A new report from the Montreal Economic Institute (MEI) suggests that high taxes in Canadian NHL markets are a key factor in the country's 33-year Stanley Cup drought. The study, authored by analyst Gabriel Giguère, examines the relationship between tax competitiveness and team performance across the league's 32 markets.
Tax rates and win rates
The study finds that between 1980 and 2017, every one per cent increase in the local tax rate reduced an NHL team's win rate by 1.55 to 1.57 percentage points. This effect is about 2.5 times stronger than in other major North American sports leagues. Giguère attributes this to the short peak windows and high injury risk in hockey, which incentivize players to maximize net income.
Montreal: the most taxed market
Montreal has the highest effective tax rate in the NHL at 48.57 per cent. The Montreal Canadiens, currently the league's youngest roster with an average age of 26.2, may struggle to retain their core as players become eligible for free agency. Under NHL rules, players over 27 or with seven accrued seasons can become unrestricted free agents, allowing them to seek the highest bidder.
Giguère notes that four of the last six Stanley Cups were won by teams from Florida, a state with no personal income tax. This year, the Vegas Golden Knights from Nevada (also low-tax) are heading to their third Stanley Cup finals in nine years, led by former Toronto Maple Leafs star Mitch Marner. Marner avoided an estimated $3.75 million annual tax bill by leaving Toronto.
Sunbelt advantage
The study highlights a more than 15 per cent tax differential between the lowest-taxed U.S. markets and the highest-taxed Canadian ones. Giguère acknowledges that taxation is just one factor, along with warmer climates, lifestyle advantages, and a stronger U.S. currency. The NHL and NHL Players' Association are expected to address this issue in upcoming collective bargaining.
Giguère, a die-hard Habs fan, concludes: "If Quebec wants to have a winning hockey team, they should lower taxes to help the Montreal Canadiens attract the best players. That's pretty clear from the numbers."
