The Toronto Maple Leafs are getting a raw deal because other teams get tax breaks which they can’t take advantage of.
With 31 teams competing for a Stanley Cup, you think the NHL would want to make the system as fair as possible, but for the Toronto Maple Leafs and many other teams, that isn’t the case. Although the Leafs are the most successful team (revenue wise) in the league, they suffer because they have to pay their players more than some of the other teams.
Sure, they can hire as many scouts as they want, or build the best amenities in the world, but they’re not able to take full advantage of their wealth. It’s great that every team has a maximum amount of money that they can spend in a salary cap, but the system is flawed.
$81.5 million in Ontario is not worth the same amount as $81.5 million in Florida. Everyone is getting paid in American dollars, but that doesn’t matter. Where you live plays a huge factor on the net income you receive.
In every state and province with an NHL hockey team, there are different tax rules and players have to pay different amounts. Thus, when it comes to fitting in more good players under the salary cap, some teams have a distinct advantage in both the numbers of players they can afford, and the attractiveness of their team to free agents.
No State-Tax Teams Have Huge Advantage Over the Leafs
This is where the no-state tax teams have the upper-hand in a salary-cap world compared to the Leafs. Remember when everyone yelled at Kyle Dubas because he gave John Tavares, Mitch Marner and Auston Matthews too much money? Well, you almost have to in Toronto because of how much you’re getting taxed on it.
For example, the average person in Florida pays about 7 percent in tax, compared to a millionaire in Toronto who pays between 40-50 percent.
Let’s do a quick exercise, assuming a 40 percent tax in Toronto:
- Auston Matthews ($11.634M)
- Net-Income in Toronto: $6.981M
- Net-Income in Florida: $10.82M
- Nikita Kucherov ($9.5M)
- Net-Income in Toronto: $5.7M
- Net-Income in Florida: $8.835M
Despite making $2M less on the salary-cap, Kucherov is netting more money than Matthews. That’s a HUGE advantage in the grand scheme of things. In addition to tax, that doesn’t even take into consideration the escrow that each player pays, which is approximately another 10-20 percent.
If you’re a star on the Lightning like Steven Stamkos, Brayden Point, Andrei Vasilevskiy and Victor Hedman, you couldn’t care less if you’re not technically one of the highest paid players in the league. You get to keep almost your entire salary and free up space to make your team even better, so it’s a huge benefit to yourself and your team.
The fact that the NHL hasn’t understood this yet is a true disadvantage to the rest of the league. Just look at the top four teams left in the Stanley Cup playoffs right now. Three of the four teams have no state-tax (Nevada, Texas and Florida).
I’m not sure if there’s an opportunity for the NHL to introduce a soft-cap, so teams can go over and pay a luxury tax, or if they can actually lower or raise the salary-cap based on where the team is located, but it’s not fair.
The NHL seriously needs to look into this issue so that the Toronto Maple Leafs and the rest of the high-taxed markets can be in the same playing field as the non-state taxed teams.