During the worst pandemic in a century and the first world-wide lockdown in history, there won’t be many tears shed for professional athletes and owners squeezed by the economic turmoil. Restaurants and businesses are buckling as the virus rages worldwide, but it is interesting to note the effect of the new NHL proposal on players such as Pittsburgh Penguins star Sidney Crosby.
And you can see why the NHLPA and the players were upset.
Crosby famously wears No 87 and makes $8.7 million per season (AAV) because he was born on August 7, 1987 (8/7/87). You may say that’s a pretty fat paycheck, but the most recently negotiated CBA and the NHL owners’ new proposal via NHL Commissioner Gary Bettman will take a pretty large chunk out of players’ wallets.
Editor’s Note: Crosby’s 2020-21 salary is actually $9.6 million, but for Crosby’s superstitious numerology, we’ll use his AAV.
For example, Crosby makes $8.7 million. After the already-agreed 20% escrow this season, Crosby will make $6.96 million.
Further, the owners ask for an additional 13% deferral, so his annual nut drops to $5.83 million. Still not bad, right?
Now, tap out 10% to his super-agent Pat Brison, and Crosby is down to $5.247 million. And, here comes the kicker, the U.S. government and Uncle Sam want their cut, too. Crosby is in the highest 37% tax bracket, so we’ll use the $5.83 million placeholder because the 2018 tax cuts negatively impacted professional athletes.
Athletes can no longer deduct workout gear, meals, entertainment, and agent fees. So, we will estimate the Pittsburgh Penguins crown jewel’s tax burden to be about $2.1 million.
(Most agents don’t charge 10%, but not many want to say what they do charge, either. So, it’s somewhere between 1%-10%. We also assume he has a darn good accountant who can find more deductions).
From $5.247 million, U.S. Federal taxes take Crosby down to about $3.1 million. Then, in the city of Pittsburgh taxes (3%) and Pennsylvania state taxes (3.07%), Sidney Crosby will pay another $528,000 to the taxman, which brings his “take-home” salary down to $2.572 million.
That’s a pretty big drop from $8.7 million. Of course, we’re not combing through Crosby’s life to find additional tax deductions or factoring personal endorsements on this side or that side of the border.
But in rough numbers, under the owners’ opening proposal, Crosby would receive only about 30% of his salary.
Now, let’s calculate what is leftover for a player who makes only $1 million. The Pittsburgh Penguins Zach Aston-Reese makes a perfectly round million-dollar salary.
Applying the same formula to ZAR, he immediately drops to $800,000 after the escrow holdback. Then, he would drop to $670,000 after the additional 13% deferral.
Federal taxes would bite Aston-Reese for another $247,900 (using the $670,000 figure as taxable income), so he would be at $399,100. After state and local taxes, the Penguins winger would be at $358,000.
Tap out to his agent, the venerable Michael Curran, and Aston-Reese is down to $258,000-$300,000.
You or I may jump at that, but a few hundred thousand dollars is a smaller income than some of you who will read this article (and you should definitely subscribe to PHN+). Imagine playing most of an NHL season for only $258,000? The minimum salary in 2005-06 was $450,000.
Last offseason, Aston-Reese was one of several players who lived and trained with Gary Roberts in Toronto. Such endeavors are not free, which only adds to the onerous burden the NHL players are being asked to carry to save the sport.
Sidney Crosby will survive on a few million, but how many players make less than $1 million and would see their incomes shrink to minor league levels?
Undoubtedly, we’ll receive a few comments, “They’re being paid to play a game!”
And that is true, but an athlete’s career is not forever. There is an extreme level of commitment and lasting effects to consider, too. It’s not an easy situation for anyone, but maybe this adds some balance to the discussion.