Pros, Cons, and Other Options for a Luxury Tax System in the NHL

The NHL’s salary cap makes it near impossible to maintain prolonged success, which is a good thing, but could it be better?

The NHL has multiple teams up against the cap, the Toronto Maple Leafs, Vegas Golden Knights, and Tampa Bay Lightning to name a few. They have big-time guys signed for a lot of money, and role guys signed for cheap (as many teams are run, this isn’t new). But, when the playoffs come around, the NHL’s salary cap is tossed out the window.

Yes, seeing the same team in the finals for four to five years in a row isn’t the best for the game. The beauty of the NHL compared to other major leagues is how hard it really is to build a winning team and personnel. With that said, could a luxury tax help the NHL in forms of keeping fan interest long term? I will go over both options here, and a final point at the end of the article.

1. Why the NHL should use a Luxury Tax
2. Why the NHL should not use one
3. A simpler option

Why the NHL Should Have a Luxury Tax System:

Let’s get right to the team I have in mind, which is the Vegas Golden Knights.

The NHL has loopholes in the cap, as I have talked about before (you can read that here) and the league knows that teams will bend the rules and play their cards to bypass the rules. This is unfair for other contenders who have to maintain their healthy roster into the postseason. Other teams, like the Golden Knights, have a massive addition in Mark Stone for the playoffs alongside Jack Eichel. The Golden Knights are approximately 10 million over the $82.5 million cap ($91.522 million) with Mark Stone and Alec Martinez in LTIR.

Then there are teams with massive contracts on their payroll, such as the Toronto Maple Leafs and the Edmonton Oilers. Connor McDavid is earning 12.5 million dollars per year and the Maple Leafs have four guys who make up more than half of their cap space, led by Auston Matthew‘s 11.64 million dollar deal. A ten million dollar cushion could add a massive rental to make a serious run at the Cup.

With the luxury tax of 10 million dollars, teams can build strong teams without cheating the cap while maintaining the same difficulty it takes to win the Stanley Cup. The top teams in the league who are in position to contend at the moment have to pay a tax rate which would be distributed equally to the teams who did not exceed the salary cap as compensation.

No one points out the massive difference between your team’s situation and the current salary cap (Tampa Bay and Chicago) after winning the Cup AND you are compensating their team with a sizable check.

Now, let’s go over the next part.