Gary Bettman's Harsh New Rules Punish Canadian NHL Teams
Taxes in the NHL for Canadian teams has been a widely discussed issue over recent years, and Gary Bettman and the league have made matters worse with new rules in the updated Collective Bargaining Agreement.
The seven Canadian teams in the NHL, the Vancouver Canucks, Calgary Flames, Edmonton Oilers, Winnipeg Jets, Toronto Maple Leafs, Ottawa Senators, and Montreal Canadiens, have been at a minor disadvantage for years.
Canadian Tax Rates Make Things Difficult for NHL Teams
Canada holds a higher federal and provincial tax rate than anywhere in the United States; especially more than the few income tax-free states in the league.
For example, the average player on the Toronto Maple Leafs is expected to pay over 53% of their contract in taxes; the Panthers, Golden Knights, and Lightning only need to pay a shade under 37%.
The duty days rule is one of the most significant factors affecting NHL player taxation. Generally, players pay taxes in every state or province where they earn income, typically defined as days spent practicing, traveling, or playing games.
Example: A player for the New York Rangers will pay New York State taxes on home games but will also owe taxes in California for road games played against the Kings, Ducks or Sharks. The portion of income taxed is based on the ratio of duty days in each jurisdiction relative to the total duty days in the season.
Tax residency plays a crucial role in determining overall tax liability. Players with homes in multiple jurisdictions may strategically claim residency in lower-tax areas, but this must be backed up with substantial evidence (e.g., time spent, voting registration, or driver's licenses).
Example: A player for the New York Rangers will pay New York State taxes on home games but will also owe taxes in California for road games played against the Kings, Ducks or Sharks. The portion of income taxed is based on the ratio of duty days in each jurisdiction relative to the total duty days in the season.
Tax residency plays a crucial role in determining overall tax liability. Players with homes in multiple jurisdictions may strategically claim residency in lower-tax areas, but this must be backed up with substantial evidence (e.g., time spent, voting registration, or driver's licenses).
Since players are paid based on where they are playing games, large signing bonuses are used to avoid taxes.
For Canadian teams, this leads to very unique contracts -- an example of this is Auston Matthews' $53 million deal in Toronto.
Toronto Maple Leafs captain Auston Matthew signed a 4 year/$53,000,000 with $49,650,000 in signing bonuses. By structuring the contract with 94% in signing bonuses, Arizona resident Matthews stands to enjoy a substantial tax savings. On his last deal alone, Matthews saved around $4 million in taxes across his 5 year deal worth $58,201,250.
Auston Matthews' Contract With the Maple Leafs Highlights Issue in New CBA
While this deal was allowed in the outgoing CBA, and will continue to be allowed until the beginning of the 2026-27 season, following that, the rules will change massively.
The limit on signing bonuses in relation to contract value will now be 60%, which will have a major impact on these teams in higher tax markets.
This isn't the only rule change coming to the NHL, but it may be the biggest. This was one of the issues that many fans were calling on the NHL to fix. Instead, they've just made things worse.
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