Jeremy Laura: Yzerman’s fantastic asset management, updates on the season from the NHL

Hi hi Hi!!

Hi hi Hi!!
- HenryHockey

What’s up H2?!! Good to see you bud

Just read a great article penned by our own Jeremy Laura!!

Keep the faith brother, cuz these times are a changing!

I just think that now that most of the arbitration is done, there should be some movement with clubs getting closer to being cap compliant and getting the rest of their RFA's signed or moved. After all we are only a month away from training camp!

I would say this was Yzermans first real draft in October. The other one had him as GM and i think he did influence it a bit but it was still all of Hollands scouting/drafting crew. The fact Yzerman got rid of a bunch of them (they pretty much all went to Holland in Edmonton), shows it was not the scouting/drafting team he wanted going forward.

For the last few drafts that Holland did, they seemed to go more for size than high end skill like the Wings use to. Yzerman has drafted some size too but those bigger guys are also skilled guys and he seems like he might be going back to drafting skilled guys over just big bodies. Hopefully that brings back results of getting some impact players beyond the first round again.

Just read a great article penned by our own Jeremy Laura!!

Keep the faith brother, cuz these times are a changing!

I just think that now that most of the arbitration is done, there should be some movement with clubs getting closer to being cap compliant and getting the rest of their RFA's signed or moved. After all we are only a month away from training camp!
- HenryHockey

Thanks for that! We’re definitely waiting for training camp announcements. I’m not convinced the NHL start date isn’t going to be pushed back again. Waiting for some more reports on playoffs and revenues

I would say this was Yzermans first real draft in October. The other one had him as GM and i think he did influence it a bit but it was still all of Hollands scouting/drafting crew. The fact Yzerman got rid of a bunch of them (they pretty much all went to Holland in Edmonton), shows it was not the scouting/drafting team he wanted going forward.

For the last few drafts that Holland did, they seemed to go more for size than high end skill like the Wings use to. Yzerman has drafted some size too but those bigger guys are also skilled guys and he seems like he might be going back to drafting skilled guys over just big bodies. Hopefully that brings back results of getting some impact players beyond the first round again.
- dcz28

I’ll add that Yzerman scouted all of the season before he was hired in. His fingerprints are definitely on that draft. Went with his brother to Europe quite a bit. I’ll give Kenny credit on some under the radar picks (Bertuzzi, Hronek) and Berggren is looking pretty good. Seider was definitely Steve’s guy, but I do think Holland wanted that player as well. I tend to see that, not just skill set, but work ethic and attitude are strong considerations for Yzerman. Nice post up and good points!

1. you misused the word livelihoods:

plural noun: livelihoods
a means of securing the necessities of life.
"people whose livelihoods depend on the rainforest"

A professional hockey player has no problem "securing the necessities of life" unless they go full Joe Murphy.

2. The stick factories are operational in China.. I literally just ordered custom twigs for our team within the last 2 weeks. Highly recommend this as opposed to paying $300 for retail.

1. you misused the word livelihoods:

plural noun: livelihoods
a means of securing the necessities of life.
"people whose livelihoods depend on the rainforest"

A professional hockey player has no problem "securing the necessities of life" unless they go full Joe Murphy.

2. The stick factories are operational in China.. I literally just ordered custom twigs for our team within the last 2 weeks. Highly recommend this as opposed to paying $300 for retail.
- Udogs

Appreciate the grammar correct, thanks for that. My point was that China HAD closed their factories and by March, NHL storehouses were almost empty. Due to that, Warrior picked up on orders (some retained, some did not). I apologize if I didn’t make that clear. The further affect was that hundreds (if not thousands) of smaller leagues and clubs haven’t been placing orders and so there is a significant gap for the $ flow between lost orders due to shutdowns and lost new business due to non starts

1. you misused the word livelihoods:

plural noun: livelihoods
a means of securing the necessities of life.
"people whose livelihoods depend on the rainforest"

A professional hockey player has no problem "securing the necessities of life" unless they go full Joe Murphy.

2. The stick factories are operational in China.. I literally just ordered custom twigs for our team within the last 2 weeks. Highly recommend this as opposed to paying $300 for retail.
- Udogs

I do actually disagree on the use of livelihoods though. Yes, pro hockey players may well have the ability to go without, but the vendors, stores, maintenance, smaller league coaches and thousands of other businesses who rely on the NHL to be able to make a basic living are unable to do so. Keep in mind that many players as well don’t have massive bank accounts and can’t live on nothing. While you may disagree and feel otherwise, there are plenty of cases to suggest otherwise. A player making 1 million and paying 20 percent escrow plus taxes may take home 20 to 30%. All offseason training (and there’s been a lot of it for some teams) is out of pocket. Living arrangements and food are out of pocket. I’ll leave the grammar as is and agree to disagree.

As for “going full Joe Murphy”, Thats pretty nasty stuff bud. Yep, he screwed up. Most of these athletes are “done” before they turn 30. The earnings will not carry through and they come out of the league relying on a lot of pain meds that are no longer available. There are far more cases than Joe that we just don’t hear about until they commit suicide or end up in prison

I do actually disagree on the use of livelihoods though. Yes, pro hockey players may well have the ability to go without, but the vendors, stores, maintenance, smaller league coaches and thousands of other businesses who rely on the NHL to be able to make a basic living are unable to do so. Keep in mind that many players as well don’t have massive bank accounts and can’t live on nothing. While you may disagree and feel otherwise, there are plenty of cases to suggest otherwise. A player making 1 million and paying 20 percent escrow plus taxes may take home 20 to 30%. All offseason training (and there’s been a lot of it for some teams) is out of pocket. Living arrangements and food are out of pocket. I’ll leave the grammar as is and agree to disagree.

As for “going full Joe Murphy”, Thats pretty nasty stuff bud. Yep, he screwed up. Most of these athletes are “done” before they turn 30. The earnings will not carry through and they come out of the league relying on a lot of pain meds that are no longer available. There are far more cases than Joe that we just don’t hear about until they commit suicide or end up in prison
- Jeremy Laura

This doesn't necessarily contradict your main point, but I think your estimate for player take-home percentage is a bit too low.

Taxes and agent fees are calculated after escrow has already been taken out, meaning that even at 20% escrow, ~50% effective tax rate, 5% agent fees you're still looking at a take-home of around 38%.

Again, this doesn't take away your entire point that take-home pay is easily less than half the top-line salary figure, but I strongly doubt that it's nearly as low as 20 percent for any player, and probably not even below 30 percent.

I'm concerned we're about to enter new rounds of shut downs. Here in Michigan, schools are shutting down all over, some through the end of the year. We're hearing that hospitals are getting hammered and it appears as if Influenza patients are being treated as Covid since they experience some of the same symptoms as Covid patients.

If there is another shut down, the impact on sports & entertainment will be devastating and possibly irreversible. Some leagues wouldn't survive and the impact on the vendor & supplier industry would be devastating. In the minor and junior leagues, the owners are generally millionaires, but not billionaires. Few could sustain another lost season. In the NHL, while they all have very wealthy owners or ownership groups, they didn't become wealthy by bleeding cash and they'll only sustain losses for so long before they either sell, or take advantage of bankruptcy protections to stop the bleeding. The long term impact on the development of players would be immense, and I suspect players in their prime will work to get their contracts voided and head to Russia or Scandinavia. I can't see Russia shutting down their economy, it's too small (about the size of the economy of Texas).

I know it sounds like doom & gloom, but it's just a concern I have. The powers that be may be able save a lot of industries, but sports & entertainment may not be one of them.

This season, there are 22 contracts on the books with just under 10 million in cap space (Z can still be put on LTIR if Yzerman decides to get to the ceiling). Next season? 9 contracts with a projected 46 million in cap space (only Dekeyser and Stecher still have contracts of the current NHL D). The next year? 2 NHL players and 67 million in cap space. Keep in mind that players currently listed as Grand Rapids should be moving up and will count against the cap. The point remains, Yzerman is trimming the fat and it is impressive.-Jeremy Laura

This really is the ideal rebuild, isn't it? Other than the Abdelkader buyout hit, Stevie Y has a clean slate, can build with players he wants and develops, and management is satisfied that it has a low payroll through the flat-cap rebuild.

I'm concerned we're about to enter new rounds of shut downs. Here in Michigan, schools are shutting down all over, some through the end of the year. We're hearing that hospitals are getting hammered and it appears as if Influenza patients are being treated as Covid since they experience some of the same symptoms as Covid patients.

If there is another shut down, the impact on sports & entertainment will be devastating and possibly irreversible. Some leagues wouldn't survive and the impact on the vendor & supplier industry would be devastating. In the minor and junior leagues, the owners are generally millionaires, but not billionaires. Few could sustain another lost season. In the NHL, while they all have very wealthy owners or ownership groups, they didn't become wealthy by bleeding cash and they'll only sustain losses for so long before they either sell, or take advantage of bankruptcy protections to stop the bleeding. The long term impact on the development of players would be immense, and I suspect players in their prime will work to get their contracts voided and head to Russia or Scandinavia. I can't see Russia shutting down their economy, it's too small (about the size of the economy of Texas).

I know it sounds like doom & gloom, but it's just a concern I have. The powers that be may be able save a lot of industries, but sports & entertainment may not be one of them.
- bluelineenforcer

I hear you, but I think a November-December shutdown/partial-shutdown of facilities was anticipated by a lot of public health experts because of the confluence of flu season. I hope businesses baked that contingency into their projections. If the league goes to a 48 game (or less) season, it can adjust to a Feb/March start. It isn't ideal, but whatcha gonna do?

This really is the ideal rebuild, isn't it? Other than the Abdelkader buyout hit, Stevie Y has a clean slate, can build with players he wants and develops, and management is satisfied that it has a low payroll through the flat-cap rebuild.
- Only_A_Ladd

Yes, for sure.

In terms of the guys on the roster who would hypothetically belong in any “core,” you’ve got Larkin signed for three more years, Mantha for four more years, and Bertuzzi still an RFA at the end of next year. All of them are 24-26 years old, so should continue to be at or near peak productivity for around 5 more years, maybe longer. Plus Hronek, who is 23 and an RFA still next year, and Zadina, who is 20 and an RFA in two years.

Then you’ve got guys who have at least the potential to be solid core players like Raymond, Seider, Berggren, maybe Veleno, maybe Niederbach all still on the way. And at least one or two more drafts upcoming where there should be a good chance at adding another high-end pick or two.

Everybody else is on a short-term deal. The only egregiously bad contracts left are Nielsen (gone after two years) and Staal (gone after this year). Plus moderately bad contracts to Helm (gone after this year) and DeKeyser (two years). Everyone else is at least within the ball park of fair value, if not undervalued.

Cap space for days.

I mean, there’s still a lot of work to do obviously. You still need to draft and develop well. You still need to identify and acquire the right free agents or trade targets. Talent isn’t going to just fall into your lap. But they’re in about the best starting position that you can realistically hope for.

This doesn't necessarily contradict your main point, but I think your estimate for player take-home percentage is a bit too low.

Taxes and agent fees are calculated after escrow has already been taken out, meaning that even at 20% escrow, ~50% effective tax rate, 5% agent fees you're still looking at a take-home of around 38%.

Again, this doesn't take away your entire point that take-home pay is easily less than half the top-line salary figure, but I strongly doubt that it's nearly as low as 20 percent for any player, and probably not even below 30 percent.
- Sven22

You may want to double check that. Agent fees for sure are pre escrow, i believe taxes are as well. Agent fees are as high as 10% (less for signing bonuses). Even post escrow, the tax bracket on 800K or higher is pretty steep.

Hey all, we’re dealing with a tough loss over here. I’m going to be away for a day or two. Please keep the comments rolling (and/or trolling) I’ll see you all next week

Hey all, we’re dealing with a tough loss over here. I’m going to be away for a day or two. Please keep the comments rolling (and/or trolling) I’ll see you all next week
- Jeremy Laura

Have a good weekend!

You may want to double check that. Agent fees for sure are pre escrow, i believe taxes are as well. Agent fees are as high as 10% (less for signing bonuses). Even post escrow, the tax bracket on 800K or higher is pretty steep.
- Jeremy Laura

All the sources I checked indicate agent fees are calculated at the very least after escrow, and maybe even after tax (though I doubt that), and 3 to 6 percent is the typical fee range. Ten percent seems extremely excessive.

Sources:

https://www.si.com/hockey...ary-not-as-much-you-think

https://anderscpa.com/how...yers-really-make/?tag=sae

https://www.hockeyskillst...nhlers-actually-get-paid/

Escrow is definitely pre-tax. Nothing else would even remotely make sense. Money held in escrow is not paid to the players, they cannot use it, cannot invest it, will probably never earn it. etc. Obviously they would pay taxes on any escrow funds that are returned at the end of the year, but definitely not before.

This is the most important error I think you are making, since taking out taxes before escrow would eat a full 10% of the gross just on its own. I am quite certain that this not happening.

As for "tax brackets on $800k or higher," the highest US federal tax bracket is 37% on earnings above ~$518k. State, local, and "jock" taxes go on top of that, obviously, but every source I've read seems suggests that a 50% effective tax rate is pretty typical for the average player, with obviously some variation.

In the most extreme scenario (20% escrow, 10% agent fees on top line salary value, 55% effective income tax rate), that gets you down to 26% left for take-home.

But again, I think the 10 percent fees on top-line salary is not actually realistic. If agents were really taking that much of the pie I don't know why any player would ever hire one. It would mean that, if your agent was taking 10 percent of the gross and you were only getting 26%, your agent would be taking almost 30 percent of your pay. No way is that happening.

I think a more reasonable worst-case scenario for the player would be something like 20% escrow, 6% agent fees post-escrow, 55% effective tax. Which would put the take home at 31.2%.

I'm not an accountant or a lawyer, and someone can correct me if I'm wrong, but I'm willing to bet that ~31% is pretty much the absolute floor here, and most players are probably in the mid-to-upper 30s.

Hey all, we’re dealing with a tough loss over here. I’m going to be away for a day or two. Please keep the comments rolling (and/or trolling) I’ll see you all next week
- Jeremy Laura

🙏🏻🙏🏻🙏🏻 If you need anything, you know how to get ahold of me.

This doesn't necessarily contradict your main point, but I think your estimate for player take-home percentage is a bit too low.

Taxes and agent fees are calculated after escrow has already been taken out, meaning that even at 20% escrow, ~50% effective tax rate, 5% agent fees you're still looking at a take-home of around 38%.

Again, this doesn't take away your entire point that take-home pay is easily less than half the top-line salary figure, but I strongly doubt that it's nearly as low as 20 percent for any player, and probably not even below 30 percent.
- Sven22

I appreciate where you’re coming from, but here is Sean Avery’s take on it. I’ve referenced this article before. Agents get 6% or less on signing bonuses, but 10 and higher is fairly normal. 15% used to be the norm. Remember, just like anyone else you have to claim your salary. Escrow, since it can be refunded (not likely right now) isn’t going to change what your paystub says. And now, players are out 30% off the top with the mandatory deferment. Signing bonuses were a huge way to avoid losing money. Canada has a 30% cap on bonuses, agents take less, and for a while Escrow wasn’t being withheld. They’ve adjusted the escrow recently. Most players don’t have “management” fees that I’m aware of, I do know that agents handle real estate issues, moving logistics, etc. here is Sean’s quote, I’ll put the article link below

In truth, it isn’t. Taxes take about half (if you take no evasive tax action), agent and management fees take 25 percent, and the NHL snatches another 20 percent to put in escrow, which the owners balance out at the end of the season. Sometimes, they use the players’ cash to help small-market teams. Sometimes we’d get a refund. But for The New Avery Rule purposes, consider it gone. So really, that $13.2 million becomes $660,000 — which is still a lot of money, but you have to make that last for the next 50 or 60 years because if you have a five-and-a-half year NHL career, you’ve retired at age 25 or 26.

https://www.theplayerstri...ticles/the-new-avery-rule

Quick update, I’m working on my next post(s). The speculation is all over the map as far as January start and what that would entail. If the league is going to lose money to open its doors, I’d be hard pressed to believe they’ll stick to it until they have a real solution on the lost revenues.

I appreciate where you’re coming from, but here is Sean Avery’s take on it. I’ve referenced this article before. Agents get 6% or less on signing bonuses, but 10 and higher is fairly normal. 15% used to be the norm. Remember, just like anyone else you have to claim your salary. Escrow, since it can be refunded (not likely right now) isn’t going to change what your paystub says. And now, players are out 30% off the top with the mandatory deferment. Signing bonuses were a huge way to avoid losing money. Canada has a 30% cap on bonuses, agents take less, and for a while Escrow wasn’t being withheld. They’ve adjusted the escrow recently. Most players don’t have “management” fees that I’m aware of, I do know that agents handle real estate issues, moving logistics, etc. here is Sean’s quote, I’ll put the article link below

In truth, it isn’t. Taxes take about half (if you take no evasive tax action), agent and management fees take 25 percent, and the NHL snatches another 20 percent to put in escrow, which the owners balance out at the end of the season. Sometimes, they use the players’ cash to help small-market teams. Sometimes we’d get a refund. But for The New Avery Rule purposes, consider it gone. So really, that $13.2 million becomes $660,000 — which is still a lot of money, but you have to make that last for the next 50 or 60 years because if you have a five-and-a-half year NHL career, you’ve retired at age 25 or 26.

https://www.theplayerstri...ticles/the-new-avery-rule
- Jeremy Laura

Avery's quote here makes no sense to me whatsoever. By saying $13.2 million becomes $660k he is stating that an NHL player's take-home is only five percent of their gross. He is also saying that "agent and management fees" take 25 percent, so in effect he is saying that "agents and management" take 5 out of every 6 dollars a player makes after taxes. That is so ridiculous that it just flat out cannot possibly be true.

The numbers at the end also clearly contradict what Avery was saying earlier in the same article, when he claimed he took home $71,250 of his $125,000 signing bonus (57%), and also claimed that his first NHL paycheck was for $14,500. (Avery's entry level NHL salary was $400,000, and NHL players get paid 13 times per year, so that implies his take home was about 47% of the gross.

Did you read the sources I linked? They paint a completely different picture than what Avery is saying here. Also, here's another one from ESPN focusing on NBA players, who also have taxes and escrow, and are in a very comparable situation to NHL players. It estimates they're taking home around 50 percent. It also very clearly establishes that escrow is taken out before taxes, and only the portion returned to players at the end of the season (if any) is taxed.

https://www.espn.com/nba/...er-salaries-take-home-pay

Basically I am forced to conclude that at least one of the following is true:

1. Avery is lying
2. Avery is very very very very bad with money and doesn't understand how taxes, escrow, and fees actually work, even though he thinks he does.
3. Avery's agent cheated him out of a lot cash

I mean, when multiple sources from multiple different places all say one thing, and Sean Avery says something else, I'm not especially inclined to side with Avery.

I'm not trying to be a jerk here Jeremy. I just think you are relying way too much one this one article by one ex-player when it seems like he is the only one saying anything remotely like this. If you have any other, non-Avery, non-Players Tribune sources corroborating this information I'd be glad to take a look at it, but right now I think the overwhelming bulk of the evidence supports my position.

One more, then I'll quit:

Here's an article from the Athletic from last year, where Mario Scandella breaks down the financials in more detail.

Summary of some of the discussion points:

- Confirms that escrow is taken out before taxes

- "For a player making $4.75 million, agency fees will cost in the area of $130,000." If you do the math, that's 2.7% of the gross, or about 6% (roughly) after escrow and taxes. He estimates another ~$20,000 in professional fees (tax prep, financial advisor, etc.)

- "As a young guy coming in and making $600,000 and you’re probably keeping $280,000 out of that ...," which would be a take-home rate of about 47%.

He provides the following numbers as a sample budget for a player in his position, making $4.75m per season:

Gross | 4750000
Escrow | 641000
401k | 19000
Federal tax | 1840000
Household | 62000
Professional Fees | 150000
Tips | 20,000
Insurance | 105000
Fun money | 180000

That gives him more than $1.7 million remaining even after accounting for personal spending, including $15k per month in "fun money."

Granted, those figures do not include state taxes, nor do they reflect the fact that escrow has gone up. So I recalculated them:

Gross: $4.75m
Take-home minus escrow (20%), maxed 401(k), taxes (50%), $150k in professional fees: $1.74m

That still amounts to a take-home of around 37%.

Obviously that doesn't include things like living expenses, extra "hockey" expenses, or "fun money." But even at league minimum, 37 percent of $750k is still around $270k for expenses plus savings -- not exactly roughing it.

It also doesn't include insurance, but a player making league minimum wouldn't need nearly as much insurance as somebody making multiple millions. (Scandella estimates $7k per million insured.)

In other words, yes, NHL players still make a lot less than the number on the top of their contract, there are a lot of fees and expenses and taxes that get taken out, they still have to budget carefully if they want to have a good retirement. That's all 100% true and I fully agree with you about all those things.

At the same time, I think the estimate of 20-30 percent take-home is misleading and far too low. And also, even on a league minimum salary, an NHL player who is financially literate and sticks to a budget can have a comfortable upper-middle-class lifestyle and still put at least six figures into savings per year.

Anyway, the reason I wasted all this time digging into all this info is because I find it fascinating and the discussion made me want to learn more about it, not because I'm hellbent on proving you wrong! I really do appreciate the work you do, and I hope things are going well with you and yours.