Major news from Gary Bettman now makes the Detroit Red Wings a prime free agency hotspot
Photo credit: Maitlynn Mossolle
The Detroit Red Wings and Little Caesar's Arena are a prime free agent hot spot for NHL players, compared to Toronto, due to America's tax structure, which lacks the burden of that found in Canada.
While the Detroit Red Wings and Toronto Maple Leafs are original-six rivals, this may never die due to more than just on-ice competition.
In an announcement by NHL Commissioner Gary Bettman, the Red Wings remain a prime spot for NHL free agents to land.
With the latest CBA, Canadian teams are put at a disadvantageous spot thanks to language that favors North American clubs, like the Wings.
CBA Good For the Wings, Bad for Buds
For Canadian teams that cannot use the tax structure in the new language. The new CBA stipulates that a signing bonus can only make up 60% of an
NHL player's contract.
Under the old CBA, all of a player's contract could be comprised of signing bonuses except for the CBA mandated yearly minimum salary. That has changed. The new CBA limits bonuses to 60% of a contract.
This limits NHL teams to working around Canada, and their localities' tax laws, should they be any different (Ontario, Quebec, etc).
Why does this matter?
The Canadian tax on signing bonuses for non-residents of Canada is limited to 15%, with the player then paying the balance owing at the prevailing tax rate in his home state in the United States. So while a player who claims to be a resident of a U.S. state pays taxes in both Canada and the U.S., the combined tax savings is significant, potentially saving the player millions of dollars over the term of the contract.
This puts American teams in the driver's seat as far as being able to pick up talent at a significant rate goes. A player who claims to live primarily in a state like Detroit will get a significant tax decrease, even when combined with paying taxes in Canada.
It seems like the Red Wings should be able to take advantage of this, especially for Canadian stars who are looking for new homes in the future.
The only question is whether or not Steve Yzerman is cognizant of it to do so.
The team will need more talent in order to push into playoff contention next season, and once again are failing to take advantage of material factors that could work in their favor.
Previously on Red Wings Insider
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