The Toronto Maple Leafs could be heavily impacted by the changes in the new Collective Bargaining Agreement (CBA) between the NHL and the NHLPA.
The new CBA will take effect for the 2026-27 season. The most noticeable change is the shift from an 82 to an 84-game schedule. The two extra games have drawn the bulk of fan attention.
But hidden in the changes to the new CBA are provisions that could seriously hamper Canadian teams. In particular, one crucial change could make it hard for the Toronto Maple Leafs to attract free agents.
One of the main narratives over the last couple of seasons has been the supposed tax advantage that teams like the Tampa Bay Lightning and Florida Panthers hold over other markets.
That tax advantage was one of the reasons why Mitch Marner was reportedly so eager to play for the Vegas Golden Knights. Certain states offer lower tax thresholds, and in the case of Texas, Florida, and Tennessee, there is no income tax.
That situation means that a player’s tax burden could be significantly lower. It’s partly the reason why Steven Stamkos signed with the Predators last offseason and the Florida Panthers were able to get Brad Marchand, Sam Bennett, and Aaron Ekblad to re-sign at bargain-basement prices.
That tax advantage will become even greater with the new CBA and its changes. The specific change pertains to signing bonuses that teams can pay to players as part of their contracts. The Leafs, along with other Canadian clubs, heavily load up contracts with signing bonuses as a strategy to minimize the tax bill on players.
In the Leafs’ case, some contracts are loaded up to 90% of their total value with signing bonuses. That situation makes playing in Canada attractive despite the high tax rates. In particular, tax rates are lower on bonuses than they are on regular pay.
That rule goes for all workers, not just professional athletes. It’s also partly the reason why corporate executives have relatively low salaries but get outrageously high performance bonuses.
Under the new CBA, teams can now only pay players up to 60% of their total salary in bonuses. That situation could have a huge impact on Canadian teams’ ability to attract free agents.
If you are inclined to get a more thorough explanation of this previous point, I would encourage you to check out the article Marco D’Amico published on July 16 at RG Media.
Maple Leafs could have trouble re-signing Auston Matthews under new CBA rules
One of the most concerning implications of the new CBA rule changes will be the Maple Leafs’ ability to re-sign Auston Matthews.
When Matthews signed his four-year extension, the contract called for 90% of his salary to be paid in bonuses. So, every July 1, Matthews gets a fat paycheque. The rest of the year, he’s paid the league minimum.
Of course, Matthews’ cap hit counts as $13.25 million, but in reality, he only makes $775K. That’s a technicality and bookkeeping voodoo.
Under the new CBA, the Leafs would only be able to pay Matthews 60% of his salary in bonuses. That would mean that the rest would fall under regular pay, and, therefore, increase Matthews’ tax bill.
Now, a player like Matthews has exploited a taxation loophole between the US and Canada. You see, Matthews is a resident of Arizona. He doesn’t technically live in Canada. He lives in Arizona. He only works in Canada.
That situation means that Matthews pays taxes under Arizona, not Canadian rules. As a result, he gets a lower tax bill.
In contrast, Mitch Marner, a Canadian citizen, cannot claim residence in a lower tax jurisdiction like Arizona. He has to claim his tax jurisdiction in Canada. Well, now he’ll claim his new tax jurisdiction in Nevada, not Canada.
I bring this example of Marner up because the whole theatre about the attention and pressure in Toronto is just smoke and mirrors. He didn’t want his decision to sign with Vegas to be seen as financially driven.
Marner would rather have himself painted as a helpless victim of the voracious Toronto media than a greedy individual.
Well, in my estimation, Marner did what was best for himself and his family. Any one of us would have done something similar in his shoes. So, we can’t blame him for it.
Ultimately, the Maple Leafs will need to adapt to this rule change, among others. Please keep in mind that in business, like in any ecosystem, those that can adapt have a better shot at survival than those who cannot.