An idea to remove the cap advantage for no tax states

[Space umpire]

All leagues went through the pandemic. There's only one where free agency became the most boring day on the caldendar.

Why?

Other leagues draw the majority of their revenue from television deals. The NHL is gate revenue driven.
I’d assume that if you’re a fan you would know that.

 

[Space umpire]

How much is your property tax on a 550-600k home.

About 6k. And that is with a senior citizen discount and homestead exemption.
I’m guessing many players rent properties the taxes are a few thousand more without homestead (owner occupancy).

 

[Golden_Jet]

About 6k. And that is with a senior citizen discount and homestead exemption.
I’m guessing many players rent properties the taxes are a few thousand more without homestead (owner occupancy).

Ya property tax and insurance much higher

 

[DuklaNation]

Seems more people are now acknowledging that the tax differences does actually play a role in creating advantages for certain teams and disadvantages for others. The more attention it gets, the more likely change occurs.

Excellent article on this topic from the Athletic.

Regardless of how a player may mitigate tax burden through accounting, it looks like teams in lower tax markets really emphasize the tax differences between them and higher tax markets:


A breakdown of one accounting move that a player can make to try to mitigate taxes:


Additionally, it seems that Canada really wants to change the regulatory landscape so that athletes have greater difficulty avoiding paying Canadian taxes.

‘Anywhere but Canada’: How a tax ruling could hobble pro teams north of the border

The ruling on John Tavares' signing bonus could have far-reaching implications for future pros contemplating a deal with a Canadian team.

www.nytimes.com

And I was told repeatedly that it wasn't a factor at all. Go figure.

 

[JPT]

Seems more people are now acknowledging that the tax differences does actually play a role in creating advantages for certain teams and disadvantages for others. The more attention it gets, the more likely change occurs.


And I was told repeatedly that it wasn't a factor at all. Go figure.

Where were you told that?

 

[Machinehead]

Other leagues draw the majority of their revenue from television deals. The NHL is gate revenue driven.
I’d assume that if you’re a fan you would know that.

It's not "gate-driven" it's just a lot smaller. Let's call it what it is.

That's a given and isn't a good excuse to be locked into the same cap structure forever. Leagues evolve.

 

[DuklaNation]

Where were you told that?

Online discourse, media, etc outside of hardcore areas like this site. I rarely heard it mentioned previously. With more attention, maybe an adjustment to current system is possible.

 

[Idiot Stick]

this is still goin on?

 

[norrisnick]

It's not "gate-driven" it's just a lot smaller. Let's call it what it is.

That's a given and isn't a good excuse to be locked into the same cap structure forever. Leagues evolve.

Which makes it gate driven. If media deals are smaller that makes the percentage of ticket revenue higher. Which makes having fans in the arenas that much more important.

It's like, you're annoyed that hockey is a niche sport and the league is constrained by not having the same piles of money to toss around. Just mentally add a zero at the bottom of every contract if that'll help.

Salary cap is at $880M and Guentzel just signed for $90M/yr. Done.

 

[Machinehead]

Which makes it gate driven. If media deals are smaller that makes the percentage of ticket revenue higher. Which makes having fans in the arenas that much more important.

It's like, you're annoyed that hockey is a niche sport and the league is constrained by not having the same piles of money to toss around. Just mentally add a zero at the bottom of every contract if that'll help.

Salary cap is at $880M and Guentzel just signed for $90M/yr. Done.

The league survived for 88 years without a salary cap.

And again, I'm not advocating just not having one, but to assert that this is the only way the league could possibly exist is just completely ridiculous.

 

[norrisnick]

The league survived for 88 years without a salary cap.

And again, I'm not advocating just not having one, but to assert that this is the only way the league could possibly exist is just completely ridiculous.

Oh, so you're a let a bunch of teams die off and/or constantly relocate advocate?

The cap was instituted because the league, as is, wasn't going to survive much longer without a salary cap. Every league has some mechanism to ensure that player salaries do not wildly outgrow revenue. Again, NHLers get the biggest slice of their respective pie than their peers in other leagues. You just don't want to accept hockey's pie is much much smaller than Football, Baseball, and Basketball.

 

[JPT]

Online discourse, media, etc outside of hardcore areas like this site. I rarely heard it mentioned previously. With more attention, maybe an adjustment to current system is possible.

I have bad news for you that is explained over about 40 pages

 

[Machinehead]

Oh, so you're a let a bunch of teams die off and/or constantly relocate advocate?

The cap was instituted because the league, as is, wasn't going to survive much longer without a salary cap. Every league has some mechanism to ensure that player salaries do not wildly outgrow revenue. Again, NHLers get the biggest slice of their respective pie than their peers in other leagues. You just don't want to accept hockey's pie is much much smaller than Football, Baseball, and Basketball.

Yes, some sort of mechanism.

You're operating on the belief that the mechanism can't even undergo small alterations.

Nobody is advocating for not having a salary cap.

 

[Golden_Jet]

Basically, if you re-sign a player that already plays for you, you're allowed to offer him up to 175% of his pervious salary, and if that's the money that puts you over the cap, you're allowed to go over the cap by that much, so it essentially "doesn't count."

So like, it is a limit, but with a hard cap, they would never be able to afford 175%. In that sense, it does work for the players. I can see why the players hate the franchise tag in the NFL. That's completely different. I'm using the concept of "franchising" a guy colloquially, to mean "homegrown discount."

The whole culture is different in the NBA. The cap floor is 90% of the cap ceiling. They literally force owners to spend on the roster. The NBA has way more of a "this is just a giant toy" culture whereas the NHL has more of a "I need to maximize every penny out of this" culture.

And I understand that to an extent with the overall lower revenues that the NHL generates, but at the same time, nobody who buys a hockey team is living paycheck to paycheck off of the hockey team.

The question was how does it work in the NBA not NFL.

NFL is not 175%
Exclusive tag
It’s the average of the five largest salaries at the player’s position that year, or 120% of the player’s salary from the previous year.

Non exclusive tag
the average of the five highest salaries at the player’s position throughout the last five years but under the current year’s salary cap, or 120% of the player’s salary from the previous year.

And counts against the cap.

 

[Machinehead]

The question was how does it work in the NBA not NFL.

NFL is not 175%
Exclusive tag
It’s the average of the five largest salaries at the player’s position that year, or 120% of the player’s salary from the previous year.

Non exclusive tag
the average of the five highest salaries at the player’s position throughout the last five years but under the current year’s salary cap, or 120% of the player’s salary from the previous year.

And counts against the cap.

That's the way it works in the NBA. It's 175% and it doesn't count against the cap.

I shouldn't have even used the "tag" terminology because that's a specific thing.

I'm talking about some mechanism whereby the cap hit is discounted for keeping certain players with those players essentially making the same real dollars.

We can agree to disagree on the process and go back and forth on the numbers, I just dislike the notion that nothing like that is possible because Newton's 4th law of motion is that the NHL must have this specific cap system with these specific mechanisms forever.

 

[JPT]

Yes, some sort of mechanism.

You're operating on the belief that the mechanism can't even undergo small alterations.

Nobody is advocating for not having a salary cap.

Well, there have been folks in here advocating for not having a salary cap.

 

[DuklaNation]

I have bad news for you that is explained over about 40 pages

Salary structures have evolved over the years in the major sports leagues. That vastly exceeds 40 pages. When factors show that the system has weaknesses, updates will occur eventually. Thats why the income tax rules have increased so much since the early 1900s.

 

[Machinehead]

Well, there have been folks in here advocating for not having a salary cap.

That shouldn't be taken seriously. Unlimited spending is obviously not healthy for any sport.

Honestly, the treatment of the current system like it's scientific law also shouldn't be taken seriously.

 

[JPT]

Salary structures have evolved over the years in the major sports leagues. That vastly exceeds 40 pages. When factors show that the system has weaknesses, updates will occur eventually. Thats why the income tax rules have increased so much since the early 1900s.

I don't think you appreciate the complexity of a fix to whatever advantage these teams have vis-a-vis no state income tax. You're also going down a slippery slope where teams will argue that other things should be taken into account (i.e. higher property taxes, higher property insurance, higher education costs, higher sales tax, higher health care costs, etc.). Why are we looking at only one advantage that a handful of teams have and not other advantages that other markets have? There are financial advantages unique to some markets that have nothing to do with income tax. Seems like this complaint is cherry-picked because those with the advantage are in mostly non-traditional markets.

 

[norrisnick]

That shouldn't be taken seriously. Unlimited spending is obviously not healthy for any sport.

Honestly, the treatment of the current system like it's scientific law also shouldn't be taken seriously.

It's not scientific law, but there are some key factors that should be essentially treated as such.

1. The owners are never going beyond 50% to players again.
2. The players loathe escrow and any systemic change that runs the risk of increasing escrow, ie large chunks of salary that doesn't count against the cap that has to be accounted for somehow to ensure 50% is not exceeded, will be a no go.

I can't think of a mechanism whereby teams can get a caphit "discount", that doesn't run face first into points 1 or 2. About the only thing, maybe, would be to artificially lower the upper limit calculation to make room for the discounts. But, that's not really changing anything besides optics and taking money from the depth guys and giving it to the top guys. The players won't vote for that.

 

[DuklaNation]

I don't think you appreciate the complexity of a fix to whatever advantage these teams have vis-a-vis no state income tax. You're also going down a slippery slope where teams will argue that other things should be taken into account (i.e. higher property taxes, higher property insurance, higher education costs, higher sales tax, higher health care costs, etc.). Why are we looking at only one advantage that a handful of teams have and not other advantages that other markets have? There are financial advantages unique to some markets that have nothing to do with income tax. Seems like this complaint is cherry-picked because those with the advantage are in mostly non-traditional markets.

Its not that complex, maybe messy if you went that route. I would give more advantages to 1st 2 contracts of a players career to nullify some of the impact. I'm not here to outline solutions. I just want the issue to be acknowledged, because there is a blatant competition issue in NHL. Bettman has to go.

 

[Fight4yourRight]

Just pass laws at the state/provincial level that says athletes are exempt from state income taxes.

Saddd.

 

[Leonardo87]

I think this thread has taxed out.