NHL teams in states with no income tax may have an advantage, experts say
The quality of an NHL team, its management, fans, location and salary all play a role in free agency.
But experts say another factor is also enticing hockey players to sign as free agents: the state’s income tax.
According to The Associated Press, four of the past five Stanley Cup champions are based in places with no state income tax, and that benefit continues to draw free agents who know they will take home more money there than elsewhere around North America.
"There is a distinct advantage for those teams that are in states with no tax — always," Alan Pogroszewski, who has studied and worked with players on tax matters for more than a decade, told AP. "There will always be an advantage."
FILE: Sticks and the puck photographed during a faceoff between the New York Islanders and the New York Rangers on April 4, 2008 at Madison Square Garden in New York City. (Credit: Bruce Bennett/Getty Images)
While it’s not necessarily the deciding factor for a player, an NHL contract is worth more in states without income taxes.
For example, player Sam Reinhart got to re-sign with the reigning champion Florida Panthers, and his contract is worth more there than it would have been had he signed for the same terms in many other markets.
Averaging out Reinhart's salary to $8.625 million annually, he owes $3.15 million in taxes in Florida. He would pay $1.1 million more in California, $1.5 million more in New York and $1.4 million more in Toronto, according to a calculator provided publicly by Cardinal Point Athlete Advisors.
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Over the length of the contract that could save him up to $12 million.
"That’s part of the reality," San Jose Sharks general manager Mike Grier said. "I think it is an advantage for those teams: They can obviously pay guys a little bit less, and guys are happy to go there. So not to their fault or anything, those teams take advantage of the situation as they should."
NHL free agency starts
Every year, the NHL calls July 1st "free-agent frenzy."
Nashville, Florida, Tampa Bay, Dallas, Vegas and Seattle — the six teams in the 32-team NHL in states with no income tax — combined to spend nearly a quarter of the $1 billion-plus in salaries committed Monday when free agency opened.
NHL free agency refers to the period during which hockey players who are not under contract with any team can negotiate and sign contracts with NHL teams. This typically occurs during the off-season, after the conclusion of the NHL playoffs and before the start of the next season.
Free agency allows players to seek better contracts, potentially with different teams, based on their performance and market value. Teams can also use free agency to strengthen their rosters by acquiring players who fit their needs or fill gaps in their lineup.
This story was reported from Los Angeles. The Associated Press contributed.