Flaw in League salary cap structure

[stator]

Top income tax brackets are higher in the USA than Canada. That is where most in the NHL will be, but your assertion that the cap structure is flawed is correct, from my view. Caps should be adjusted for tax implications on the city where each team is located.

In the USA, the combined top income tax brackets for state + federal, California has all other beat. Not sure that hockey fans want to see the most uplift for cap adjustment going to the Sharks, Ducks, and those dirty dogs... Kings.

States with no income tax like Texas and Florida have an advantage for those in the same division, plus those teams. So the cap adjustments for high income earners need to consider where the team plays their home games, plus which teams they will play the most on the road. I cannot see the owners coming to an agreement because of the complexity when you consider the schedule change from year to year.

I also believe the cap is flawed for these long term contracts that extend well past the player's likely playing age as other assert here. Reminds me of the 49ers years under Eddie DeBartolo's ownership. That guy heavily leveraged the future using the NFL salary cap years and ended up being bankrupt that resulted the team ownership changing to those that held Eddie's debt. The NFL later amended the cap rules so this could not be done. I do expect the NHL to tighten up the cap rules further in this regard.

 

[Leaf Lander]

Absolutely you are correct a rich franchise like Toronto is being disadvantaged by a flawed salary cap structure

 

[HamiltonNHL]

How High Taxes are Keeping the Stanley Cup out of Canada

[source]

Interesting.

 

[rrc1967]

this is pretty pointless.

how far do you take it? do you compare tax freedom days - how about "sin" taxes and sales taxes? do you take into account cost of living indexes?

the leafs get to spend more on scouts, management and facilities than any other club in the NHL. they have the ability if they so choose to do so; to make their players play at the top peak of their performance unlike any other NHL team.

 

[King Mapes]

I'm talking about when NYR offers 6 mill and Toronto offers 6 mill and they have to decided, I bet majority of players don't know the difference.

Assuming players don't (which most should), their agents do. That's their job. To get their clients the most take home money

 

[rdawg1234]

Toronto equals more endorsements though than say Florida, so it equals out.

I dont think taxes are a huge factor with us, we've always been able to sign solid UFA's.

It's a myth, we have great facilities, a huge fanbase, endorsements etc. So if you like being in the spotlight and we're a wining team, UFA's will come to us.

But if you want nothing to do with the spotlight, you'd probably go to a southern team, and the money wouldn't be that much different.

 

[jboknows]

I believe anyone can create their own corporation and be sole shareholder. IT professionals do it all the time, but it is up to the employer whether he'll contract you or wants you to be an employee.

You can be both at the same time.

You are correct that anyone can create their own corporation. However, your next comment I do not believe to be correct at all. I can incorporate myself and sell my services... ultimately we can try and claim that I am a contractor, however the CRA will easily reclassify me as being an employee based on many criteria they look at:

1) do I choose my own schedule?
2) do I have the ability to change the way my work is completed?
3) do I own the tools I use?
4) do I work for other companies, or is this the sole source of my income?
4) Etc. etc. Etc.

NHL players would be employees as far as I'm concerned (at least in Canada, I have little knowledge of US tax legislature). In regards to someone else's comments about incorporating for brand imaging, shoe sales, etc. Absolutely, you are now selling something other than your services and this incorporated company/income would be business income, not employment income.

Also, to the person saying that Americans would pay double-tax, here and in the US... we have tax treaties in place for that. In the same way that if I have American investments and pay tax to the US government, I get credit for that on my return in Canada.

 

[TOGuy14]

Does anybody else think the league's CBA is flawed by the differences in income tax in te league? If every team is limited to the same Salary Cap would it not make sense for the Cap to be adjusted in each market to account for the differences in income tax? Big markets such as Toronto are essentially paying for other teams players through revenue sharing and for those fans to get much cheaper tickets for a very similar experience. Players signing in Ontario lose a much larger percentage of their salary to tax (a factor that effects player contract demands) then those who sign in Florida (among others). I know this is a problem that extends beyond Toronto and includes other big markets but as a Leafs fan this is a legitimate piss off to me. Leafs fans pay more for tickets then those in Florida (and as you all know, it's not even close), and in return we get higher contract demands so the players can bring the same amount of money home after taxes. Another option (probably a legal mess) could be to subjugate all players in the league to the same income tax. The cap and revenue sharing is designed to put all the teams in the league on a level playing field and right now that is not the case. It's pure exploitation of this market and fan base considering we pay for other teams to get players for cheap.

I was under the impression (particularly in baseball) that most players create shell corporations in Florida and just sign personal services contracts with teams in different locales to avoid paying higher income taxes?

Does this practice not happen in hockey?