LAS VEGAS — Four of the past five Stanley Cup championship teams have come from states that don’t collect state income taxes — and seven of the past 10 finalists.
Those runs, by the Florida Panthers, Tampa Bay Lightning, Vegas Golden Knights and Dallas Stars, have understandably sparked a debate over whether the teams involved have an unfair advantage in signing players at below-market rates.
In many cases, players signing in those states — Florida, Tennessee, Texas, Nevada and Washington are among the states that deduct no further income tax than the federal taxes — would lose millions of dollars over the lives of their contracts if they played north of the border or in high-income-tax states such as California, New York, New Jersey and Minnesota.
The NHL is keeping an eye on the situation.
In a recent poll of fans by The Athletic, 84.6 percent of 14,066 respondents felt that teams in no-state-income-tax states have an advantage. Of that, 42.8 percent feel changes need to be made to even the playing field, 41.5 percent feel it’s not a significant enough advantage to warrant complex changes and 14.7 percent feel the issue is overblown.
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“It’s an issue that comes up from time to time in our room at the board level and general managers level,” NHL deputy commissioner Bill Daly said last month at the NHL’s European player media tour in Prague. “There are no easy fixes. It’s not like we can just pick from Column A and fix the problem overnight. Players make decisions on where they want to play for a variety of reasons. Their bottom line is one of them, but the quality of life and the communities they live in is probably more important.”
Daly echoed that sentiment Tuesday at the NHL’s North American player media tour in Las Vegas. He said while it’s too early to determine if this is something that may have to be addressed, he has talked to the NHL Players’ Association about the subject and the mutual feeling is that leveling the playing field would be too complicated.
For instance, even if the league systematically adjusted the cap ceiling for teams in no-state-income-tax states, what would happen if a player was traded or sent to the minors? Also, if it was deemed that a player was willing to sign a “hometown discount” contract at lower than what he could have received elsewhere, how problematic would it be to try to determine how much of a discount they took?
The NHLPA, so far, doesn’t see this as much of a problem. Executive director Marty Walsh met with the two dozen players who attended the media tour in Prague and explained this would be a complicated issue to fix. Plus, they don’t see this being a debate in other leagues.
As Daly said, “This is not new. This has all existed over the course of time.”
But some players do see a need for action.
“They have to find a way to tweak it, honestly,” Ottawa Senators forward Shane Pinto said Tuesday. “If you look at all these free agents, you don’t blame them for going down south. It’s just what it is, and it’s best for their families and taxes and lifestyle-wise. But I do think they have to find a way, especially for the Canadian teams. They’ve got to overpay guys to come to Canada every time, and that messes up with the cap. I think they do have to find a way to try to just even it out.
“I know it’s not easy because it’s been like that forever, but I think it’d be nice to have an even playing field.”
To be fair, few were complaining about the lack of state income taxes in Florida when the Tampa Bay Lightning were a doormat in the 1990s. Few brought this up when the Florida Panthers didn’t make the playoffs from 2000 to 2011 and didn’t advance past the first round from 1996 to 2022.
“I think every place certainly has its advantages, whether it’s (lifestyle), and taxes is certainly a part of it,” said Nashville Predators star Filip Forsberg, whose no-state-income-tax team had a banner summer by signing Juuse Saros to an eight-year extension and Steven Stamkos, Jonathan Marchessault and Brady Skjei to contracts totaling more than $166 million. “At the end of the day, that does play quite a bit of difference on our salary. It’s a fair point. I’m not disagreeing with it.
“It’s above my pay grade whether to decide if it’s right or wrong.”
Defenseman MacKenzie Weegar signed an eight-year, $50 million contract with the Calgary Flames in 2022. He previously played in Florida, acquired along with Jonathan Huberdeau in the Matthew Tkachuk blockbuster.
Alberta has a relatively low income-tax rate among Canadian provinces. Still, according to the Turbo Tax and Smart Asset websites, Weegar would be making approximately $950,000 more on his current $6.25 million a year contract if he were being paid in Florida.
He’s not bothered by that. But he does think it’d be nice if the league and players’ union could find a mechanism to even things out in the next collective bargaining agreement.
“You definitely feel like it might pull some other guys down south to those teams,” Weegar said Wednesday. “So there could be something in the next CBA to work something out. But ultimately, the Tampas, Florida, you look at Nashville, the teams are winning. That’s what really pulls people in. The New Yorks and Calgary, if we start winning, nobody really cares about taxes.
“The contracts are already big enough. You don’t really notice the tax too, too much. You still living pretty comfortably. So I’d say, start winning, you’ll get your guys to come in, and your free agents that want to play there.”
Like Stamkos and Marchessault going from Tampa Bay and Las Vegas, respectively, to Nashville, defenseman Brandon Montour went from no-state-income-tax state to no-state-income-tax state. A day after celebrating winning the Stanley Cup during a parade on A1A in Ft. Lauderdale, Montour signed a seven-year, $50 million contract with the Seattle Kraken.
He said taxes were not the predominant reason in his decision.
“You can’t say money’s not a factor,” Montour said Wednesday. “But for me, that wasn’t what we were chasing. We had places that were the highest tax that we were considering, as well. I played in California. I played in New York. Obviously, the paychecks look a little nicer when you’re in Florida and Seattle. But it wasn’t a thing that we were focused on.
“It was trying to find something for our lifestyle and our family to set a spot and call home.”
Montour tried to grasp how the league and union could even address the situation.
“What do you do, like take a percentage off the cap?” he said. “Like if Florida signed somebody that was 10 million bucks, they’d take a percentage or 2 percent off the cap or something? I don’t really know what they would possibly be able to do.”
Montour said every player has different reasons to sign in different places, and there are many high-income-tax areas that are appealing. He thinks this is only a debate because these teams are in a cycle of winning.
“There are just too many variables to really control,” Daly said, “including the fact that there are some markets that are very highly desirable for players that have kind of the highest tax rates in the world. Yet there are other opportunities, other things, that make those markets attractive to players.
“So I just think there’s so much that goes into the equation of where a player wants to play, what he’s willing to take to play there. And a lot of that has to do with team chemistry and how teams are constructed and how the player sees himself fitting into the team in terms of their needs. And so to account for all those variables, I think it’ll be a very difficult exercise.
“Having said that, obviously there’s chatter out there, specifically in the Canadian media, that the Canadian franchises are disadvantaged. We take that chatter seriously and we always look for ways to make the system better. I just don’t have any obvious answers to it.”
Daly was asked if he could envision a scenario where teams in Florida, Vegas, Nashville, Dallas or Seattle have a lower cap ceiling than other teams. He said, “I don’t think we could ever have a different cap for different teams, even though we kind of do in some respects with respect to how the CBA works and bonus overages and the like. So I suppose maybe there’s a formula that you could think of that way.
“I have other ideas that I put ahead of that one.”
Asked if he’d share those, Daly laughed: “No.”
“Look, there are some crude ways you can try to make adjustments to account for it,” Daly said. “I don’t think this issue is the level of kind of trying to push something through, particularly without really giving it some advanced, thorough thought and running it through all the potential channels. I think sometimes when you rush to do something based on chatter, you kind of step into a hole sometimes and the unintended consequences kind of bear their heads.
“We’ll continue to monitor it. If we can make it better, we will. I mean, I could get proven wrong on that. If we have the next 10 years similar to the last five, then maybe it’s something that needs to be addressed. But at this stage, on the basis of a couple summers, I’m not really running to get there.”
That’s fine with Radko Gudas.
The Anaheim Ducks defenseman pays 13 percent in state income taxes in California, compared to zero percent when he played with the Panthers. Yet, Gudas said succinctly, “I don’t think the NHL should be stepping into tax problems.”
(Photo of Matthew Tkachuk at the Florida Panthers’ Stanley Cup rally: Rich Storry / Getty Images)
