As an Islanders fan, I’ve grown accustomed to July 1 being a day of familiar feelings. Traditionally, on July 1, the NHL’s free agency period opens up and teams can sign players officially to contracts. July 1 is the day when the big-name free agents can sign with their new teams, giving those fans hope and giving many fans, like myself, disappointment.
This year, the NHL free agency period opens up on Oct. 9, and there are many players available for hire. Coyotes forward and former MVP Taylor Hall, Panthers forward Mike Hoffman and Blues defensemen Alexander Pietrangelo, among others, will be able to sign new contracts with teams throughout the league.
As the NHL’s salary cap of $81.5 million will not increase due to lost revenue from the pandemic, it will be increasingly difficult for teams to sign players that may demand a chunk of their salary cap. The issue that I and many others have is that the universal cap isn’t fair to teams that play in heavily taxed areas.
Take the 2020 Stanley Cup Champions, the Tampa Bay Lightning. They have their captain, forward Steven Stamkos, signed to an $8.5 million per year contract. In terms of talent, Stamkos is among players like Connor McDavid and Patrick Kane, who have $12.5 million and $10.5 million contracts, respectively.
Not to mention that the Lightning also has star forwards Nikita Kucherov and Brayden Point, Conn Smythe winner Victor Hedman and former Vezina Trophy winner Andrei Vasilevskiy, one of the league’s top goalies. With all of those players on the roster, the Lightning is basically a super team.
What gives the Lightning the ability to offer these comparatively lower contracts, signing these types of players for less than $10 million per year, is Florida’s lack of an state income tax. While Florida doesn’t have any state income tax, New York has among the highest state income tax rates in the country. Florida residents also pay less in real estate taxes compared to New York, which could influence a player looking for a new home. In general, Florida is the 46th most taxed state, while New York is first.
Given all of this, Florida and states that are taxed less are more likely to be able to sign players to cheaper deals, and it allows for super teams to be built. If a player was deciding between the New York Rangers and the Tampa Bay Lightning, the money in Tampa would be worth more than in New York. Take Steven Stamkos’ contract for example. If he were to move from Tampa to Manhattan, he would need to earn nearly $24 million to maintain his current standard of living at $8.5 million a year per year, according to NerdWallet’s cost of living calculator. In context to the salary cap, Stamkos is currently about 11 percent of Tampa’s cap. If he went to New York and received a contract adjusted for the cost of living, he would be about 29.5 percent of their cap.
Teams in states like Texas, Nevada, Tennessee and Florida, where the state tax rate is zero, have an unfair advantage when signing players, while teams in California, New York, Washington, D.C. and New Jersey have to offer more money to players so that they will sign due to the differences in tax codes. The league should step in and adjust the salary cap for each market so that the team has an equal pot of money to sign players.