McGowan Discusses New NHL Benefit Plan in Pensions & Investments

News / January 22, 2013

National Hockey League players will have their own defined benefit plan now as part of the 10-year collective bargaining agreement reached in early January between the NHL and the National Hockey League Players' Association.

The league's 30 teams will contribute to the plan although total contributions will be based on the players' share of overall league revenue, so the amount won't always be the same depending on overall player salaries. The new agreement calls for players to get half of all league revenue.

Tax Partner John McGowan Jr., who in the past had advised the National Football League Management Council on pension issues, told Pensions & Investments on January 21 that while the assets for contributions might be budgeted as part of the 50 percent players' share of revenue, the assets themselves most likely will come from the clubs and players would not likely contribute to the plan.

While many of the NHL pension plan details still have to be ironed out, McGowan said the tax issues to be dealt with between U.S.- and Canadian-based clubs probably already have been studied. “Both parties have looked at the U.S.-Canada Income Tax (Convention),” he said in the article (“NHL players score new pension plan”). “They know what the tax issues are. Tax results are predictable.”

Although the clubs likely would be responsible for contributing to the plan, McGowan noted, those assets might not come directly from club coffers. In the NFL, for example, contributions to the Bert Bell/Pete Rozelle NFL Player Retirement Plan historically have been funded through television revenue allocated to each of the league's 32 teams. The plan had about $1.4 billion in assets as of March 2012, the latest data available, according to the website of the NFL Players Association. And in baseball, contributions historically have come from the proceeds of each year's All-Star Game, he said.

McGowan thought the NHL clubs would use TV revenue received from the league's contracts to fund their contributions.

“Those TV contracts are a reliable funding source,” McGowan said. “The NFL uses it, and probably the NHL will, too.”

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