Stamkos Contract Negotiations

[Joe S.]

So Stamkos was (allegedly) offered an 8 year 68 million deal...

Not that that's chump change or anything but comparable to the Kessel deal but 2 years later? Is it just me or is that a low ball offer?

 

[AvroArrow]

So Stamkos was (allegedly) offered an 8 year 68 million deal...

Not that that's chump change or anything but comparable to the Kessel deal but 2 years later? Is it just me or is that a low ball offer?

To me it seems like a fine starting point for negotiations.  I don't think they really expected to get him for that.

 

[bustaheims]

So Stamkos was (allegedly) offered an 8 year 68 million deal...

Not that that's chump change or anything but comparable to the Kessel deal but 2 years later? Is it just me or is that a low ball offer?

TBTimes_JSmith: $8.5 million avg. in Tampa nets more than $10 million in Toronto: how taxes may be factor in Stamkos talks https://t.co/T9SUI1qoE1

 

[Kin]

So Stamkos was (allegedly) offered an 8 year 68 million deal...

Not that that's chump change or anything but comparable to the Kessel deal but 2 years later? Is it just me or is that a low ball offer?

TBTimes_JSmith: $8.5 million avg. in Tampa nets more than $10 million in Toronto: how taxes may be factor in Stamkos talks https://t.co/T9SUI1qoE1

Something to keep in mind when people talk about how "unfair" it would be if big market teams can buy out the odd contract.

 

[bustaheims]

Something to keep in mind when people talk about how "unfair" it would be if big market teams can buy out the odd contract.

Yeah, and something, as fans, we often forget about when talking about player contracts. While some guys are concerned with the big number, I imagine most are more concerned about the bottom line.

 

[GhostofPotvin29]

Something to keep in mind when people talk about how "unfair" it would be if big market teams can buy out the odd contract.

Yeah, and something, as fans, we often forget about when talking about player contracts. While some guys are concerned with the big number, I imagine most are more concerned about the bottom line.

But would it even out anyway with that $$ paid in US$ in Canada with a .70 dollar?

Plus...you'd have to live in Florida. #meth

 

[Kin]

But would it even out anyway with that $$ paid in US$ in Canada with a .70 dollar?

Plus...you'd have to live in Florida. #meth

Well, if you're getting that deep into it I imagine the cost of living in Toronto is significantly higher than it is in Tampa-St. Pete.

 

[CarltonTheBear]

But would it even out anyway with that $$ paid in US$ in Canada with a .70 dollar?

Plus...you'd have to live in Florida. #meth

Well, if you're getting that deep into it I imagine the cost of living in Toronto is significantly higher than it is in Tampa-St. Pete.

The dollar's also not going to be at .70 forever... I hope.

 

[CarltonTheBear]

One advantage Toronto might have over Tampa is that they're in better shape to give Stamkos most of his money in the form of a lump sum signing bonus. I'm sure yearly cheques for $10,000,000.00 would be pretty appealing.

 

[GhostofPotvin29]

So how does that article compare with this one:

Crowe Soberman (actual tax experts) have done some great examples using the Blue Jays in 2013 and the Raptors in 2015. Based on these examples, if players say they are making their decisions based on personal income tax costs, they are full of something ? and it smells.

Ignoring contract restructuring and using all the variables described above, we computed that the tax bill for a player who is a resident of Florida and moves from the Marlins to the Blue Jays with $100 million left on his contract is only an additional $2.7 million, over the life of the entire contract.

That?s a increased income tax cost of 2.7 percent of his contract to play in Toronto for a baseball player over playing in Florida or Texas. Pretty much no one makes a contract decision in professional sports based on that amount of money.

In basketball (and it would be safe to assume hockey would be similar), residency rules increase the no state income tax advantage, but it?s still not as big a difference as most people would assume.

We computed the tax bill for the point guard on a $12 million per year contract. Our point guard is going to pay approximately $5.92 million in taxes and social security payments per year on his contract. For comparative purposes, had that player signed with the Rockets or Heat, he would have only paid $5.12 million in taxes and social security.

While that?s slightly more than double what the baseball player would be hit with, it is still only 6.67 percent of the contract and that?s a number the team, the player and his agent should be able to easily handle in negotiations. The advantage of teams in income tax free jurisdictions certainly isn?t overwhelming or untenable.

These discussions are not unique to Toronto either. Pretty much every team outside of Florida and Texas has to deal with the same issue. In the basketball example, Crowe Soberman calculates the player would be $63,000 better off in New York and $70,000 worse off in Los Angeles and no one raises personal income tax rates as an impediment to attracting professional athletes to those markets.

http://probballreport.com/the-myth-american-athletes-pay-more-tax-in-toronto-blown-away/

Are they more or less saying similar things?

 

[Kin]

Are they more or less saying similar things?

At a quick glance it seems like they're saying more or less the same thing, the difference in tone boiling down to how important you want a few million dollars to be if the guy is making many many millions regardless. In one, it's a small percentage of the total. In the other, millions of dollars is still a fortune.

 

[bustaheims]

Are they more or less saying similar things?

Sort of. One is pointing out how the difference for an individual season isn't that impactful, while the other is pointing out how, over the life of a contract, those small differences add up to a significant difference that makes up for the difference in the optics between the value of two deals - and, obviously, works in Tampa's favour when it comes to the cap.

The one article argues that the difference shouldn't have a negative impact on the ability of a higher taxed team to negotiate on the same level as one in a state with no taxes. The other argues that, despite the difference in optics between the TBay offer and the expectations of what Stamkos "should" command, the actual take home amount of the contract isn't that different - so, that, while we may see it as a lowball offer, it's actually very much in-line with what other teams are expected to be looking to sign him for.

 

[CarltonTheBear]

The other argues that, despite the difference in optics between the TBay offer and the expectations of what Stamkos "should" command, the actual take home amount of the contract isn't that different - so, that, while we may see it as a lowball offer, it's actually very much in-line with what other teams are expected to be looking to sign him for.

That would suggest though that if money was a big factor in Stamkos' decision that he would seriously consider an $8.5mil offer from Tampa Bay because of those factors, which I don't think he ever would. I could see a lower-echelon player being more concerned about this, but for a someone like Stamkos having his number in line with the other elite players in the league is a pretty big deal. Both for him and the NHLPA.

He's also signing an 8-year deal here. What happens in year 3 or 4 if something happens and either he demands a trade or Tampa decides to trade him? Does he only accept a trade to Florida to make sure he's not getting screwed over with the taxes? I think this whole tax thing is a nice bonus for a player signing in Tampa or Florida, but I can't see it effecting a players contract negotiations that much. Everyone still wants to sign a deal that's in line with what the market dictates.

You can also look at the Dave Bolland contract negotiations here as an example. By all accounts the Leafs and Panthers were pretty neck-and-neck in what they were offering, but Florida's ended up being a little higher. If Bolland was taking taxes into account he could have accepted a smaller offer from the Panthers and still came out ahead.

 

[WhatIfGodWasALeaf]

I wonder if the tax thing has an impact on guy signing in Dallas, we don't pay any state tax here, so you're saving 10% right away.

 

[Kin]

That would suggest though that if money was a big factor in Stamkos' decision that he would seriously consider an $8.5mil offer from Tampa Bay because of those factors, which I don't think he ever would. I could see a lower-echelon player being more concerned about this, but for a someone like Stamkos having his number in line with the other elite players in the league is a pretty big deal. Both for him and the NHLPA.

He's also signing an 8-year deal here. What happens in year 3 or 4 if something happens and either he demands a trade or Tampa decides to trade him? Does he only accept a trade to Florida to make sure he's not getting screwed over with the taxes? I think this whole tax thing is a nice bonus for a player signing in Tampa or Florida, but I can't see it effecting a players contract negotiations that much. Everyone still wants to sign a deal that's in line with what the market dictates.

I think most of that is true and it's a big reason why people are saying that Stamkos leaving is a fair bet but I think we all knew that part of Tampa's pitch to Stamkos was going to involve how he would fit into their cap going forward and how paying him what might be the market rate would hamstring their ability to sign other guys on a team that, going into this season, had pretty legitimate championship hopes.

You can look at Chicago and say that they've managed to put together a pretty decent team with Kane and Toews at the top of the cap heap but Tampa doesn't have the luxury of paying Duncan Keith and Marian Hossa far below market prices. They're going to have to negotiate a lot of big contracts in the next few years and so it makes sense for them to try and pitch that angle to Stamkos.

So I think this sort of argument is really just the icing on the cake of their pitch. It's "You get to stay in Tampa, you get to play with this really good team and when you factor in taxes you're doing alright".

 

[L K]

So Stamkos was (allegedly) offered an 8 year 68 million deal...

Not that that's chump change or anything but comparable to the Kessel deal but 2 years later? Is it just me or is that a low ball offer?

TBTimes_JSmith: $8.5 million avg. in Tampa nets more than $10 million in Toronto: how taxes may be factor in Stamkos talks https://t.co/T9SUI1qoE1

Something to keep in mind when people talk about how "unfair" it would be if big market teams can buy out the odd contract.

Not to mention that most of the "big market" teams often play in cities that are considerably more expensive to live in.  A McMansion in Sunrise Florida probably doesn't even cost as much as an upscale condo in Toronto.

 

[Kin]

Not to mention that most of the "big market" teams often play in cities that are considerably more expensive to live in.  A McMansion in Sunrise Florida probably doesn't even cost as much as an upscale condo in Toronto.

I agree with your general point but I have to assume that if you play for the Panthers you're probably going to live in Miami and chance the commute.

 

[GhostofPotvin29]

So Stamkos was (allegedly) offered an 8 year 68 million deal...

Not that that's chump change or anything but comparable to the Kessel deal but 2 years later? Is it just me or is that a low ball offer?

TBTimes_JSmith: $8.5 million avg. in Tampa nets more than $10 million in Toronto: how taxes may be factor in Stamkos talks https://t.co/T9SUI1qoE1

Something to keep in mind when people talk about how "unfair" it would be if big market teams can buy out the odd contract.

Not to mention that most of the "big market" teams often play in cities that are considerably more expensive to live in.  A McMansion in Sunrise Florida probably doesn't even cost as much as an upscale condo in Toronto.

But there's a reason people are willing to pay to live in those places, no?

 

[CarltonTheBear]

But there's a reason people are willing to pay to live in those places, no?

Yeah that honestly doesn't seem like that big of a deal to me. Especially since when he sells the place it'll get the old "A Celebrity lived here!" price bump.

Or it could be the reverse of what Nik said with Miami/Florida, he could decide to live in the less expensive boroughs.

 

[Kin]

But there's a reason people are willing to pay to live in those places, no?

Yes, but typically it's because of financial opportunities that don't exist elsewhere. By capping the Leafs and, say, the Jets at an equal rate you've essentially removed that.