It's time to institute a luxury tax

[KevFu]

With the economy the way it is right now, that's a bad look. Different rules for the rich?

I agree on the bad look, but you're not making any sense with the "different rules for the rich" part.

It's not different. The RULE would be the same for everyone: Each team would be allowed to put the exact same amount of disposable cash into a players' pocket.

If a player is offered a $10m contract by both the Florida Panthers and Ottawa Senators, AFTER provincial or state income taxes, the player would get:
$10m from FLA
$7.425m from OTT


And who's the "Rich" in this scenario? It's not Rich vs Poor. The tax rates are NOT in order of NHL economic might. Players from the rich NY Rangers and players from the poor Buffalo Sabres are paying the same state income tax rate.

But you look at how good teams are...
Teams for whom you'd lose zero to $450,000 in state/provincial income taxes... 7 of 8 made the playoffs
Teams for whom you'd lose $1.4 million to $2.575 million? 5 of 9 missed the playoffs.

No wonder no one wants to play in Ottawa, there's a big bite out of your check if you go there.

 

[KevFu]

For the record, I'm not advocating for that kind of change...

I'm merely making sure people understand exactly what it is we're talking about.

 

[Golden_Jet]

I agree on the bad look, but you're not making any sense with the "different rules for the rich" part.

I really tried a couple of times to figure that out, but couldn’t.

 

[BigT2002]

Well, the NBA never really had parity to begin with. Have you SEEN the list of NBA Champions?
Eight franchises (Lakers, Celtics, Warriors, Bulls, Spurs, 76ers, Pistons and Heat) have won 61 titles, and the other 22 franchises have won 16.

The NHL does have overall numbers like that (It's 55-22 in the NHL in the same time span), but most of that stems from the league having only six teams while the NBA had 8-12 for their first 21 seasons.


The big thing that allows super teams is all the Exemptions/Exceptions in their soft cap. It allows teams to add a third guy to create a super team when a hard cap would force players to be like "I can't get paid being the third guy." The NBA needs their top 60 players to be "two per team" and not "one team with four, and one team with none."

Which is fair to a degree. Hockey has had the luxury of being a world game for quite some time. The best players have ranged from Canada to Russia to Sweden to Finland to the US to Germany... etc etc etc etc. The NBA was widely a North American sport. I think Tony Kukoc was the first non-US-born player to be drafted. The NHL draft pool, as such, is much more diluted with overall talent potential than the NBA was in the 70's-90's. It didn't excel as a "World Game" until after the 92 Olympic Team crushed everyone in the first quarters of the game to ignite it being played competitively against the US in the 2000s.

But you are correct on your last point as well. Unfortunately, NBA teams can essentially sit out 2 of their 3 elite players and still win against another team purely because one is a destination city vs. a smaller market. Was one of the absolute hardest things with the Timberwolves back in the day, and it has literally taken two 1st overalls and trading away the future to bring together 3 players to even compete in the Western Conference Playoffs. And even that may not be enough...

 

[DaBadGuy7]

Ironically this has been the most parity in the NBA since the 70s, in large part due to the new CBA penalties as been a de facto “hard cap”:



I still think the NHL needs to soften the cap to some degree, I think it’s way too punitive overall on teams in terms of building and maintaining rosters. If the GMs aren’t gonna be smart about wisely spending then that’s the point imo besides the obvious

 

[Ford Prefect]

I thought for sure that a big reason the huge signing bonuses were popular was because they were Escrow proof. I must have heard that somewhere but I can't find anything that supports that conclusion.

I remember them being lockout proof. I think Owen Nolan had the first contract that effectively protected him against losing money when the league locked the players out.

 

[Ford Prefect]

Luxury tax is basically a cap for every team that isn't super rich. It doesn't do anything to curtail spending to win. The leagues that have something like that set up (MLB with the luxury tax, NBA with Bird Rights) see the teams in the wealthiest markets far outspending everyone else, and many, many organizations falling into a rut of continually selling off good players because they know they have no hopes of retaining in FA because those large markets are willing to spend sometimes triple the payroll of others.

The best thing is what we have. Everyone plays by the same rules. The super rich teams aren't allowed to buy titles, which helps pull up everyone else because everyone has a legitimate chance.

There are better ways of closing up the LTIR loopholes than to institute a luxury tax that really only benefits those who the cap is supposed to reign under control. We already saw in the 90s with Toronto, NYR, Philly, Detroit, etc spending gobs of money every year, it legitimately held back competition. The league would have died had we continued down that path.

Is that true though? Look at MLB right now. The Rays continuously have one of the lowest payrolls in the league and have been legit contenders for years. The Orioles have one of the most stacked lineups AND the best farm systems in the game. The Guardians had a string of continued success over the last decade, as have the Royals who are trending up again. And of course the A's; consistently and repeatedly building up and tearing down, and still with the most division titles in AL west history and the most since 2000 when free agency really took off. That's just in the AL.

Yes of course you'll have teams like the Reds and the Pirates who always have low payrolls and never seem to be competitive. Yes, you have the Yankees and Dodgers who will always spend astronomically to be competitive. But you also have the teams like the Mets and Cubs who consistently spend near the top of the market and have had limited success.

There is no sport with a great gap between rich and poor, but time and again it's shown that if you adapt your strategy for roster construction, you can be competitive. Maybe you're more cyclical but it can be achieved. The Dodgers have won one WS title since 1988. Teams with equal or more? Oakland, KC, Minnesota, Miami/Florida, Arizona..

I'm not saying that there is no correlation between payroll and success; obviously there is. But it is too much of a stretch to say that you can't be competitive or win when there are powerhouse teams.

 

[KevFu]

Ironically this has been the most parity in the NBA since the 70s, in large part due to the new CBA penalties as been a de facto “hard cap”:

I still think the NHL needs to soften the cap to some degree, I think it’s way too punitive overall on teams in terms of building and maintaining rosters. If the GMs aren’t gonna be smart about wisely spending then that’s the point imo besides the obvious

So... the NBA makes their cap harder and sees more parity, and you want to make the NHL cap softer to get less parity?

 

[joelef]

Is that true though? Look at MLB right now. The Rays continuously have one of the lowest payrolls in the league and have been legit contenders for years. The Orioles have one of the most stacked lineups AND the best farm systems in the game. The Guardians had a string of continued success over the last decade, as have the Royals who are trending up again. And of course the A's; consistently and repeatedly building up and tearing down, and still with the most division titles in AL west history and the most since 2000 when free agency really took off. That's just in the AL.

Yes of course you'll have teams like the Reds and the Pirates who always have low payrolls and never seem to be competitive. Yes, you have the Yankees and Dodgers who will always spend astronomically to be competitive. But you also have the teams like the Mets and Cubs who consistently spend near the top of the market and have had limited success.

There is no sport with a great gap between rich and poor, but time and again it's shown that if you adapt your strategy for roster construction, you can be competitive. Maybe you're more cyclical but it can be achieved. The Dodgers have won one WS title since 1988. Teams with equal or more? Oakland, KC, Minnesota, Miami/Florida, Arizona..

I'm not saying that there is no correlation between payroll and success; obviously there is. But it is too much of a stretch to say that you can't be competitive or win when there are powerhouse teams.

There is no “ rich or poor”there’s only whether or not there billionaires ownership wants to spend.

 

[DaBadGuy7]

So... the NBA makes their cap harder and sees more parity, and you want to make the NHL cap softer to get less parity?

Gotta be a healthy balance between the two imo. The fact that teams have an issue having two rosters are points in the season because of the cap is an issue imo.

 

[edog37]

Gotta be a healthy balance between the two imo. The fact that teams have an issue having two rosters are points in the season because of the cap is an issue imo.

There is no issue with the cap at all.

 

[DaBadGuy7]

There is no issue with the cap at all.

Wrong, while not a long term issue because of the flat cap, it’s caused some teams to play a player or two short early in the season:

https://x.com/i/web/status/1714337438728896553

 

[mouser]

Wrong, while not a long term issue because of the flat cap, it’s caused some teams to play a player or two short early in the season:

https://x.com/i/web/status/1714337438728896553

These situations were caused by intentional choices team GMs made to expend all of their cap space to construct rosters of less than 23 players, with no cap wiggle room to recall players in case of injury.

This is not a natural outcome of the salary cap system. This is GMs taking intentional risks to min/max the system.

 

[Tawnos]

These situations were caused by intentional choices team GMs made to expend all of their cap space to construct rosters of less than 23 players, with no cap wiggle room to recall players in case of injury.

This is not a natural outcome of the salary cap system. This is GMs taking intentional risks to min/max the system.

There is some nuance here, because some of that squeeze was caused by GMs signing guys to deals with an expectation that the cap would go up fairly significantly in the first few years of the decade. That’s where the projections pointed. It’s not a natural outcome partially because of the risk of signing those deals and partially because of Covid circumstance.