How taxing issue creates competitive imbalance in NHL

The NHL is unique compared to other North American leagues — seven of its 32 teams play in Canada. Those Canadian teams are already at a disadvantage because they pay players in league standard American dollars. Add in an unfavorable comparative tax situation and no Canadian team having won a Stanley Cup since 1993 and you get what should be a niche issue coming to the forefront of a major North American sports league. 

The tax argument impacts American teams as well. The NHL's most valuable markets are generally in states with higher taxes or Canada. The New York Rangers, New York Islanders and Buffalo Sabres play in the state with the highest income tax in the league. Those teams have combined for two Stanley Cup Finals appearances in the past 30 years. 

Friedman doesn't believe the league is seriously considering a fix for the issue, but his concern is about the long-term health of a league in which the most hockey-rabid fans in the sport might believe their teams are at a competitive disadvantage.

It's quite wonky, but the basic premise is this: Teams such as the Florida Panthers, Tampa Bay Lightning, Dallas Stars, Nashville Predators, Seattle Kraken and Vegas Golden Knights have a significant built-in advantage. Those teams are all in states that don't have an income tax.

PuckPedia, a website that tracks NHL salary-cap information and has basic salary-cap FAQs, also features a free-to-use tax calculator that allows users to compare the difference in taxes between markets.

Recently, some were taken by surprise when Florida Panthers winger Sam Reinhart was only able to parlay his monster 57-goal contract year campaign that ended with him lifting Lord Stanley's Cup into an eight-year contract worth an average annual value of $8.625M. That made him just the 16th-highest paid winger in the league despite Reinhart being days away from unrestricted free agency. Reinhart had all the leverage. Why couldn't he earn a bigger contract? 

The answer comes back to taxes. Reinhart could have earned a bigger contract elsewhere in total value. Using PuckPedia's tax calculator, it would take an equivalent offer by one of the higher-tax teams of $12.5M per year to match the after-tax pay Reinhart received in Florida. That would have made Reinhart the third-highest paid player in the league. He's good, but he's not that good. 

This is a significant competitive advantage in a sport where an extra $4M can buy you a critically important player who might not be available in other sports at that cost.

The Stanley Cup Finals have been full of non-traditional teams lately. In eight of the past 10 Stanley Cup Finals, a zero-tax team has played. A zero-tax team has played in five straight and won four of the past five championships. 

The NHL, unlike the other major professional sports leagues, has a hard salary cap. There is no mechanism — outside of Long Term Injured Reserve — to exceed the cap. 

In a league desperate for superstars in the most popular markets, it doesn't make much sense to make it harder for those teams to compete for their services. 

Actually, it doesn't make any sense.