Remember when the Florida Panthers won their second Stanley Cup in a row, players re-signed there, and all the hockey pundits cried out “it’s because Florida has no income tax”? Remember when Commissioner Gary Bettman went on TNT’s broadcast and disputed the notion with the explanation that the “tax advantage” didn’t help in attracting talent when the Panthers were an NHL bottom dweller? Discussion on the issue has died down a bit but a new development in the Pacific Northwest might reignite that debate.
The state of Washington recently passed a “millionaire’s tax” law taxing per capita income at over $1 million at almost 10% (the law has yet to be signed by the governor and go into effect). Pretty much every professional athlete in Seattle will be affected by it. Washington, like Florida, was one of the few states with NHL teams to have no person income tax. Now that’s going to change.
Some have started to ask how it will affect the Seattle Kraken. Ken Campbell of The Hockey News says the Kraken never took full advantage of the tax free status while they had it. Since their inception the Kraken have taking the traditional “build through the draft” approach to building a team. Those tax benefits would have been helpful in signing free agents and when those drafted young players need new big contracts, but not anymore.
One of Seattle’s other professional sports teams has expressed concerns. One of the Seattle Seahawks top executives said having the new tax in place would hurt player negotiations. It’s worth mentioning there are two distinct differences between the Seahawks situation and the Kraken’s. First, with the Seahawks being in the NFL players usually command much higher salaries than their hockey counterparts. Second, as the reigning Super Bowl champions the Seahawks are in “win now” contention mode. That’s the time when signing and retaining talent at inflated free agent prices is a main concern. Meanwhile the Kraken could still be seen in the “building” stage with their slow and steady approach.
One of other states without an income tax is Nevada which is home to the Kraken’s expansion partner Vegas Golden Knights. The Golden Knights experienced immediate success, but don’t thank the tax status. Bill Foley and company’s vision and method for building the team have been “win now” mode since the second he was granted the franchise. Their way of doing business in terms of team construction couldn’t be any more different than Seattle’s. It’s a tale of two cities, with the same tax benefits.
Then there’s the theory that maybe this “income tax” debate has become a problem because it keeps getting talked about in the media. Critics say “well, it wasn’t a problem when the Florida teams were bad” and that’s a pretty good defense. Florida, Texas and fellow no income tax state Tennessee have had NHL teams for three decades at this point. Their tax status was rarely such a discussed upon topic. Maybe it was in the back of the minds of player agents and financial advisors, but it certainly wasn’t asked about in press conferences like when Brad Marchand signed his extension.
Is it possible the fact many of these players are Canadians escalates the cause? The Canadian dollar continues to be weak against its American counterpart. The value of the Canadian dollar was seen as a reason for Quebec City to be passed over for an expansion franchise. While Florida might literally offer a sunnier alternative to Toronto, its tax advantage is even more an advantage than ever before. The old saying says “the grass is greener on the other side” but it keeps getting greener and it’s greener than ever.
No one is expecting this to be the thing that prevents the Seattle Kraken from being 2027 Stanley Cup champions. If the state of Florida decided to follow suit (which is incredibly unlikely) it doesn’t invalid the impressive work Bill Zito has done building a team in South Florida. Maybe all this talk about how income taxes affect were a player signs is overblown anyway.