NHL salary cap loophole gives teams like Dallas and Florida extra leverage: Report | NHL News
All NHL teams are supposed to be playing under the same rules of the salary cap, but all teams don’t play under the same fiscal realities. Teams such as the Dallas Stars and Florida Panthers may very well be doing a wonderful job of constructing solid rosters.But there is a loophole: they play in states with no personal income tax. That may provide them with a slight but significant advantage, something that creates an uneven playing field from the beginning of the season.
No income tax provides additional cap room freedom
In the NHL, a dollar is a dollar. The salary cap is designed to level the playing field, ensuring wealthy and poor teams have equal allowances. But Florida, Texas, Nevada, and Washington (Seattle’s home state) teams enjoy a special advantage. Their players don’t pay state income tax.That allows those teams at times to be able to pay players a bit less and still make the deal sound that valuable. A player earning $5 million in Florida, for instance, might earn more money than a player earning $5 million in California or New York, where they pay more in taxes.And so, although the cap is uniform for all clubs, how contracts ultimately shake out in reality differs. This is a secret advantage for clubs like the Panthers and Stars. It’s perhaps a 5 to 10 percent advantage but in a close league such as the NHL, this is huge.Also Read: Finding Stability For Reilly Smith With The Golden Knights After A Short Stint With The Rangers
Astute front offices or tax guidance
Yes, teams such as Tampa Bay, Vegas, Florida, and Dallas have operated well. Their front offices have made savvy trades, drafted proficiently, and maintained healthy locker rooms. But we can’t help but notice how much easier that becomes when they can make star players happy without necessarily paying top dollar.Players could decide to sign or re-sign in these cities because they retain more of their salary. That enables teams to maximize the cap and construct deeper teams.In a perfectly equitable system, all teams would have the same tax system. Until that time, fans and teams in high-taxing states can’t help but wonder if they’re beginning the race a step behind.Whether it’s intelligent management or tax benefit or both NHL clubs evidently have a superior way to construct a winner.
