL Cancels Escrow Payments; Golden Knights to Benefit if Salary Cap Rises

Good news for the salary cap: players around the league were notified that escrow payments have been canceled for the remainder of the 2024-25 season. This cancelation indicates that the league is financially rebounding post-COVID much faster than previously projected. This bodes well for the salary cap continuing to increase faster than the league anticipated.

A Crash Course in Escrow 101

The salary cap is set before the season–for example, the salary cap for the 2025-26 season will be set before July 1, 2025– and projects how much the league will make in revenue. The CBA agreement is that the players and the owners split this 50/50. Since there’s no way to know for sure how much revenue the league will make, the league withholds a percentage of players’ salaries.

If the league doesn’t make as much money as it was projected to and the salary cap accounts for more than 50% of total revenue, that money is redistributed to the owners. If the salary cap accounts for less than 50% of total revenue, players get it back, plus a little extra.

The CBA agrees upon the percentage of a player’s salary that goes into escrow and varies from year to year. During COVID, it was as high as 20%. This season, it was 6%.

Does that seem unfair? Yeah, the players think so too. But escrow is necessary.

What This Means for the League

The league is growing faster than expected in a post-COVID world. The salary cap was projected to rise from $88 million to $92-93 million next season. According to Allan Walsh, that projection might be too low. On the Steve Dangle Podcast, Walsh said he expected the salary cap to leap to $97 million. If this is true, it would be the largest year-to-year jump ever.

The salary cap going up is a good thing. Teams that were going to be against the cap will have more wiggle room to acquire or retain players, and star players can make more money. Everyone holds hands and sings kumbaya.

What This Means for the Golden Knights

Even if the salary cap is set at the previously projected $92-93 million, the Golden Knights will have around $14 million in free cap space. If the salary cap rises to Walsh’s projection of $97 million, the Golden Knights would have closer to $18 million.

That money can be spent in several ways. Defenseman Nicolas Hague is a pending RFA. Stanley Cup-winning goaltender Adin Hill is a pending UFA. Ilya Samsonov and Victor Olofsson will also become UFAs, but the Golden Knights may use that cap space to go big-game hunting. For example, they could trade for a player on an expiring contract at the Trade Deadline and extend them. They might not be able to afford the likes of Mitch Marner or Mikko Rantanen– both set to become UFAs– but they could target a player like Brock Boeser at the Trade Deadline if the Canucks continue to fall out of the playoff picture.