New NHL CBA Will Make It Tougher For Canadian Teams To Compete

The new NHL Collective Bargaining Agreement (CBA) will pose additional challenges for Canadian teams competing for players, primarily due to tax implications. Previously, players on Canadian teams could structure contracts almost entirely with signing bonuses (except for a mandated minimum salary), allowing them to significantly reduce their tax burden. This was possible because non-resident players are taxed at only 15% in Canada on signing bonuses, with the remaining tax paid at their home state's rate in the US, leading to substantial savings.

The new CBA changes this by limiting signing bonuses to 60% of a contract's total value. This restriction removes a key financial advantage Canadian teams used to offer. Players like Toronto Maple Leafs captain Auston Matthews exemplified this strategy; his recent 4-year, $53 million deal included $49.65 million (94%) in signing bonuses, saving him an estimated $4 million in taxes over his previous contract. Other notable examples include Carey Price (84% signing bonuses on an $84 million deal), Leon Draisaitl (93% on a $122 million deal), and William Nylander (75% of his contract).

With players having limited earning years, maximizing take-home pay through tax-efficient contracts is crucial. The CBA's new bonus limit reduces Canadian teams' ability to offer this specific financial benefit, adding to existing disadvantages like high taxes, weather, and intense media scrutiny.