TomasHertlsRooster
Don’t say eye test when you mean points
This has come up a lot lately, and it's really tough to say what the truth is. When discussing this, an overwhelming amount of weight is put on anecdotal evidence by both sides; one side will mention that Nikita Kucherov took $9.5M, and the other side will mention that Sergei Bobrovsky took $10M. Confirmation bias is also heavily at play here; if you already believe that teams that play in states without state income taxes get heavy discounts, then William Karlsson signing for less than $6M on an 8-year term in Vegas will help confirm what you believe. If you already believe that these teams don't get heavy discounts, then Andrei Vasilevskiy signing for $9.5M on an 8-year term will help confirm what you believe.
What I wanted to do was take an objective look at all of the data available. I didn't want to just bicker over one, two, or even 5 contracts. So I looked at every free agent (UFA or RFA) skater who was signed to a contract with an AAV of at least $1M, and and added together the full cap hit that each team had signed their players to. (Extensions signed that take place at the start of 2020-2021 are not present here.) Then, using Evolving Hockey's contract projections, I entered their projected cap hit on the same term that they signed for. Then I created a new variable, titled "Cap hit/Projected Cap hit", which divides the team's cap hit by their projected cap hit, and attempts to discern whether or not certain teams are getting heavy discounts or not. A team below 100% would be doing well, since they paid less than full value for their players, where as a team above 100% is doing worse than full value.
Here is the data for every player:
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You'll notice that Anaheim is missing because they didn't sign a single player to a contract with an AAV of at least $1M.
After I put all of this data together for each team, I used data from CapFriendly to get every team's estimated tax rate.
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Then, I looked to try and find a correlation between cap hit/projected cap hit and estimated tax rates.
There is a slight correlation here, meaning that teams with higher tax rates are paying more than projected value to their players. However, the correlation isn't nearly strong enough to draw any conclusion, with an R^2 value of only 0.0764. And just looking at the chart, the data really is all over the place.
More specifically, if you look at just the teams with no state taxes, there doesn't seem to be a consistent trend. 3 of the 5 teams with no state taxes (Tampa Bay, Florida, and Dallas) actually paid more than projected to their players.
Just based on this data we have here, I don't think we can really conclude that teams in states with lesser tax rates get significant discount. I know that people will have some issues with the contract evaluation model, and so do I. I think some of the projected cap hits are fairly wonky for some of these players. For example, Matt Duchene in Nashville was widely regarded as a major discount, yet his projected contract on a 7-year term was slightly less than what he actually signed for. Duchene is definitely an outlier, and the model has a few.
Having said that, even with a model that isn't perfect, we would probably still observe a much stronger correlation between discounts and low estimated tax rates if the correlation was extremely strong.
UPDATE: I just did these same calculations using Matt Cane's 2018 contract projection model, along with contracts signed in 2018.
Teams:
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What's interesting is that when using data from both years, you get a slight correlation with almost identical R^2 values. Both in that 0.06-0.08 range, which is not significant on its own, but the fact that this is repeated through two samples with two different models is very interesting.
When combining the results of both years, the results grow in significance.
At this point, the evidence is note worthy, but the R^2 value that we are working with here is still less than 0.1. However, the fact that the level of significance increases as the sample size increases - even with two different models - increases the likelihood that there is something here, but that it is definitely not extreme, and that it is certainly prone to strong variance.
What I wanted to do was take an objective look at all of the data available. I didn't want to just bicker over one, two, or even 5 contracts. So I looked at every free agent (UFA or RFA) skater who was signed to a contract with an AAV of at least $1M, and and added together the full cap hit that each team had signed their players to. (Extensions signed that take place at the start of 2020-2021 are not present here.) Then, using Evolving Hockey's contract projections, I entered their projected cap hit on the same term that they signed for. Then I created a new variable, titled "Cap hit/Projected Cap hit", which divides the team's cap hit by their projected cap hit, and attempts to discern whether or not certain teams are getting heavy discounts or not. A team below 100% would be doing well, since they paid less than full value for their players, where as a team above 100% is doing worse than full value.
Here is the data for every player:
Player | Position | Signed as | Age | Team | Term | Cap Hit | Projected Cap Hit | Cap Hit Over Projected |
Lawson Crouse | F | RFA | 22 | ARI | 3 | $1,533,000 | $1,823,399 | ($290,399) |
Danton Heinen | F | RFA | 23 | BOS | 2 | $2,800,000 | $2,819,150 | ($19,150) |
Brett Ritchie | F | UFA | 25 | BOS | 1 | $1,000,000 | $794,944 | $205,056 |
Jeff Skinner | F | UFA | 27 | BUF | 8 | $9,000,000 | $8,341,377 | $658,623 |
Marcus Johansson | F | UFA | 28 | BUF | 2 | $4,500,000 | $3,143,553 | $1,356,447 |
Jake Mccabe | D | RFA | 25 | BUF | 2 | $2,850,000 | $2,685,410 | $164,590 |
Evan Rodrigues | F | RFA | 25 | BUF | 1 | $2,000,000 | $1,262,744 | $737,256 |
Zemgus Girgensons | F | RFA | 25 | BUF | 1 | $1,600,000 | $1,389,466 | $210,534 |
Johan Larsson | F | RFA | 26 | BUF | 1 | $1,550,000 | $1,238,189 | $311,811 |
Sebastian Aho | F | RFA | 21 | CAR | 5 | $8,454,000 | $8,773,423 | ($319,423) |
Ryan Dzingel | F | UFA | 27 | CAR | 2 | $3,375,000 | $4,171,461 | ($796,461) |
Brock Mcginn | F | RFA | 25 | CAR | 2 | $2,100,000 | $2,195,805 | ($95,805) |
Gustav Nyquist | F | UFA | 29 | CBJ | 4 | $5,500,000 | $5,577,975 | ($77,975) |
Ryan Murray | D | RFA | 25 | CBJ | 2 | $4,600,000 | $3,128,864 | $1,471,136 |
Scott Harrington | D | RFA | 26 | CBJ | 3 | $1,633,333 | $1,366,977 | $266,356 |
Sam Bennett | F | RFA | 23 | CGY | 2 | $2,550,000 | $2,407,183 | $142,817 |
David Kampf | F | UFA | 24 | CHI | 2 | $1,000,000 | $1,293,504 | ($293,504) |
Ryan Carpenter | F | UFA | 28 | CHI | 3 | $1,000,000 | $1,680,243 | ($680,243) |
J.T. Compher | F | RFA | 24 | COL | 4 | $3,500,000 | $3,428,686 | $71,314 |
Joonas Donskoi | F | UFA | 27 | COL | 4 | $3,900,000 | $3,326,413 | $573,587 |
Andre Burakovsky | F | RFA | 24 | COL | 1 | $3,250,000 | $2,079,146 | $1,170,854 |
Nikita Zadorov | D | RFA | 24 | COL | 1 | $3,200,000 | $2,458,808 | $741,192 |
Colin Wilson | F | UFA | 29 | COL | 1 | $2,600,000 | $1,247,204 | $1,352,796 |
Pierre-Edouard Bellemare | F | UFA | 34 | COL | 2 | $1,800,000 | $1,424,773 | $375,227 |
Joe Pavelski | F | UFA | 34 | DAL | 3 | $7,000,000 | $7,408,595 | ($408,595) |
Esa Lindell | D | RFA | 25 | DAL | 6 | $5,800,000 | $5,709,883 | $90,117 |
Mattias Janmark | F | RFA | 26 | DAL | 1 | $2,300,000 | $2,091,628 | $208,372 |
Roman Polak | D | UFA | 33 | DAL | 1 | $1,750,000 | $1,675,162 | $74,838 |
Corey Perry | F | UFA | 34 | DAL | 1 | $1,500,000 | $1,102,330 | $397,670 |
Andrej Sekera | D | UFA | 33 | DAL | 1 | $1,500,000 | $1,008,539 | $491,461 |
Patrik Nemeth | D | UFA | 27 | DET | 2 | $3,000,000 | $2,213,156 | $786,844 |
Valtteri Filppula | F | UFA | 35 | DET | 2 | $3,000,000 | $2,943,253 | $56,747 |
Alex Chiasson | F | UFA | 28 | EDM | 2 | $2,150,000 | $2,567,505 | ($417,505) |
Markus Granlund | F | UFA | 26 | EDM | 1 | $1,300,000 | $1,338,082 | ($38,082) |
Jujhar Khaira | F | RFA | 24 | EDM | 2 | $1,200,000 | $1,138,249 | $61,751 |
Anton Stralman | D | UFA | 32 | FLA | 3 | $5,500,000 | $4,475,273 | $1,024,727 |
Brett Connolly | F | UFA | 27 | FLA | 4 | $3,200,000 | $3,648,650 | ($448,650) |
Noel Acciari | F | UFA | 27 | FLA | 3 | $1,666,667 | $1,505,589 | $161,078 |
Alex Iafallo | F | RFA | 25 | L.A | 2 | $2,425,000 | $2,402,877 | $22,123 |
Mats Zuccarello | F | UFA | 31 | MIN | 5 | $6,000,000 | $6,015,461 | ($15,461) |
Ryan Donato | F | RFA | 23 | MIN | 2 | $1,900,000 | $1,746,496 | $153,504 |
Ryan Hartman | F | UFA | 24 | MIN | 2 | $1,900,000 | $2,703,931 | ($803,931) |
Brett Kulak | D | RFA | 25 | MTL | 3 | $1,850,000 | $2,365,692 | ($515,692) |
Joel Armia | F | RFA | 26 | MTL | 2 | $2,600,000 | $2,918,875 | ($318,875) |
Ben Chiarot | D | UFA | 28 | MTL | 3 | $3,500,000 | $2,766,359 | $733,641 |
Jordan Weal | F | UFA | 27 | MTL | 2 | $1,400,000 | $1,848,538 | ($448,538) |
Nick Cousins | F | UFA | 25 | MTL | 1 | $1,000,000 | $841,415 | $158,585 |
Mike Reilly | D | RFA | 25 | MTL | 2 | $1,500,000 | $1,294,063 | $205,937 |
Nate Thompson | F | UFA | 34 | MTL | 1 | $1,000,000 | $905,746 | $94,254 |
Wayne Simmonds | F | UFA | 30 | N.J | 1 | $5,000,000 | $1,938,597 | $3,061,403 |
Will Butcher | D | RFA | 24 | N.J | 3 | $3,730,000 | $3,327,467 | $402,533 |
Matt Duchene | F | UFA | 28 | NSH | 7 | $8,000,000 | $7,675,778 | $324,222 |
Colton Sissons | F | RFA | 25 | NSH | 7 | $2,857,143 | $3,905,167 | ($1,048,024) |
Anders Lee | F | UFA | 28 | NYI | 7 | $7,000,000 | $6,558,841 | $441,159 |
Jordan Eberle | F | UFA | 29 | NYI | 5 | $5,500,000 | $5,654,091 | ($154,091) |
Brock Nelson | F | UFA | 27 | NYI | 6 | $6,000,000 | $4,895,832 | $1,104,168 |
Artemi Panarin | F | UFA | 27 | NYR | 7 | $11,642,000 | $10,482,359 | $1,159,641 |
Jacob Trouba | D | RFA | 25 | NYR | 7 | $8,000,000 | $6,873,268 | $1,126,732 |
Pavel Buchnevich | F | RFA | 24 | NYR | 2 | $3,250,000 | $2,874,385 | $375,615 |
Ron Hainsey | D | UFA | 38 | OTT | 1 | $3,500,000 | $2,264,619 | $1,235,381 |
Anthony Duclair | F | RFA | 23 | OTT | 1 | $1,650,000 | $1,222,631 | $427,369 |
Kevin Hayes | F | UFA | 27 | PHI | 7 | $7,140,000 | $6,579,110 | $560,890 |
Travis Sanheim | D | RFA | 23 | PHI | 2 | $3,250,000 | $2,859,126 | $390,874 |
Brandon Tanev | F | UFA | 27 | PIT | 6 | $3,500,000 | $3,821,772 | ($321,772) |
Zach Aston-Reese | F | RFA | 24 | PIT | 2 | $1,000,000 | $1,268,315 | ($268,315) |
Erik Karlsson | D | UFA | 29 | S.J | 8 | $11,500,000 | $9,720,403 | $1,779,597 |
Timo Meier | F | RFA | 22 | S.J | 4 | $6,000,000 | $4,852,639 | $1,147,361 |
Kevin Labanc | F | RFA | 23 | S.J | 1 | $1,000,000 | $1,893,645 | ($893,645) |
Joel Edmundson | D | RFA | 26 | STL | 1 | $3,100,000 | $4,021,205 | ($921,205) |
Oskar Sundqvist | F | RFA | 25 | STL | 4 | $2,750,000 | $2,348,432 | $401,568 |
Carl Gunnarsson | D | UFA | 32 | STL | 2 | $1,750,000 | $1,001,246 | $748,754 |
Braydon Coburn | D | UFA | 34 | T.B | 2 | $1,700,000 | $2,084,100 | ($384,100) |
Cedric Paquette | F | RFA | 25 | T.B | 2 | $1,650,000 | $1,436,654 | $213,346 |
Jan Rutta | D | UFA | 28 | T.B | 1 | $1,300,000 | $934,481 | $365,519 |
Cody Ceci | D | RFA | 25 | TOR | 1 | $4,500,000 | $3,057,622 | $1,442,378 |
Andreas Johnsson | F | RFA | 24 | TOR | 4 | $3,400,000 | $3,672,590 | ($272,590) |
Alex Kerfoot | F | RFA | 24 | TOR | 4 | $3,500,000 | $4,216,644 | ($716,644) |
Kasperi Kapanen | F | RFA | 22 | TOR | 3 | $3,200,000 | $2,884,599 | $315,401 |
Tyler Myers | D | UFA | 29 | VAN | 5 | $6,000,000 | $5,536,915 | $463,085 |
Alex Edler | D | UFA | 33 | VAN | 2 | $6,000,000 | $5,738,872 | $261,128 |
Micheal Ferland | F | UFA | 27 | VAN | 4 | $3,500,000 | $4,106,404 | ($606,404) |
Jordie Benn | D | UFA | 31 | VAN | 2 | $2,000,000 | $2,741,134 | ($741,134) |
Josh Leivo | F | RFA | 26 | VAN | 1 | $1,500,000 | $1,133,691 | $366,309 |
William Karlsson | F | RFA | 26 | VGK | 8 | $5,900,000 | $7,567,491 | ($1,667,491) |
Tomas Nosek | F | UFA | 26 | VGK | 1 | $1,000,000 | $886,753 | $113,247 |
Nathan Beaulieu | D | UFA | 26 | WPG | 1 | $1,000,000 | $1,435,683 | ($435,683) |
Neal Pionk | D | RFA | 23 | WPG | 2 | $3,000,000 | $2,934,707 | $65,293 |
Andrew Copp | F | RFA | 24 | WPG | 2 | $2,280,000 | $2,176,861 | $103,139 |
Richard Panik | F | UFA | 28 | WSH | 4 | $2,500,000 | $4,795,203 | ($2,295,203) |
Jakub Vrana | F | RFA | 23 | WSH | 2 | $3,350,000 | $3,100,747 | $249,253 |
Carl Hagelin | F | UFA | 30 | WSH | 4 | $2,750,000 | $3,309,399 | ($559,399) |
Garnet Hathaway | F | UFA | 27 | WSH | 4 | $1,500,000 | $2,062,733 | ($562,733) |
You'll notice that Anaheim is missing because they didn't sign a single player to a contract with an AAV of at least $1M.
After I put all of this data together for each team, I used data from CapFriendly to get every team's estimated tax rate.
TEAM | Estimated Tax Rate | Cap Hit | Projected Cap Hit | Cap Hit/Projected Cap Hit |
Arizona Coyotes | 44.02% | $1,533,000 | $1,823,399 | 84.07% |
Boston Bruins | 44.41% | $3,800,000 | $3,614,094 | 105.14% |
Buffalo Sabres | 47.23% | $21,500,000 | $18,060,739 | 119.04% |
Calgary Flames | 47.46% | $2,550,000 | $2,407,183 | 105.93% |
Carolina Hurricanes | 44.73% | $13,929,000 | $15,140,689 | 92.00% |
Chicago Blackhawks | 44.16% | $2,000,000 | $2,973,747 | 67.26% |
Colorado Avalanche | 43.97% | $18,250,000 | $13,965,030 | 130.68% |
Columbus Blue Jackets | 46.05% | $11,733,333 | $10,073,816 | 116.47% |
Dallas Stars | 40.54% | $19,850,000 | $18,996,137 | 104.49% |
Detroit Red Wings | 44.67% | $6,000,000 | $5,156,409 | 116.36% |
Edmonton Oilers | 47.46% | $4,650,000 | $5,043,836 | 92.19% |
Florida Panthers | 40.20% | $10,366,667 | $9,629,512 | 107.66% |
Los Angeles Kings | 51.52% | $2,425,000 | $2,402,877 | 100.92% |
Minnesota Wild | 48.66% | $9,800,000 | $10,465,888 | 93.64% |
Montreal Canadiens | 52.91% | $12,850,000 | $12,940,688 | 99.30% |
Nashville Predators | 40.28% | $10,857,143 | $11,580,945 | 93.75% |
New Jersey Devils | 47.50% | $8,730,000 | $5,266,064 | 165.78% |
New York Islanders | 47.26% | $18,500,000 | $17,108,764 | 108.13% |
New York Rangers | 47.23% | $22,892,000 | $20,230,012 | 113.16% |
Ottawa Senators | 52.93% | $5,150,000 | $3,487,250 | 147.68% |
Philadelphia Flyers | 47.50% | $10,390,000 | $9,438,236 | 110.08% |
Pittsburgh Penguins | 44.87% | $4,500,000 | $5,090,087 | 88.41% |
San Jose Sharks | 51.52% | $18,500,000 | $16,466,687 | 112.35% |
St. Louis Blues | 45.42% | $7,600,000 | $7,370,883 | 103.11% |
Tampa Bay Lightning | 40.27% | $4,650,000 | $4,455,235 | 104.37% |
Toronto Maple Leafs | 52.93% | $14,600,000 | $13,831,455 | 105.56% |
Vancouver Canucks | 49.26% | $19,000,000 | $19,257,016 | 98.67% |
Vegas Golden Knights | 40.47% | $6,900,000 | $8,454,244 | 81.62% |
Washington Capitals | 45.00% | $10,100,000 | $13,268,082 | 76.12% |
Winnipeg Jets | 49.96% | $6,280,000 | $6,547,251 | 95.92% |
Then, I looked to try and find a correlation between cap hit/projected cap hit and estimated tax rates.
There is a slight correlation here, meaning that teams with higher tax rates are paying more than projected value to their players. However, the correlation isn't nearly strong enough to draw any conclusion, with an R^2 value of only 0.0764. And just looking at the chart, the data really is all over the place.
More specifically, if you look at just the teams with no state taxes, there doesn't seem to be a consistent trend. 3 of the 5 teams with no state taxes (Tampa Bay, Florida, and Dallas) actually paid more than projected to their players.
Just based on this data we have here, I don't think we can really conclude that teams in states with lesser tax rates get significant discount. I know that people will have some issues with the contract evaluation model, and so do I. I think some of the projected cap hits are fairly wonky for some of these players. For example, Matt Duchene in Nashville was widely regarded as a major discount, yet his projected contract on a 7-year term was slightly less than what he actually signed for. Duchene is definitely an outlier, and the model has a few.
Having said that, even with a model that isn't perfect, we would probably still observe a much stronger correlation between discounts and low estimated tax rates if the correlation was extremely strong.
UPDATE: I just did these same calculations using Matt Cane's 2018 contract projection model, along with contracts signed in 2018.
Teams:
TEAM | Estimated Tax Rate | Cap Hit | Projected Cap Hit | Cap Hit/Projected Cap Hit |
Anaheim Ducks | 51.52% | $9,953,833 | $8,922,702 | 111.56% |
Arizona Coyotes | 44.02% | $10,625,000 | $11,378,304 | 93.38% |
Boston Bruins | 44.41% | $10,425,000 | $13,078,792 | 79.71% |
Buffalo Sabres | 47.23% | $7,450,000 | $8,406,517 | 88.62% |
Calgary Flames | 47.46% | $21,600,000 | $20,500,627 | 105.36% |
Carolina Hurricanes | 44.73% | $8,350,000 | $8,481,157 | 98.45% |
Chicago Blackhawks | 44.16% | $6,250,000 | $6,235,644 | 100.23% |
Colorado Avalanche | 43.97% | $14,858,333 | $11,642,238 | 127.62% |
Columbus Blue Jackets | 46.05% | $11,825,000 | $10,685,522 | 110.66% |
Dallas Stars | 40.54% | $13,150,000 | $12,905,882 | 101.89% |
Detroit Red Wings | 44.67% | $26,225,000 | $25,134,711 | 104.34% |
Edmonton Oilers | 47.46% | $12,850,000 | $12,933,237 | 99.36% |
Florida Panthers | 40.20% | $3,250,000 | $2,477,629 | 131.17% |
Minnesota Wild | 48.66% | $14,750,000 | $14,835,032 | 99.43% |
Montreal Canadiens | 52.91% | $8,483,000 | $6,493,404 | 130.64% |
Nashville Predators | 40.28% | $2,750,000 | $6,466,913 | 42.52% |
New Jersey Devils | 47.50% | $7,691,667 | $8,023,544 | 95.86% |
New York Islanders | 47.26% | $18,500,000 | $17,147,729 | 107.89% |
New York Rangers | 47.23% | $20,700,000 | $17,630,642 | 117.41% |
Ottawa Senators | 52.93% | $12,650,000 | $12,980,572 | 97.45% |
Philadelphia Flyers | 47.50% | $8,150,000 | $7,387,652 | 110.32% |
Pittsburgh Penguins | 44.87% | $10,987,500 | $10,846,554 | 101.30% |
San Jose Sharks | 51.52% | $20,562,500 | $19,700,640 | 104.37% |
St. Louis Blues | 45.42% | $15,500,000 | $18,880,234 | 82.10% |
Tampa Bay Lightning | 40.27% | $7,400,000 | $8,014,053 | 92.34% |
Toronto Maple Leafs | 52.93% | $19,262,366 | $18,519,585 | 104.01% |
Vancouver Canucks | 49.26% | $17,392,000 | $14,188,865 | 122.57% |
Vegas Golden Knights | 40.47% | $25,800,000 | $22,309,039 | 115.65% |
Washington Capitals | 45.00% | $18,770,000 | $17,267,096 | 108.70% |
Winnipeg Jets | 49.96% | $19,883,333 | $18,207,279 | 109.21% |
What's interesting is that when using data from both years, you get a slight correlation with almost identical R^2 values. Both in that 0.06-0.08 range, which is not significant on its own, but the fact that this is repeated through two samples with two different models is very interesting.
When combining the results of both years, the results grow in significance.
At this point, the evidence is note worthy, but the R^2 value that we are working with here is still less than 0.1. However, the fact that the level of significance increases as the sample size increases - even with two different models - increases the likelihood that there is something here, but that it is definitely not extreme, and that it is certainly prone to strong variance.
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