When is a dollar a dollar to a professional hockey player? That is one question which was left out when the National Hockey League created its hard salary cap after the 2012-13 lockout. It’s not just a question of who’s face is on that dollar. Whether the face on that legal tender is Her Majesty, a past Canadian prime minister or a now deceased president of the United States, teams are allocated their cap space in U.S. dollars. But there are other factors which come into play.
Several NHL markets, particularly in the sunbelt, are located in low-tax states, where residents of La Belle Province are taxed back into the stone age. If the decision to play in Las Vegas or Montreal turns into a purely financial decision, it’s Vegas Baby. And you can’t really blame someone for making that choice.
Just how much of a difference can this make? Using the ADP Canadian Payroll Calculator, a $1,000,000 contract turns into a net pay of $493,335.20 in Quebec, $521,843.77 in Manitoba, and $551,965.39 in Alberta. However, in Florida, Texas and Nevada, that million-dollar payday becomes $641,022 (using the salaryaftertax.com calculator). These figures are just for argument’s sake, as a good accountant with knowledge of tax law will get more precise figures. But if you had a limited number of years to make a million dollars a year, would you leave $150,000 in someone else’s pocket? Probably not.
There are actuaries out there who have crunched the numbers to figure out what the premiums are to insure Gene Simmons’ tongue, Troy Polamalu’s hair, and to guard against an alien abduction. It should be possible to figure out what the tax differences are in NHL markets. The next step to financially even up the playing field for all NHL teams is to have a differentiated salary cap.
The end result of that change is simple. Those in high-tax markets get to spend more. Those in low-tax areas get to spend less, so that a dollar earned is actually worth the same across the league.
You can’t bring South Beach to Portage and Main. How could you? The city can’t figure out what to do with that intersection. You can’t bring summer heat to a chilly Toronto, Ottawa or Montreal in January. Those geographic differences and travel challenges will remain. But the financial inequities can — and should be — addressed.