Rules · escrow
Escrow: the money withheld until the league hits its revenue target
The NBA withholds 10% of every salary into escrow. On a $10M contract that is $1,000,000 that arrives late — or, in a bad revenue year, partly not at all. It is the only league we track with a fixed league-wide escrow rate.
How the mechanism works
The collective agreement guarantees players a fixed share of basketball-related income. Clubs cannot know that figure until the season ends, so 10% of every salary is held back. If league revenue lands on target, the withheld money is returned. If it falls short, part of it stays with the league instead.
The effect is that a player's contractual salary is not the same as the money arriving during the season, and the shortfall is not something a player can budget around in advance.
What it costs at each contract size
| Contract | Held in escrow (10%) | Arrives on schedule |
|---|---|---|
| $1,000,000 | $100,000 | $900,000 |
| $5,000,000 | $500,000 | $4,500,000 |
| $10,000,000 | $1,000,000 | $9,000,000 |
| $25,000,000 | $2,500,000 | $22,500,000 |
Which leagues use escrow
Only the NBA sets a fixed league-wide rate in the data we track. The NHL negotiates escrow season by season, so no fixed figure is modelled here and NHL take-home figures on this site exclude it — they are therefore slightly optimistic. The NFL, MLB, European football and the IPL show no comparable league-wide escrow mechanism.
Escrow versus tax
They are often confused because both reduce the paycheque. Tax is permanent. Escrow is deferred and conditional. Our calculator treats escrow as a deduction, which is the conservative choice: if the money is returned, take-home is higher than shown.