How do we fix the imbalances in the cap system?

[Sypher04]

I'm posting this since I seem to have accidentally completely derailed the free agency thread.

Tampa's core:
Point - 9.5
Kuch - 9.5
Vasi - 9.5
Stamkos - 8.5
Hedman - 7.875
Total cap hit: 44.875
Every single one considered team friendly at the time of signing

AAV required to pay the same players the same in net for Toronto:
Point - 12.75
Kuch - 12.75
Vasi - 12.75
Stamkos - 11.5
Hedman - 10.5
Total cap hit: 60.25m

To be clear, I never expect the tax thing to change, though the massive signing bonus structure I think might, but I'd abolish both

As for how taxes could be mitigated for. I get it's a complex issue, and I'm sure they have capologists way smarter than me who could work it out, but a basis for the idea I'd think could look something like this:

Take all the tax rates of each market. Find the average. Subtract the average tax amount from the cap figure giving us the Net Cap

Make player cap hits their AAV - the average tax rate. Essentially their net cap hit.

This isn't about excusing the Leafs of their failures, which they own themselves, but removing the imbalances in the cap system. As far as I'm concerned, all of them are on the table

Discuss here

Click to read more...

 

[leaffaninvancouver]

I'm posting this since I seem to have accidentally completely derailed the free agency thread.

Tampa's core:
Point - 9.5
Kuch - 9.5
Vasi - 9.5
Stamkos - 8.5
Hedman - 7.875
Total cap hit: 44.875
Every single one considered team friendly at the time of signing

AAV required to pay the same players the same in net for Toronto:
Point - 12.75
Kuch - 12.75
Vasi - 12.75
Stamkos - 11.5
Hedman - 10.5
Total cap hit: 60.25m

To be clear, I never expect the tax thing to change, though the massive signing bonus structure I think might, but I'd abolish both

As for how taxes could be mitigated for. I get it's a complex issue, and I'm sure they have capologists way smarter than me who could work it out, but a basis for the idea I'd think could look something like this:

Take all the tax rates of each market. Find the average. Subtract the average tax amount from the cap figure giving us the Net Cap

Make player cap hits their AAV - the average tax rate. Essentially their net cap hit.

This isn't about excusing the Leafs of their failures, which they own themselves, but removing the imbalances in the cap system

Discuss here

It's ridiculous that were not allowed to have coaches work over the summer with our players without other teams complaining but Tampa is allowed to essentially go over the cap by 10-20 million every year due to taxes.

 

[Sypher04]

I do agree. Every team should be allowed to do this. But my goal isn't to rail on Tampa here. I mean, the Leafs do use the cap in ways many teams can't, such as exploiting LTIR, and massively frontloaded bonus signings. I think if the league wants to claim parity of opportunity, both of these things should be reigned in/dealt with, just like tax disparity.

Imagine being a team like Columbus, with all their challenges, and watching some teams signing players below market due to tax advantages, on top of heavy signing bonuses & LTIR usage in the double digits. How do you truly compete?

 

[leaffaninvancouver]

I do agree. Every team should be allowed to do this. But my goal isn't to rail on Tampa here. I mean, the Leafs do use the cap in ways many teams can't, such as exploiting LTIR, and massively frontloaded bonus signings. I think if the league wants to claim parity of opportunity, both of these things should be reigned in/dealt with, just like tax disparity.

Imagine being a team like Columbus, with all their challenges, and watching some teams signing players below market due to tax advantages, on top of heavy signing bonuses & LTIR usage in the double digits. How do you truly compete?

The league wants to claim parity but they have no problem abusing the teams that actually fund the league. Playing for Toronto means you will be a public figure, the trade off for that extra fame should be your team can pay more as people are more interested. Why handcuff the teams that have rabid fanbases? Big market teams should be able to pay more, to make working in the city worth it, to justify the cost of living there. It's the same reason why the exact same job will have triple the salary in a major city as opposed to a small one.

The league is purposely hurting bigger teams, to allow small ones to have an unfair advantage.

 

[William Hylander]

There should be an after tax salary cap, or at least if you have a tax advantage give other teams at a higher tax bracket a adjustment to their cap equal to like 5-10 million.

 

[CDN24]

There should be an after tax salary cap, or at least if you have a tax advantage give other teams at a higher tax bracket a adjustment to their cap equal to like 5-10 million.

For that to work you would need to eliminate all tax savings mechanisms available to players Ie no more RCAs for Cdn teams, no more signing bonus up front. Everyone's full pay gets taxed as salary. That would have to be negotiated in the CBA- players will never accept it. What about player movement. If a player signs in Tampa which is low tax and gets traded to Toronto does his salary increase to offset the savings. Say he makes 10 million in Tampa at roughly 40% tax so he has an after tax cap it of $6M. When he gets traded to Toronto does his salary increase such that he is still 6m after tax to match his cap hit. How would that affect escrow, trading [layers from low tax jurisdiction to high increases the share of hockey related revenue going to players if salary must be adjusted so notionally the player from tampa to Toronto example costs eceryone in escrow?

Never will work because taxation especially for high income earners is too complicated and too many savings opportunities are available. Marginal tax rate does not mean much to these guys.

 

[vpasla1]

The owners wanted a cap for cost certainty and the current system gives them that.

However, the Leafs are able to offer better sponsorship deals and other streams of revenue that other teams can't, so I would think that would offset some of it.

 

[nuck]

That is a question that someone should ask Shanahan. I assume the Canadian teams, and those US ones in the more expensive markets, have a good reason for not getting some kind of concession. Maybe its as simple as they like the external limit on their spending to guarantee more profits but there are enough clubs negatively affected that the current situation has to be in place by a significant majority approval.

 

[leaffaninvancouver]

The owners wanted a cap for cost certainty and the current system gives them that.

However, the Leafs are able to offer better sponsorship deals and other streams of revenue that other teams can't, so I would think that would offset some of it.

They are to some degree, but stars will get sponsorships regardless. Colton Orr was a pretty popular player here, I don't remember him raking in endorsement deals.

 

[Walshy7]

The owners wanted a cap for cost certainty and the current system gives them that.

However, the Leafs are able to offer better sponsorship deals and other streams of revenue that other teams can't, so I would think that would offset some of it.

the sponsorship/endorsement angle doesn’t work too well unless you are talking specifically about matthews or marner.

I saw someone say hyman had x amount of endorsements, yeah he did but all those endorsements total wouldn’t even be a million dollars so his higher contract in Edmonton probably mitigates that endorsement loss anyway.

So while it’s nice players get endorsement deals in Toronto it’s not close to the same as the tax savings Tampa/Florida etc get. Again unless you are talking about stars marner/matthews would likely make considerable $$$ from endorsements.

Also endorsements require some amount of work, Tampa players do noting more than be hockey players and get the same take home as ours do having to go do commercials etc which I’m not saying “poor players have to work for extra money” of course

 

[Dreakmur]

Unless you think the players will offer to take a pay cut or the owners will offer to pay more money, this is a problem without a solution.

The owners and players are all happy with this system. The only people who have issue are the fans of bad teams looking for excuses.

 

[leaffaninvancouver]

Unless you think the players will offer to take a pay cut or the owners will offer to pay more money, this is a problem without a solution.

The owners and players are all happy with this system. The only people who have issue are the fans of bad teams looking for excuses.

If you have nothing to contribute, why are you here? Well apart from just attacking the team and its fans of course.

 

[Dreakmur]

If you have nothing to contribute, why are you here? Well apart from just attacking the team and its fans of course.

I just contributed.

 

[ryno23]

If you have nothing to contribute, why are you here? Well apart from just attacking the team and its fans of course.

I think he is an owner lover and cap lover. he was doing the same thing in another thread. I see we finally found Gary's alias on HF lol

 

[Lightsol]

Why not? If you're the league and you're demanding a cap that equalizes, than equalize.

The point of the cap is not to equalize; it's to cover up the fact that the NHL has a handful of franchises that are flat out unsustainable, and in the old wide-open FA system, they were constantly hemorrhaging talent because in that environment, the only way to retain good players in unpopular markets was to overpay, and those franchises were already losing tons of money. The cap prevents the rich teams from poaching talent from the small teams, and revenue sharing allows the NHL to cover up that half the league is consistently losing money.

I told you, what really really pisses me off as a Leafs fan is that not only is Tampa benefiting from the tax situation, they also qualify for revenue sharing. So those back-to-back Cups? Toronto, New York and Montreal helped pay for those...

Bettman wanted a hard cap, but he didn't bother to look at other leagues with hard caps, like the NFL, to see what they do. So unlike the NFL, the NHL has no way of changing a contract once it's signed, and all the money is guaranteed, with the only way to eliminate a contract outright is to buy it out and take double the contract as a penalty. This is INSANE. The cap floor, which was almost definitely created at the request of the NHLPA (to avoid teams spending next to nothing, which you know some teams would do if they could), creates an even worse situation; ever notice that the teams that are massively overpaying middle-6 forwards generally don't have the high contracts of the top forwards? When you don't have enough guys worth big money, you have to compensate by overpaying the guys down a level from that to hit the cap floor. This would be fine if it weren't for the fact that every contract effects every other contract going forward. So when you get a team overpaying middle-6 forwards, it jacks up the price for middle-6 forwards LEAGUE-WIDE.

The result? The Leafs are actually being actively punished by the system for having their young players break out too fast, before their ELC's ended, allowing them to demand much higher contracts quicker than most players. Is there any other league that literally punishes teams for doing the right thing like this?

And Bettman won't change it because his expansion franchises benefit more than anyone else from this system.

 

[notDatsyuk]

Another whinefest about how mean the league is the Toronto.

Mods, can we please close this.

 

[PromisedLand]

do not agree with the OP's position. Taxes don't have as big of a role to play.

- Leafs do rcas, which NBA has banned
- Leafs players makes more revenue in advertising and marketing than any other players in the league unless you are Ovi, Crosby, McDavid
- Leafs can front load the contract like few other teams can

why front loading the contract matters?

• You get a lot of your money a lot before
• You can invest in a property NOW instead of waiting, and then earn higher rate of return. Imagine Marner buying property before pandemic, and then the ridiculous house price increases during the pandemic itself especially in Toronto, and marner selling these properties at the inflated prices. This higher rate of return is only possible when you have a large capital available "Right Now"
• You can also invest in stocks/currencies/funds etc... "Right Now" instead of waiting
  
  • Simple Example: investing 1 million in a fund that has 1% rate of return versus investing 10 million in a fund that has a 1% rate of return.
  • Leafs players can make quite a bit of money compared to other players playing for other franchises.

bottom line: I don't buy the tax theory that OP is talking about. For the Leafs thats not a big issue.

 

[Lightsol]

Another whinefest about how mean the league is the Toronto.

Mods, can we please close this.

Clearly we need 5 more topics about how stupid Dubas is and how the Leafs are 100% screwed next year...

 

[BlueForever75]

Should there be 2 separate salary caps? 1 for teams in states in the US where tax breaks allow them to circumvent the cap. A second which is higher for teams in states and provinces that pay higher taxes.

This would be the only way to make the field equal. It would allow the Leafs and other Canadian teams to sign players to higher numbers and be an option for FA players.

 

[Walshy7]

Another whinefest about how mean the league is the Toronto.

Mods, can we please close this.

why don’t you put the thread on ignore? Or simply not click on it. Why should it be closed because YOU want it closed

 

[RobBrown4PM]

Allow teams to go over the cap, but force a luxury tax on those that go over the cap.

 

[TOGuy14]

There should be an after tax salary cap, or at least if you have a tax advantage give other teams at a higher tax bracket a adjustment to their cap equal to like 5-10 million.

I think the league should just simplify it and create low medium and high classification brackets for local tax rates and then allow certain variances in the cap to adjust for it. It might not be dollar to dollar but it would soften the blow (ie TOR / MTL might now get a 25% cap boost for the tax rate, but maybe they get a bonus 5M limit or something)

 

[DraftSchmaft]

A study done in 2014 made a "true cap" and Lightning's true cap was 5 mil higher than Leafs. I imagine it would be even greater today.

 

[Its not your fault]

Allow teams to go over the cap, but force a luxury tax on those that go over the cap.

Leafs wouldn't mind that but others would. Rather have an NHL to watch then the top 5 business teams holding half the best players.

 

[613Leafer]

Leafs have massive advantages most teams don't have. Our players get a lot more in endorsement $$ than comparable players do in other markets, we can afford to front-load deals with massive signing bonuses which players really want, we can spend more than anyone on coaching, development, scouting, etc.

Is the tax issue an unfair advantage? Sure. But the Leafs have a bunch of unfair advantages as well, and at the end of the day the Leafs have the resources to make a top top contender under the salary cap, but have failed to do so due to poor decision making, poor drafting/developing, etc.