KHL Contraction Part I (Mod Warning - Post #15)

[Acallabeth]

I was refering more to the NHL contracts that can not be what they seem to be. Obviously, an era of super-generous contracts like Radulov and Fedorov got after coming back to the KHL is over, and likely it's for the better.

 

[Barclay Donaldson]

I was refering more to the NHL contracts that can not be what they seem to be. Obviously, an era of super-generous contracts like Radulov and Fedorov got after coming back to the KHL is over, and likely it's for the better.

The vast majority of the NHL contracts are not as murky as you're making them out to be. Four, soon to be five, teams play in states with no taxes. California has three teams with a tax rate of well below 10%. Most of the American teams play in states with low taxes, more than enough to compensate for being in the +30% tax bracket. Canada's federal tax is the same.

 

[Caser]

The vast majority of the NHL contracts are not as murky as you're making them out to be. Four, soon to be five, teams play in states with no taxes. California has three teams with a tax rate of well below 10%. Most of the American teams play in states with low taxes, more than enough to compensate for being in the +30% tax bracket. Canada's federal tax is the same.

There's also escrow, which was 10% last season. So to get 2m net income in the NHL playing, for example, for LA Kings, you need to have a salary of 3m before taxes.

 

[Barclay Donaldson]

There's also escrow, which was 10% last season. So to get 2m net income in the NHL playing, for example, for LA Kings, you need to have a salary of 3m before taxes.

I don't think the math is right for 2 million as 10% of 3 million, but I get your point. Regardless, escrow is given back to players most of the time because the 50/50 revenue split is hit the vast majority of the time.

 

[Caser]

I don't think the math is right for 2 million as 10% of 3 million, but I get your point. Regardless, escrow is given back to players most of the time because the 50/50 revenue split is hit the vast majority of the time.

By net income I meant after getting both taxes and escrow subtracted from the initial 3m, not only escrow.

And, if I understood correctly the tweet below, 10% was the final number for the 2018/19.

 

[rohky]

No money from the main sponsor in Ufa. Some other teams are reporting financial troubles too... I hope that they will go through this

 

[Barclay Donaldson]

No money from the main sponsor in Ufa. Some other teams are reporting financial troubles too... I hope that they will go through this

That is what happens when a team is almost entirely reliant on Bashneft money. I suspect that other teams in similar situations will also face similar troubles.

 

[rohky]

That is what happens when a team is almost entirely reliant on Bashneft money. I suspect that other teams in similar situations will also face similar troubles.

Almost all KHL teams rely on money from single sponsor (government-run companies or local authorities). No chance for real stability.

 

[Barclay Donaldson]

Almost all KHL teams rely on money from single sponsor (government-run companies or local authorities). No chance for real stability.

The league has too many flaws to accomplish anything at this point. SKA can sign anyone they want, it’s actually been admitted the hockey heads want the best players playing together for national team purposes. Teams wouldn’t exist without constant subsidies from state-controlled businesses. Forcing teams in cities where they don’t belong.

 

[vorky]

@rohky

I will give you good advice. If I were you, I would not trust a single word of the journalist with a name Shevchenko.

 

[Barclay Donaldson]

@rohky

I will give you good advice. If I were you, I would not trust a single word of the journalist with a name Shevchenko.

Trusting him beats trusting "KHL can do no wrong" mouthpieces who inaccurately predict expansion not only worldwide but in Europa specifically.

 

[vorky]

That is not just me, but there are more reputable KHL followers saying that you can not trust a single word to Shevchenko. He is playing "his games." People not following the KHL too deeply may not notice all details of his reporting.

And there are more journalists you can not trust a single word.

 

[Jussi]

Игроки «Салавата» сегодня получат зарплату за март. Источник финансирования не «Башнефть»

Google translate:

According to GorObzor.ru , today, April 24, the players of Salavat Yulaev will receive wages for March. The money will come to the club from the “Foundation for Social Targeted Programs”, which finances the team. According to our data, the funds were not received from the Bashneft company (a subsidiary of Rosneft Oil Company). Earlier, she stopped sending money to the “Fund for Social Targeted Programs” to finance HC Salavat Yulaev.

 

[Zine]

Even if they are reported post taxes, then my point still stands. I'm not an expert in Russian tax code, but unless they've changed it from 13% then that doesn't change anything. Mozyakin would be making $2.5 million instead of $2.3 million For the average player making far less than 100 million RUB, the difference is tens of thousands of dollars. That's a drop in the bucket, and they're still making less than players on NHL entry-level contracts.

If this was Radulov and his insane +600 million RUB contract, then I understand it. But they aren't.

1. The average NHL tax rate is 47%, plus escrow, and a handful of cities levy taxes.
2. Russian tax rate is 13%, and KHL salaries are generally reported as net income.

As such, in terms of net pay, NHLers earn close to only half what they are purported to make. Therefore the average NHL entry level contract is worth $490K USD in net earnings; or the equivalent of a 36.5 million RUB reported deal in the KHL.

The days of exorbitant KHL salaries are gone, but tons of players likely exist who make at least NHL entry level money. I mean Ak Bars just re-signed painfully average Glukhov to 40 million/yr.

 

[Caser]

1. The average NHL tax rate is 47%, plus escrow, and a handful of cities levy taxes.
2. Russian tax rate is 13%, and KHL salaries are generally reported as net income.

As such, in terms of net pay, NHLers earn close to only half what they are purported to make. Therefore the average NHL entry level contract is worth $490K USD in net earnings; or the equivalent of a 36.5 million RUB reported deal in the KHL.

The days of exorbitant KHL salaries are gone, but tons of players likely exist who make at least NHL entry level money. I mean Ak Bars just re-signed painfully average Glukhov to 40 million/yr.

It's not exactly that easy with NHL taxes, as different parts of income usually is taxed differently, also on away games players are paying taxes at the rate of the local state/city. I'd recommend CapFriendlys tax calculator to better understand that. So if we take Altybarmakyan's recently signed ELC contract of 817k per year and imagine that the escrow is 10% like last year, then the resulting income is 587k.

A big issue is the escrow though, as due to the losses NHL is taking now, it might reach quite high values. Some are speculating about as high as 30%, so if we assume this kind of a worst case scenario then the income from a 817k ELC is indeed only 460k.

 

[vorky]

1. The average NHL tax rate is 47%, plus escrow, and a handful of cities levy taxes.
2. Russian tax rate is 13%, and KHL salaries are generally reported as net income.

As such, in terms of net pay, NHLers earn close to only half what they are purported to make. Therefore the average NHL entry level contract is worth $490K USD in net earnings; or the equivalent of a 36.5 million RUB reported deal in the KHL.

The days of exorbitant KHL salaries are gone, but tons of players likely exist who make at least NHL entry level money. I mean Ak Bars just re-signed painfully average Glukhov to 40 million/yr.

I would not be surprised if the media reported only the basic salary (оклад) of the player, without the bonuses. Here I see the most important misunderstanding by the media. They always report the salary cap is 900 million & according to them the ideal cap should be 1,1-1,3 billion. But it is like that. So the cap mechanism is calculated at the level of 1,26 billion for next season because 900 million is just for the basic salaries, but we need to count the excepted bonuses too. So, the media does not know what they are claiming. They just create negative feelings among fans.

 

[Barclay Donaldson]

1. The average NHL tax rate is 47%, plus escrow, and a handful of cities levy taxes.
2. Russian tax rate is 13%, and KHL salaries are generally reported as net income.

As such, in terms of net pay, NHLers earn close to only half what they are purported to make. Therefore the average NHL entry level contract is worth $490K USD in net earnings; or the equivalent of a 36.5 million RUB reported deal in the KHL.

The days of exorbitant KHL salaries are gone, but tons of players likely exist who make at least NHL entry level money. I mean Ak Bars just re-signed painfully average Glukhov to 40 million/yr.

I’m pretty sure you need to read North American tax code. There are seven teams at least where there is no state income tax, which proves just by itself that 47% figure of yours to be impossibly high. I refer you to this article discusses the taxes of the Stamkos contract (link: Tax tricks: How an $8.5M Lightning contract keeping Steven Stamkos in Tampa is better than $10.5M to leave). Some of the taxes are high, around 30%. But nothing anywhere near almost half of a contract being able to be eaten up by taxes. But have fun thinking that it is.

 

[Zine]

I’m pretty sure you need to read North American tax code. There are seven teams at least where there is no state income tax, which proves just by itself that 47% figure of yours to be impossibly high. I refer you to this article discusses the taxes of the Stamkos contract (link: Tax tricks: How an $8.5M Lightning contract keeping Steven Stamkos in Tampa is better than $10.5M to leave). Some of the taxes are high, around 30%. But nothing anywhere near almost half of a contract being able to be eaten up by taxes. But have fun thinking that it is.

How Much Do NHL Players Really Make? Part 2: Taxes

 

[Barclay Donaldson]

How Much Do NHL Players Really Make? Part 2: Taxes

Your claim was that the average tax rate in the NHL is 47%, which it clearly isn't. Only six of those players on that long list were 47% or above, and most of them were in the very low 40s and high 30s. Around one quarter of the league pays no state income tax, which would result in 1 out of every 4 NHLers seeing the 30%'s that Jamie Benn sees, which would roughly corroborate with my "around 30%." The absolute highest are the high tax areas of Montréal and Toronto, which is around 50%. No Ranger is going to be paying that much, because most of them live in lower tax areas in Connecticut and Westchester County and will be paying somewhere in the high 30s low 40s. Most NHL players are like that and will live in lower cost areas so they can take home more.

 

[Zine]

Your claim was that the average tax rate in the NHL is 47%, which it clearly isn't. Only six of those players on that long list were 47% or above, and most of them were in the very low 40s and high 30s. Around one quarter of the league pays no state income tax, which would result in 1 out of every 4 NHLers seeing the 30%'s that Jamie Benn sees, which would roughly corroborate with my "around 30%." The absolute highest are the high tax areas of Montréal and Toronto, which is around 50%. No Ranger is going to be paying that much, because most of them live in lower tax areas in Connecticut and Westchester County and will be paying somewhere in the high 30s low 40s. Most NHL players are like that and will live in lower cost areas so they can take home more.

My mistake, I was using figures from 2018. Apparently US federal tax rate has declined 2% since then. As such the NHL average should be around 45%.....which exactly correlates to the average of the tax rates I posted in the previous link (45.5% average)

By the way, Benn is at 36.74,% which is much closer to 40% than the ‘"around 30%." you claim it is.

Furthermore, did you not say “some of the taxes are high, around 30%. But nothing anywhere near almost half of a contract being able to be eaten up by taxes.”?
That is, obviously, blatantly untrue and does not reflect reality. Here, more info for you:

Comparing NHL Player Contracts (2018 figures)
https://thehockeywriters.com/nhl-salaries-not-as-advertised/
https://www.taxpayer.com/media/CTF-HomeIceDisadvantage.pdf
How Much NHL Players Really Make | Anders CPA
How much does an NHL player take home on a $1 million salary? Not as much you think -

 

[Caser]

My mistake, I was using figures from 2018. Apparently, US federal tax rate has declined 2% since then.
So the NHL average should be around 45%.....which exactly correlates to the averaged tax rates in the previous link I posted (45.5% average)

By the way, Benn is at 36.74,% which is much closer to 40% than the ‘"around 30%." you claim it is. Furthermore, did you not say “some of the taxes are high, around 30%. But nothing anywhere near almost half of a contract being able to be eaten up by taxes.”?
That is, obviously, blatantly untrue and does not reflect reality. Here, more info for you:

Comparing NHL Player Contracts (2018 figures)
https://thehockeywriters.com/nhl-salaries-not-as-advertised/
https://www.taxpayer.com/media/CTF-HomeIceDisadvantage.pdf
How Much NHL Players Really Make | Anders CPA
How much does an NHL player take home on a $1 million salary? Not as much you think -

If we look into smaller contracts like ELCs (and not Panarin-like contracts) it is important to remember that the taxation is done at the marginal rate and therefore the effective rate will be notably lower.

 

[vorky]

Since you are talking the taxes in the NHL. I will quote Morozov as saying: "ELC is $925 000 but 40% is taxes. That is the NHL. But while playing the AHL, it is just $70 000 "

 

[TheWhiskeyThief]

An ELC take home after escrow, even in a high tax place like Toronto, is just short of $600k/yr. In a low tax regime, it’s just shy of $650k.

 

[SoundAndFury]

I mean with salary cap maybe a few more guys will be willing to try NA path but the rule of thumb remains the same. If you believe you can make the NHL you earn more, if you won't you earn way less. That isn't going to change.

Altybarmakyan, for example, will be making less than he could in the K for sure. It's just that he played himself out of a big contract back home and the salary difference became marginal. Which, again, was always going to be the case. The only way that was going to change if the small KHL teams became richer and, hence, willing to pay more for KHL level talent.

 

[Zine]

Yea that's the gamble. The big money, long-term, is with the NHL. However most players that go over must endure a lower salary (even if they make the NHL) in hopes of earning more later.

If I recall correctly, that's why Kaprizov extended with CSKA two years ago. On the advice of his father he wanted to ensure he was financial secure before attempting the NHL.