What is the solution to balancing the salary cap with no tax states?

[Bank Shot]

Nope. To make the teams more competitive which will be popular amongst constituents and lead to additional tax revenue generated as with more games comes more rev for surrounding business, the arena, wages, all of which are taxed

Except the arena is usually paid for with a huge amount of public money and the taxes garnered from the arena never make it back.

Its a scam for sure. There is a reason the value of sports franchises has rocketed to obscene amounts over the last 20 years despite the teams never "making" money.

 

[Legion34]

Wasn't trying to suggest they completely offset the tax burden, only used it as an example of a tool that begins to do so. But fair point that most young athletes are not going to have the long term focus to take advantage.

So you say that tax considerations are very much an ongoing issue but how do you explain that when we are talking about roughly 5% (in the case of Ontario vs Florida)?

I know a key role an accountant serves is to limit their client's tax burden and I know accountants will rightfully magnify the hundreds of thousands of dollars that that 5% represents, and into the millions when invested. But how do other factors such as the weak Canadian dollar and the high cost of living in the US not begin to eat away at the 5% advantage (or 6.4% as a worst case as I first stated)?

I'm to assume that it's simply outside of your purview to go into that kind of detail or that it is simply not guaranteed because exchange rates will fluctuate and an athlete can decide to live as cheap in the US as they do in Canada. I'll assume that agents also gloss over the things that bite into the 6.4% for the same reasons, tangible savings in the form of lower taxes are a lot easier for a mid twenties athlete to digest than a cost of living analysis and a bunch of hypotheticals on lifestyle.

The point remains however that we are talking about a worst case scenario of 6.4%. I just can't see a rational forward thinking person making that the driving force behind their decision making the way the media makes it out to be.

*Signing bonuses paid up front and thus not subject to away game tax rates notwithstanding.

This also assumes that us accountants also don’t have methods.

It’s simple. If you don’t think they do it. Then why do stars of high tax teams consistently sign for less than no state tax teams.

Why do players in Florida. Tampas. Dallas. Vegas. Nashville and Seattle sign for less than

NYR, Anaheim. SJ. LA. Toronto. Montreal. Chicago

Is the weather in Seattle better than orange county? LA was winning back to back cups. Rangers were presidents trophy winners.
Montreal is the most prestigious team in the league.

Why would they all consistently take less?
Why did rantanen sign for 12 ?

 

[NotCommitted]

Ban indoor rinks and hold all games on natural ice. Fixes so many issues with one swift move.

 

[Chaos2k7]

Bob signed for $10M, the second most expensive goalie contract in the league behind Carey Price.

They also wanted Panarin the same year and he signed with the Rangers instead. For tax reasons?

 

[Bank Shot]

They also wanted Panarin the same year and he signed with the Rangers instead. For tax reasons?

Panarin didn't sign for a team friendly contract that's for sure.

The argument isn't that other teams can't attract players. The argument is that they can't sign their players for the same money as tax free teams.

 

[dekelikekocur]

I think this is where the NHL (and you) have it wrong. Maybe your season ticket base across 7 existing teams is capped but there’s no cap on incentivizing existing and new fans from spending money on the NHL and that includes existing markets. It’s not like you’re already a fan and your spending dollars are capped.

Also, it’s un-PC to say this. But think about the prestige of a league relative to the prestige of its major teams winning. All things equal, does MLB like it better if the LA Dodgers are winning the World Series. Or do they want to prop up Oakland (RIP) so they survive as a franchise? Do the LA Lakers do more for the NBA when they win, or does the league need to grow the game in New Orleans and Charlotte and Toronto? I’m sure they’re not opposed to growth but I don’t think they’re tripping over themselves for the success of those markets? All is to say most pro leagues aren’t in the business the same as the NHL when they talk about growing the game.

Market saturation is a real thing, the ROI gets worse the more saturation you have as you're spending increases to reach the outliers. The US has a lot of untapped potential that is cheap investment for a much higher ROI value.

 

[FissionFire]

1. Every player can’t play on no tax teams. Thats impossible

2.) it is a competitive edge and always has been a competitive edge. It was just washed out by teams paying more in pre cap years or adding on fake years (hossa). Once that got outlawed it took off as the only loophole left in town

3.) it is NOT out of anyone’s control. The league artificially made the salary cap and left this loophole. There are plenty of ways to address it.
-ie. 32 teams can split 50% hrr based on taxes. So if the cap was 100 million on average. High tax teams could get 105. And low could get 95.

There is NO other league that has a triple hard cap. Comparing other leagues is silly

Should endorsement opportunities be factored into the cap as well? There is no denying that a player in New York, Chicago, Montreal, Toronto, etc has far more chances to make big money outside of the rink in endorsements compared to smaller markets like Vegas, Tampa, Nashville, etc. Income from salary is only one consideration for players when factoring in where to play. If you want to factor in taxes to the cap, you have to factor in ALL potential income factors and disparities across all markets. I’d say once you do that players in big markets are at worst breaking even and more likely making more money overall than smaller no-tax market players.

 

[Machinehead]

Panarin didn't sign for a team friendly contract that's for sure.

The argument isn't that other teams can't attract players. The argument is that they can't sign their players for the same money as tax free teams.

Panarin left money on the table to come to the Rangers.

Some teams have a right to gripe. Teams like the Islanders and Devils, for example, have similar taxes but they're not really in the same market because they're not the Rangers. Not all destinations are equal. Nor should they necessarily be, it's competition.

The Rangers are not one of the teams with a right to gripe. Let's not forget that their #1 defenseman basically waltzed into the league and said "I'm only playing for the Rangers" and then signed a team-friendly extension.

Not to mention anyone with a clause can force their way to the Rangers, and they've done so. Miller and Kane are just a couple of recent examples.

 

[tarheelhockey]

Nope. To make the teams more competitive which will be popular amongst constituents and lead to additional tax revenue generated as with more games comes more rev for surrounding business, the arena, wages, all of which are taxed

You missed the hidden message in my post.

 

[tarheelhockey]

Except the arena is usually paid for with a huge amount of public money and the taxes garnered from the arena never make it back.

Its a scam for sure. There is a reason the value of sports franchises has rocketed to obscene amounts over the last 20 years despite the teams never "making" money.

Even beyond the arena — let’s say NY state follows this guy’s advice and cuts $100M in public services to benefit the Rangers. How does that generate revenue for the state?

- They’re going to sell more tickets? No.
- Tickets will go up in price? Ok, that new revenue goes 50/50 to the league and players, who are no longer taxed. Ticketmaster makes a little more money. The tax difference on the transaction is nearly nothing.
- More merch gets sold. Cool. See the point above. The great majority of the value increase is captured by the league, players, and sellers. Tax revenue on this is a very small fraction of $100M.
- MSG ratings go up. Perhaps their ads become marginally more expensive than they already are. Again the public revenue difference is negligible.
- What else is there to offset a $100M loss to the state? We’re talking about entertainment orgs that are already running near their max revenue capacity, there’s virtually nothing new to generate.

This kind of “but it’ll be popular!” thinking (literally populism) is just wild. The vast majority of people don’t give a shit if the local hockey team signs a 4th liner with their cap savings. They do give a shit if the local school hires a teacher.

 

[PlayersLtd]

This also assumes that us accountants also don’t have methods.

It’s simple. If you don’t think they do it. Then why do stars of high tax teams consistently sign for less than no state tax teams.

Why do players in Florida. Tampas. Dallas. Vegas. Nashville and Seattle sign for less than

NYR, Anaheim. SJ. LA. Toronto. Montreal. Chicago

Is the weather in Seattle better than orange county? LA was winning back to back cups. Rangers were presidents trophy winners.
Montreal is the most prestigious team in the league.

Why would they all consistently take less?
Why did rantanen sign for 12 ?

Rantanen at 12 is your only example? You act like it's an epidemic when there is little to no tangible evidence of stars signing for less there. List them. List the one in Seattle and Nashville... Then list all the stars that are actively avoiding the big tax markets...

Rantanen at 12 is a top 5 contract in the league behind Drai, Mack, Matthews and McD. Slots in right about where you would expect him to. The Stars are also a very desirable destination at this time and Dallas is a fine place to live for obvious reasons.

Also then tell me, do they just willfully ignore the cost of living in these cities? Seattle is absurdly expensive. You used the example, so why are stars signing for less in Seattle (what stars? you said it) when they pay far more to live there than the value of the tax discount?

Do I think players consider their options and factor that in? Yes. Do I think it's overblown by the media and agents when compared and weighted with other factors? Also yes.

 

[Legion34]

Should endorsement opportunities be factored into the cap as well? There is no denying that a player in New York, Chicago, Montreal, Toronto, etc has far more chances to make big money outside of the rink in endorsements compared to smaller markets like Vegas, Tampa, Nashville, etc. Income from salary is only one consideration for players when factoring in where to play. If you want to factor in taxes to the cap, you have to factor in ALL potential income factors and disparities across all markets. I’d say once you do that players in big markets are at worst breaking even and more likely making more money overall than smaller no-tax market players.

No. The nhl hasn’t made an endorsement cap. The haven’t made a media cap or a weather cap.

The nhl chose to arbitrarily limit all teams equally spending. They didn’t choose to limit anything else.

those are completely separate issues

 

[Legion34]

Rantanen at 12 is your only example? You act like it's an epidemic when there is little to no tangible evidence of stars signing for less there. List them. List the one in Seattle and Nashville... Then list all the stars that are actively avoiding the big tax markets...

Rantanen at 12 is a top 5 contract in the league behind Drai, Mack, Matthews and McD. Slots in right about where you would expect him to. The Stars are also a very desirable destination at this time and Dallas is a fine place to live for obvious reasons.

Also then tell me, do they just willfully ignore the cost of living in these cities? Seattle is absurdly expensive. You used the example, so why are stars signing for less in Seattle (what stars? you said it) when they pay far more to live there than the value of the tax discount?

Do I think players consider their options and factor that in? Yes. Do I think it's overblown by the media and agents when compared and weighted with other factors? Also yes.

You really need to do your research. There are plenty of examples. They get posted over an over and over.

The standard pre pandemic star ufa contract in all high tax markets is 14% ish

Kane. Toews. Karlson. Doughty. Kopitar. Panarin. Tavares. Matthews. Price. Etc. the list goes on and on.


The standard average for no state tax teams was about 11.5.

Barkov. Kuch. Stamkos. Josi. Saros. Hedman.

no state tax teams have never handed out a 14% aav. Ever. Zero times.

 

[Bank Shot]

Should endorsement opportunities be factored into the cap as well? There is no denying that a player in New York, Chicago, Montreal, Toronto, etc has far more chances to make big money outside of the rink in endorsements compared to smaller markets like Vegas, Tampa, Nashville, etc. Income from salary is only one consideration for players when factoring in where to play. If you want to factor in taxes to the cap, you have to factor in ALL potential income factors and disparities across all markets. I’d say once you do that players in big markets are at worst breaking even and more likely making more money overall than smaller no-tax market players.

The vast majority of players make almost nothing from endorsements. The ones who do ala Crosby and Mackinnon get endorsements regardless of where they play.

 

[PlayersLtd]

You really need to do your research. There are plenty of examples. They get posted over an over and over.

The standard pre pandemic star ufa contract in all high tax markets is 14% ish

Kane. Toews. Karlson. Doughty. Kopitar. Panarin. Tavares. Matthews. Price. Etc. the list goes on and on.


The standard average for no state tax teams was about 11.5.

Barkov. Kuch. Stamkos. Josi. Saros. Hedman.

no state tax teams have never handed out a 14% aav. Ever. Zero times.

Correlation does not imply causation. What changed post pandemic to have these players begin their migration? It wasn't the taxes so why weren't they signing there before?

To deduce this to the tax advantage alone is guess at best, at worst it's ignorant. For the most part these are desirable locations where players can live in relative obscurity and enjoy good weather, some glitz and glamour and play for franchises that currently are the class of the league (TB, FLA, VEG, DAL). I never said it wasn't a factor, I said it's overblown.

Let me know when Seattle starts attracting star players for less

 

[OrangePMD]

no state tax teams have never handed out a 14% aav. Ever. Zero times.

Tampa Bay gave Brad Richards the maximum 20%.

 

[GeeoffBrown]

No. The nhl hasn’t made an endorsement cap. The haven’t made a media cap or a weather cap.

The nhl chose to arbitrarily limit all teams equally spending. They didn’t choose to limit anything else.

those are completely separate issues

I think we should do weather sharing instead of a weather cap

 

[SirKillalot]

NHL and other sports leagues could just make a national / Federal arrangement regarding sports teams.

 

[Jerzey Devil]

I love it when we get a chance to point and laugh at all of the whiney O6 fans.

 

[Tawnos]

Panarin didn't sign for a team friendly contract that's for sure.

The argument isn't that other teams can't attract players. The argument is that they can't sign their players for the same money as tax free teams.

He did sign for less than he could have elsewhere. While it was a lot of money, on the UFA scale, the contract was still at least a little team friendly.

Panarin is a very good example of why any attempt to balance this stuff out is incredibly complicated. Panarin has been paid $73.5m by the Rangers so far. $67.5m of it has been in signing bonuses, which are not subject to any state income taxes because his legal primary residence is in Florida. Only $6m has been subject to the usual state/provincial income tax calculation. The final season of his deal will be the same kind of thing. $7m in signing bonus, $1m in salary.

Let's say you give the Rangers more cap space because it's a high tax situation. In a situation where you have someone like Panarin, now you've given the Rangers an unfair advantage over the teams that have a supposed advantage now.

There is no implementable solution that results in a perfectly equal cap situation for all teams.

 

[Bank Shot]

He did sign for less than he could have elsewhere. While it was a lot of money, on the UFA scale, the contract was still at least a little team friendly.

He had the 2nd highest cap hit in the league at the time of signing it despite being nowhere close to being a top 2 player.
Let's agree to disagree that was a team friendly contract.

Panarin is a very good example of why any attempt to balance this stuff out is incredibly complicated. Panarin has been paid $73.5m by the Rangers so far. $67.5m of it has been in signing bonuses, which are not subject to any state income taxes because his legal primary residence is in Florida. Only $6m has been subject to the usual state/provincial income tax calculation. The final season of his deal will be the same kind of thing. $7m in signing bonus, $1m in salary.

Let's say you give the Rangers more cap space because it's a high tax situation. In a situation where you have someone like Panarin, now you've given the Rangers an unfair advantage over the teams that have a supposed advantage now.

There is no implementable solution that results in a perfectly equal cap situation for all teams.

The NHL could just stop allowing players to be paid so much in signing bonuses. Not that big of a deal. It messes up potential buyouts and hurts the league's leverage if the players want to have a work stoppage anyway.

 

[thebeernerd]

God I hate this talking point so f***ing much. Nobody was going to the Panthers for 25+ years when they were godawful just so they could get more money. Ditto Tampa in their dreadful years. And nobody brings up Seattle into the equation ever because Washington state is... well, let's say different in a very particular way than Texas and Florida that isn't convenient to the special interests on both sides of the border feeding this talking point to idiot news analysts.

These several teams in the NHL do not hold an inherent competitive advantage because players, first and foremost, want to win. They will go anywhere if they feel like they can win. They don't need to address this because it's a silly thing to address.

 

[Tawnos]

He had the 2nd highest cap hit in the league at the time of signing it despite being nowhere close to being a top 2 player.
Let's agree to disagree that was a team friendly contract.



The NHL could just stop allowing players to be paid so much in signing bonuses. Not that big of a deal. It messes up potential buyouts and hurts the league's leverage if the players want to have a work stoppage anyway.

Cap hit rankings relative to player rankings is a meaningless comparison for a variety of reasons.

And what is the NHL giving up to the NHLPA in exchange for restricting signing bonuses? You say "not that big of a deal"... but in reality, it's a very big deal to the side of the negotiation you decided to ignore.

 

[Lazlo Hollyfeld]

The solution is for people to have a better understanding of how taxes work.

Except the arena is usually paid for with a huge amount of public money and the taxes garnered from the arena never make it back.

Its a scam for sure. There is a reason the value of sports franchises has rocketed to obscene amounts over the last 20 years despite the teams never "making" money.

Yup. It's interesting how billionaires are lining up to pay over a half a billion dollars for the privilege of owning one of these franchises that allegedly don't make all that much money.

 

[PistolPete]

Seems a common argument on here is NHL teams like Florida benefit from no state income tax, so if this is true why aren't the Heat, Magic, Grizzlies mopping up the NBA? Marlins and Rays in MLB? Dolphins, Bucs, Titans, Raiders, in NFL?