Impact of Tax Rate on Team Success Since the Lockout

By treple13 · Oct 2, 2018 · Updated Oct 3, 2018
  1. treple13
    There's been a lot of talk this offseason about tax. Certain teams have an unfair advantage due to having lower taxes than other who have high taxes. Tampa Bay tends to be the main team people are complaining about, although others like Dallas, Nashville get lumped in as well.

    So I wanted to really explore this idea. Do teams with low tax rates have more success? And do teams with high tax rates have less? The hypothesis people seem to be making is that teams with low tax have an unfair advantage so they must be winning more.

    So what I did was take the six lowest and six highest tax teams since the 2005 lockout and analyzed them. (The salary cap is what makes the tax complaint, since teams can “spend different amounts”).

    The one difficult thing in looking into this is that tax rates change. What the tax rates are now are not what they were 5 years ago and not what they were 10 years ago. My assumption is that it's better to get the tax rates from a few years back if I want to measure this than current ones (since you'd have had at least some time to see future results). My source for the number came from this taxpayer article from 2014. This analysis obviously won’t tell you everything since the rate in years prior and since have changed, but it should give us some idea.

    (In case you are wondering why there are six, it is because there's a huge gap between the six lowest and the next seventh)

    The low tax group is Tampa, Florida, Nashville, Dallas, Calgary and Edmonton.

    The high tax group is LA, Anaheim, San Jose, New York Rangers, Minnesota and Montreal.

    And what did I find?

    Well one group averaged 96 points per season, had 58 playoff appearances, 52 series wins, 17 division titles, 5 Finals appearances and 4 Stanley Cups.

    The other group averaged 89 points per season, had 32 playoff appearances, 24 series wins, 7 division titles, 3 Finals appearances and 0 Stanley Cups.

    The odd thing here is that the high tax teams (the first group) have performed SIGNIFICANTLY better than the low tax teams over the last 12 seasons. And NONE of the low tax teams won a Stanley Cup during that time.

    So what’s going on here? I certainly wouldn’t say that it’s advantageous to a team to play in a high-tax area, but it’s pretty clear that tax advantage isn’t much of an indicator of what a team’s success will be. Something else is a better explanation for team success.

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