It's time to institute a luxury tax

[FissionFire]

You're really overestimating how much profit they'd stand to make from playoff revenue in this scenario. First of all, 50% of that playoff revenue is going to the players in the first place. I think it was estimated around Covid that the Leafs were generating $7m per playoff game (in other words, that's how much they were standing to lose from the shutdown). $3.5m of that is going to the players.

If the Leafs max out the first tier of luxury tax spending in your proposal, that means they're spending an extra $17.5 million in salary. That means they're going to have to get an extra 5 home playoff games just to break even.

That doesn’t even take into account the portion of playoff revenue that would get sent to the league for revenue sharing as well. Teams make far less then people think after all the cuts.

 

[alphahelix]

The players would 10000% be in favor of it. The owners? My guess is the big market ones would be and they'd be able to push Bettman to rule in their favor. But the push would be best coming from the players. Given all the concessions they've given the NHL, it's about time they get one back.

This is a dumb idea, very few voting members of the BoG would have any interest. This would hurt the league substantially, decimate viewership in a lot of markets and eliminate the hunger for expansion to smaller markets. It would hurt basically everyone, for the benefit of like 1% of stakeholders (a handful of players and owners).

There has never been a worse time to attempt to implement a luxury tax with the economic environment being as uncertain as it is and the appetite for expansion and new tv and streaming deals hoping for broad appeal across numerous markets.

This is basically a selfish “please help me” plea from loser fans from one big market.

If you’re a team that has huge revenue, like say the Oilers, who edged out the Leafs according to Forbes last year, you have 10000 ways to use that to your benefit outside of player salaries. You can leverage tons of advantages in your favour under the current system.

NYR are a huge market pressing their advantages and they’re gunning for the cup. Think they want to upset the status quo?

Basically, we have the LOSER Leafs crying and saying “we’ve tried nothing and we’re all out of ideas!”. Nothing has stopped them from paying ALL of their most attractive assets WAY over market value. HOw would a soft cap help them? They’d just be like the 90s Leafs or like todays Leafs, heavily overpaying for mediocre assets on the ICE and failing to press their meaningful advantages off ice like quality and size of city, elite Executive stafff and scouting and medical and player development opportunities etc.

Losers are gonna lose. This is a culture issue in Toronto and no amount of money will fix it.

Luxury tax would benefit my favourite team the Oilers more than anyone (they’re wildly rich and need to re-sign the best/ most expensive players in the leagueand I think it’s a terrible no good idea that would ruin the competitive parity and harm growth of the game mortally.

 

[Golden_Jet]

You're really overestimating how much profit they'd stand to make from playoff revenue in this scenario. First of all, 50% of that playoff revenue is going to the players in the first place. I think it was estimated around Covid that the Leafs were generating $7m per playoff game (in other words, that's how much they were standing to lose from the shutdown). $3.5m of that is going to the players.

If the Leafs max out the first tier of luxury tax spending in your proposal, that means they're spending an extra $17.5 million in salary. That means they're going to have to get an extra 5 home playoff games just to break even.

Actually 35% of playoff revenue goes to revenue sharing.

 

[mouser]

The players would 10000% be in favor of it. The owners? My guess is the big market ones would be and they'd be able to push Bettman to rule in their favor. But the push would be best coming from the players. Given all the concessions they've given the NHL, it's about time they get one back.

I'm very confident the majority of big market teams do not want a soft cap luxury tax system. Profits have skyrocketed for MLSE and many of the other top revenue teams since the cap was introduced. Getting into an payroll arms race where teams bid up the cost of players with minimal bottom line return is not something the team accountants want.

For context--the NBA has had a luxury tax soft cap system for decades. The NBA owners have been progressively trying to get rid of it by increasing the penalties and/or lowering the limits with every new CBA. Most of the NBA owners wish they had a hard cap like the NHL.

 

[LPHabsFan]

Are we sure that the players would want a luxury tax system? Even with it, the owners would still want to keep the 50/50 split at minimum. The next logical step would be, how the hell do you figure out the escrow amount when you have no idea how much teams are going to be spending in to the luxury tax zone?

 

[edog37]

I'm very confident the majority of big market teams do not want a soft cap luxury tax system. Profits have skyrocketed for MLSE and many of the other top revenue teams since the cap was introduced. Getting into an payroll arms race where teams bid up the cost of players with minimal bottom line return is not something the team accountants want.

For context--the NBA has had a luxury tax soft cap system for decades. The NBA owners have been progressively trying to get rid of it by increasing the penalties and/or lowering the limits with every new CBA. Most of the NBA owners wish they had a hard cap like the NHL.

100%. The league isn’t going to a soft cap anytime soon nor should it. League revenues have never been higher.

 

[No Fun Shogun]

It's not just small markets that like the hard cap. Big markets love cost certainties and the excuse of not having to spend more that a hard cap provides. Let's be clear, if the Chicagos, New Yorks, Torontos, Bostons, etc of the NHL really wanted a soft cap, then there'd be some form of one by now. Those parties have more than enough sway to get at least something along those lines passed through.

 

[KevFu]

The rich teams already have those advantages as you mentioned. It's also an ownership situation. The Panthers aren't a rich team by any means, yet their owner is willing to spend money when necessary.

I do also think the NHL's strategy of going into non-hockey markets and trying to grow the game of hockey is a crap shoot.

If you want to test out a potential market, get an AHL team there first and work with USA Hockey to get a junior program going, but don't just drop one of your franchises with the hopes that you can grow the game.

Oh, it's 100% ownership. Tampa is a very strong hockey business NOW because their owner built it into a strong one when before him, it wasn't strong at all. Florida is getting that going now, too.

And don't get me started on the whole "put an AHL team there first!" How the minor league system works (in both hockey and baseball) has been something that has annoyed me since the mid-80s (when I read a book by Hall of Fame manager Whitey Herzog).

-- It's even worse in baseball, where the lower levels should be like "baseball college" with dorms, classes on baseball, English, Spanish, mental health, diet & nutrition, personal finance, social and media training, personal branding, and just how to avoid screwing up your life.

It's absolutely insane that teams don't invest like $10m a year in THAT, when not doing it leads to $75m mistakes -- like signing Pablo Sandoval and getting nothing out of him because he pretty much had an eating disorder which the "baseball college" could have dealt with. We'll just turn a 19-year old kid loose on road trips and then lose our franchise pitcher to drugs and alcohol! But I digress --


Every single level of the minors should be owned and operated by the NHL & MLB. If the NHL was going to have 64 teams, where would they be? The second 32 is the AHL. Find people to RUN the business side of the AHL teams in a community-first way with funding from the league so that you are creating hockey fans in those markets so dropping an NHL team there becomes EASY. And an NHL expansion team is looking to hire... the people in the city who've been bringing fans in the whole time!


It's just that these "non-systems" grew from "I don't have to pay for that, someone else will just do it for me." But the lack of control makes it just a clusterfudge instead of coordinated corporate synergy.

 

[KevFu]

I love these threads. Every single friggin time this is discussed it is ALWAYS and I mean 100% large market teams fans who want this. I wonder why ? They're probably just thinking of the small market teams.

That's the thing that gets me (and I AM a large market fan). If you want this because you want your rich team to be able to outspend everyone else so you can win; cool. Just say so. Don't pretend it's about helping "everyone." You're just myopic and lying to yourself.

It's not just small markets that like the hard cap. Big markets love cost certainties and the excuse of not having to spend more that a hard cap provides. Let's be clear, if the Chicagos, New Yorks, Torontos, Bostons, etc of the NHL really wanted a soft cap, then there'd be some form of one by now. Those parties have more than enough sway to get at least something along those lines passed through.

Absolutely. The uber rich laugh their way to the bank because they're pocketing massive profits and then blaming the small market teams and the cap for not winning.

 

[BigT2002]

That's the thing that gets me (and I AM a large market fan). If you want this because you want your rich team to be able to outspend everyone else so you can win; cool. Just say so. Don't pretend it's about helping "everyone." You're just myopic and lying to yourself.

Quite possibly, the one thing that ruined the NBA for me was the whole Super Team creation. Parity literally went out the window for it. I mean, sure, it is great for Golden State fans to see them in the championship for like a decade straight...but it kills the mojo for the league when it is a foregone conclusion who is going to win the games. Hell, it bred another issue with the NBA and that has been players taking days off because they need the "rest." Thereby making small market games almost worthless for fans because you were never going to see the S-tier players playing.

 

[Spydey629]

Are there issues with the cap? Yes. Is a luxury tax the solution? HELL NO.

The simple way to fix the LTIR "issue" - at least as the fans see one - is to make a simple rule. A player must play in game 82 to play in game 83. If they are still on the LTIR for their team's final regular season game, they can't play in the playoffs until the second round. This stops the conspiracy theories, and also allows for players with late season injuries that wouldn't be playing in part of the first round anyway.

Where a true change is needed, and this is for people a lot better at accounting than me, is to have cap adjustments for local taxes. We keep hearing how the teams in Nevada, Texas, and Florida have advantages over other teams for free agents because they are tax free states, with Canadian franchises even more behind the 8-ball due to their national tax rates. I have no idea if this could even work, but would a "Fair Cap" based on the players' gross salary, rather than their net, even things out?

Brian Burke has talked for years about the Canadian Penalty - that any team north of the border has to pay an extra million per year for an UFA, just because of the taxes. Is a "Fair Tax" a better idea than a luxury one?

 

[Green Blank Stare]

Are there issues with the cap? Yes. Is a luxury tax the solution? HELL NO.

The simple way to fix the LTIR "issue" - at least as the fans see one - is to make a simple rule. A player must play in game 82 to play in game 83. If they are still on the LTIR for their team's final regular season game, they can't play in the playoffs until the second round. This stops the conspiracy theories, and also allows for players with late season injuries that wouldn't be playing in part of the first round anyway.

Where a true change is needed, and this is for people a lot better at accounting than me, is to have cap adjustments for local taxes. We keep hearing how the teams in Nevada, Texas, and Florida have advantages over other teams for free agents because they are tax free states, with Canadian franchises even more behind the 8-ball due to their national tax rates. I have no idea if this could even work, but would a "Fair Cap" based on the players' gross salary, rather than their net, even things out?

Brian Burke has talked for years about the Canadian Penalty - that any team north of the border has to pay an extra million per year for an UFA, just because of the taxes. Is a "Fair Tax" a better idea than a luxury one?

Washington also doesn't have a state income tax so add Seattle to the list.

I feel all sports with a cap should have some type of adjustment based on the state/province tax rates because it definitely is not a fair fight if a player has to pick between an equal contract from a California/Canadian team vs. someone considering the Kraken or Stars. .

 

[Golden_Jet]

Are there issues with the cap? Yes. Is a luxury tax the solution? HELL NO.

The simple way to fix the LTIR "issue" - at least as the fans see one - is to make a simple rule. A player must play in game 82 to play in game 83. If they are still on the LTIR for their team's final regular season game, they can't play in the playoffs until the second round. This stops the conspiracy theories, and also allows for players with late season injuries that wouldn't be playing in part of the first round anyway.

Where a true change is needed, and this is for people a lot better at accounting than me, is to have cap adjustments for local taxes. We keep hearing how the teams in Nevada, Texas, and Florida have advantages over other teams for free agents because they are tax free states, with Canadian franchises even more behind the 8-ball due to their national tax rates. I have no idea if this could even work, but would a "Fair Cap" based on the players' gross salary, rather than their net, even things out?

Brian Burke has talked for years about the Canadian Penalty - that any team north of the border has to pay an extra million per year for an UFA, just because of the taxes. Is a "Fair Tax" a better idea than a luxury one?

Bolded will never happen, has been discussed a lot in these type of threads.
It would never get approved in a CBA, banning players for 1 round, need a better solution.

 

[BigBadBruins7708]

Washington also doesn't have a state income tax so add Seattle to the list.

I feel all sports with a cap should have some type of adjustment based on the state/province tax rates because it definitely is not a fair fight if a player has to pick between an equal contract from a California/Canadian team vs. someone considering the Kraken or Stars. .

Disagree. If you do that then you need to add adjustments to the cap for other advantages franchises have vs others.

Do the O6 teams get penalized for being more desirable based on prestige/history/fanbases?
Do the California teams get penalized for being more desirable based on weather?
Does NY get penalized for being more desirable because its NYC?
Do places like NY/LA/Toronto get penalized because there's a lot more sponsorship opportunities vs Calgary/Edmonton/Raleigh?

 

[tucker3434]

Washington also doesn't have a state income tax so add Seattle to the list.

I feel all sports with a cap should have some type of adjustment based on the state/province tax rates because it definitely is not a fair fight if a player has to pick between an equal contract from a California/Canadian team vs. someone considering the Kraken or Stars. .

Nah, man. The league doesn't want to step into tax law. That's UGLY and serves no actual league-wide benefit. All expense, no revenue.

 

[KevFu]

Quite possibly, the one thing that ruined the NBA for me was the whole Super Team creation. Parity literally went out the window for it.

Well, the NBA never really had parity to begin with. Have you SEEN the list of NBA Champions?
Eight franchises (Lakers, Celtics, Warriors, Bulls, Spurs, 76ers, Pistons and Heat) have won 61 titles, and the other 22 franchises have won 16.

The NHL does have overall numbers like that (It's 55-22 in the NHL in the same time span), but most of that stems from the league having only six teams while the NBA had 8-12 for their first 21 seasons.


The big thing that allows super teams is all the Exemptions/Exceptions in their soft cap. It allows teams to add a third guy to create a super team when a hard cap would force players to be like "I can't get paid being the third guy." The NBA needs their top 60 players to be "two per team" and not "one team with four, and one team with none."

Disagree. If you do that then you need to add adjustments to the cap for other advantages franchises have vs others.

Do the O6 teams get penalized for being more desirable based on prestige/history/fanbases?
Do the California teams get penalized for being more desirable based on weather?
Does NY get penalized for being more desirable because its NYC?
Do places like NY/LA/Toronto get penalized because there's a lot more sponsorship opportunities vs Calgary/Edmonton/Raleigh?

Not really. You can't put a number on the value of happiness. (like weather and prestige).

But you CAN put a number on the value of money. Which we do all the time, including in the CBA.

The CBA also specifically details how to count non-cash items in terms of salary and prohibits using the financial value of secondary sources to circumvent the cap. A team can't offer "sign here for $1m and we'll give you a $20m sponsorship as the spokesperson for Madison Square Garden."

But a team CAN say "sign here for $8m and it's worth $7m in Texas, but only worth $5.8m if you have the same offer in Canada or California."

The CBA is specifically designed to level the playing field and make sure that teams are playing by the same rules. They're built on the fundamental principle that $1 is $1 everywhere.

But the argument that federal, state and provincial taxes change the rules by location is a VERY sound argument, and you'd have a very easy time convincing people that $1 isn't $1 everywhere.

 

[KevFu]

Nah, man. The league doesn't want to step into tax law. That's UGLY and serves no actual league-wide benefit. All expense, no revenue.

THIS is the best argument against what I just wrote. That's a really ugly area to wade into, because it's more than just "tax law," it's just overall politics and political philsophy: What each resident is GETTING for their taxes.

 

[Yukon Joe]

Disagree. If you do that then you need to add adjustments to the cap for other advantages franchises have vs others.

Do the O6 teams get penalized for being more desirable based on prestige/history/fanbases?
Do the California teams get penalized for being more desirable based on weather?
Does NY get penalized for being more desirable because its NYC?
Do places like NY/LA/Toronto get penalized because there's a lot more sponsorship opportunities vs Calgary/Edmonton/Raleigh?

So look - I'm a Jets fan. it is demonstrably the team on the most no-trade lists and always has been.

But you just can't equalize for all the reasons WHY Winnipeg is on a no-trade list. How do you factor in weather? Taxes? Small size? Does it mean Winnipeg gets a higher salary cap (debatably whether they'd even be able to use it)?

YOu could come up with a hundred or more factors of you wanted to. Does Montreal get penalized for being a french-speaking city - or a bonus for being O6? Who knows?

The thing is - Winnipeg does OK. They can't sign the big free agents, but they are able to pull of trades - even getting players to waive "no trade" clauses.

The salary cap at least sets a base-line of equality. Let teams manage themselves from there.

 

[KevFu]

The thing is, it really doesn't matter what KIND of "make things more fair economically" system the league has and decides to add, as long as whatever it is ACTUALLY MAKES it more fair, and not "easier to exploit."

The Luxury Tax is astronomically "less fair to all" than it is fair to all.


But you can't really create a perfectly fair ecosystem that eliminates the advantages of market vs market, you can only try your best to equalize the pros/cons.

Like, the Coyotes players loved LIVING IN PHOENIX, but the Coyotes organization didn't make the love playing for the Coyotes in Phoenix.

Is there anywhere that has the big/rich market, AND great weather AND a prestigious history AND insane passionate fan base AND great tax rates?

Very few teams hit 4 of 5, let alone all 5. Hell, VEGAS might be the closest, because they're not "big" but they are in a city with a ton of money, great weather/taxes, and their fans so far have been really good. And while they don't have a prestigious history dating back a century, the history they DO have is really strong performance wise.

 

[Spydey629]

The thing is, it really doesn't matter what KIND of "make things more fair economically" system the league has and decides to add, as long as whatever it is ACTUALLY MAKES it more fair, and not "easier to exploit."

The Luxury Tax is astronomically "less fair to all" than it is fair to all.


But you can't really create a perfectly fair ecosystem that eliminates the advantages of market vs market, you can only try your best to equalize the pros/cons.

Like, the Coyotes players loved LIVING IN PHOENIX, but the Coyotes organization didn't make the love playing for the Coyotes in Phoenix.

Is there anywhere that has the big/rich market, AND great weather AND a prestigious history AND insane passionate fan base AND great tax rates?

Very few teams hit 4 of 5, let alone all 5. Hell, VEGAS might be the closest, because they're not "big" but they are in a city with a ton of money, great weather/taxes, and their fans so far have been really good. And while they don't have a prestigious history dating back a century, the history they DO have is really strong performance wise.

Tampa…?

 

[KevFu]

Tampa…?

Yeah, they'd be among the closest. But Tampa isn't exactly a massive market. I think it's "big" in terms of extended area, but it's not like it's NY-LA-CHI-TOR-BOS-PHI-DAL big.

 

[Yukon Joe]

Tampa…?

exactly where I was thinking. Large but not massive, fantastic weather, new team but very good recent history, good fan base for a southern market...

But let's also remember they lost in the first round also. So same as... Winnipeg.

 

[edog37]

Washington also doesn't have a state income tax so add Seattle to the list.

I feel all sports with a cap should have some type of adjustment based on the state/province tax rates because it definitely is not a fair fight if a player has to pick between an equal contract from a California/Canadian team vs. someone considering the Kraken or Stars. .

Oh yes, let’s give millionaire players a tax break. I’m sure those optics will go over well