For a while, there was a major discussion regarding the so-called “tax advantage” that some teams enjoyed over others in the NHL. It was a reasonable claim that most fans brought up, especially Toronto Maple Leafs faithful.
But now, there is actual data to back up the tax disadvantage the Leafs have over other teams. And the data prove that the NHL’s purported parity due to the salary cap is just nonsense.
An infographic making the rounds on social media shows the teams topping the league in tax rates. Lo and behold, the Maple Leafs top the list with a 53.09% tax rate based on a $10 million salary. Toronto tied its Ontario neighbor, the Ottawa Senators, while two other Canadian clubs, the Vancouver Canucks and Montreal Canadiens, clocked in at nearly 53%.
The three California teams joined the Maple Leafs in their tax disadvantage, coming in at nearly 51%. The New York Rangers and Winnipeg Jets rounded out the teams at over 50% tax rate.
That situation clearly points towards the difficulty some teams have in signing free agents and acquiring players via trade. Players looking to maximize their income will likely drive up the price tag in free agency for these teams. As such, savvy cap management becomes increasingly difficult for teams like the Maple Leafs.
Meanwhile, it shouldn’t be surprising to see Canadian teams on most players’ no-trade lists because of the high tax rates. That’s why, regardless of what the NHL wants to sell fans, the tax advantage or disadvantage is a real thing.
Tax Advantage Has Helped Teams Win Stanley Cups
Since 2020, the teams winning the Stanley Cup are in the bottom third of the tax bracket. The Tampa Bay Lightning and the Florida Panthers ranked 31st and 32nd in the league, respectively. Their 36.57% tax rate has made them an attractive destination for players looking to win, while also allowing them to give these teams a break in their overall salary demands.
That’s something that the Maple Leafs, along with other clubs, will have a hard time dealing with. Even if teams get creative with structures to help player reduce their tax bill, it’s still an advantage that some clubs have over others.
The Vegas Golden Knights, ranked 30th, won the Cup in 2023. The Colorado Avalanche landed 25th, while the Carolina Hurricanes 24th. Their tax rates are relatively high, compared to the Florida-based teams. Still, their compartively “cheap” compared to teams like the Maple Leafs.
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Salary Cap Only Makes Challenge Harder for Maple Leafs
If there was no salary cap, the market could compensate for the difference in tax rates. Teams like the Maple Leafs, Rangers, Kings, or Canadiens could just spend more on their payroll. Meanwhile, the Panthers and Lightnings of the world could get away with paying lower wages due to the tax advantage.
The salary cap only handcuffs teams with higher tax rates. Unfortunately, the NHL can’t go to local governments and ask them to level the tax rate for hockey players in order to even the playing field.
That’s why, as much as the NHL likes to pontificate about its parity, the numbers show that it is just not real.
Pretending that the parity in the NHL is the result of a fair cap system is nonsense. It’s the result of creating disincentives for big market teams like the Maple Leafs to leverage their economic power.
Maple Leafs Tax Disadvantage Proves NHL Parity Is Nonsense