When the Tampa Bay Lightning made moves at the NHL Draft to free up salary cap space, general manager Julien BriseBois hoped a variety of factors would entice players to sign with them as free agents.
One of them, of course, is the organization’s penchant for winning and the talent already present on the team.
Another factor, he said, is the “favorable tax situation.”
It has become difficult to deny the impact of tax situations.
Four of the last five Stanley Cup champions are based in places with no income tax.
This advantage continues to attract players, who know that they will pocket more there than elsewhere in North America.
“There’s a clear advantage for teams that are in tax-free states,” said Alan Pogroszewski, who has studied and worked with players on tax issues for more than a decade. “There’s always going to be an advantage.”
It’s not necessarily the deciding factor for a player, but it certainly doesn’t hurt.
The $69 million contract Sam Reinhart signed to stay with the defending champion Panthers is worth more in Florida than he would have if he had joined several clubs in other markets.
With an average salary of $8.625 million per year, Reinhart 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 by Cardinal Point Athlete Advisors.
Over the life of the contract, this could save him up to $12 million.
“It’s part of the reality,” San Jose Sharks general manager Mike Grier said. “It’s an advantage: These teams can pay guys a little less, and the players are happy to live there. These teams are taking advantage of it, as they should.”
Nashville, Florida, Tampa Bay, Dallas, Vegas and Seattle — the six teams in states with no income tax — together spent nearly a quarter of a billion dollars on salaries as the free-agent signing period opened Monday.
Winger Jake Guentzel, who played more than seven seasons with Pittsburgh before being traded to Carolina in March, has just signed a seven-year, $63 million contract with the Lightning.
“I guess it’s always a good thing if you can make more money,” Guentzel said. “But there’s so much positive about Tampa off the ice. Those are the things you really get excited about.”
