How the tax factor favors the Lightning in the Steven Stamkos sweepstakes
With captain Steven Stamkos just four days away from being the most coveted unrestricted free agent in years, there will be no shortage of suitors likely offering more annually than the Lightning.
Tampa Bay is still in the mix, however.
Aside from being a great on-ice fit, the Lightning. which is believed to have offered Stamkos an extension with worth $8.5 million annually, holds a couple x-factors over other suitors in that there's no state income taxes in Florida and the Lightning is the only team that can offer him eight year contract (others only seven). As Tampa Bay Times analysis in January showed Stamkos could net nearly the same annually after taxes in Tampa Bay at $8.5 million as $10 million in New York (Rangers, Islanders), presuming he’d be a New York City resident (see chart); Stamkos would make more over the length of the deal in Tampa because of the extra year. Stamkos would net just $500,000 less annually than a $10 million deal Detroit, another strong suitor, but, again, more over the length of the deal.
And Stamkos' hometown Maple Leafs, due to a 53.53 percent provincial/federal tax code, would have to offer him $12.37 annually over seven years to net the same as he'd make over eight years at $8.5 million in Tampa, according to national tax guru Robert Raiola. Quebec (53.31), where Montreal plays, has almost the same combined tax rate as Toronto (53.51%), British Columbia (where the Canucks play) is (47.7%) Of course, Toronto likely offers more endorsement opportunities. Of course, Toronto likely offers more endorsement opportunities.
The key, however, is that eighth year, and the Lightning loses that advantage on July 1, when every team - including Tampa Bay - can only offer Stamkos seven years.
Under a seven-year deal in Tampa Bay, Stamkos would net $32 million, obviously less than others (see chart).
Money isn't the only factor in Stamkos' decision, but other teams are expected to make big splashes to woo him. One is Buffalo, where GM Tim Murray talked openly about being able to win paying one player $10-12 million.
What if the Sabres offer Stamkos $12 million over seven years? The Lightning, over an eight-year deal, would have to offer Stamkos $9.7 million annually to net the same over the length of a deal. That would be a sizable bump from the reported $8.5 million offer from Tampa Bay, which is cap crunched and likely unable to go much higher.
Teams in states with no state income tax make sure to sell that, the Lightning likely are.
"In my mind it's a factor you always look at," said agent, Steven Bartlett, who represents Lightning wing Ryan Callahan. "I know some of the big stars get hung up on the number because it's almost an egotistical thing — and I'm not saying it's this way with Stamkos. I'm just saying a guy feels like, 'He gets 10 (million), I need 10 (million). I need nine just to validate.' But if you're smart you realize, 'I have to run the calculation.' It isn't always just the number that's thrown out there that's the real number.
"And, believe me, the teams that have the advantage are more than willing to point that out to you, too."
Just getting to this five-day interview window likely made it more challenging for the Lightning to sign Stamkos. And in four days, it'd lose one of its biggest financial advantages.
It just hopes it won't lose the face of its franchise.