Core 4 No More: The Motherfucking Off-Season Thread

[MindzEye]

The tax fuckery on $14M is just about $7M.

Yes, that's the difference in value in John's pocket of the extra 14 million he was offered.

What I'm saying is that there is a CRA loophole on the 15.9 million in signing bonus he received in yr 1 of the contract that has it taxes as a bonus at 15% instead of income at 50-53%

That loophole largely equalized the additional money offered by San Jose. So when it comes to John's take home pay, the deals were more or less equal. There's some other weird fuckery for non resident athletes as well, which Tavares qualified as because he was a US tax resident at the time he signed the contract.

Don't take my word for it though, take Forbes:

John Tavares Could Save Nearly $12 Million In Taxes On His New Contract

Canada may have high tax rates but careful planning could save Tavares millions as he plays for his hometown team.

www.forbes.com

 

[axlsalinger]

View: https://x.com/FAN590/status/1798033266299289992

Friedman: "Put it this way. If I say something about the Leafs and they perceive it to be wrong, I hear about it very quickly"

This is what I said, though. He has connections and they use him to get info out there. They don't care if people know about Lane Lambert.

With regard to Marner though, both sides have been cautious in saying things like he "hasn't discussed" the NMC or "hasn't been asked" to waive it. Doesn't mean a great offer won't come in tomorrow or that they've made any decisions yet, though.

 

[LeafOfFaith]

Yes, that's the difference in value in John's pocket of the extra 14 million he was offered.

What I'm saying is that there is a CRA loophole on the 15.9 million in signing bonus he received in yr 1 of the contract that has it taxes as a bonus at 15% instead of income at 50-53%

That loophole largely equalized the additional money offered by San Jose. So when it comes to John's take home pay, the deals were more or less equal. There's some other weird fuckery for non resident athletes as well, which Tavares qualified as because he was a US tax resident at the time he signed the contract.

Don't take my word for it though, take Forbes:

View attachment 20687

John Tavares Could Save Nearly $12 Million In Taxes On His New Contract

Canada may have high tax rates but careful planning could save Tavares millions as he plays for his hometown team.

www.forbes.com

I'm not even referring to any of that. That's just how they played the game, regardless of where he'd have signed. Who says SJ wouldn't have given him a comparable signing bonus when they were willing to pay that much more than us?

Unless it's only a CRA thing that the IRS doesn't have. But I can assure you, these guys find all sorts of ways to manipulate their taxes.

I don't think the tax loophole is what made Tavares take Toronto over SJ. Absent any loophole, he'd almost certainly have made the same choice.

 

[Wayward DP]

They'd need to exceed $14M to be equivalent, not post-tax $7M.

And based on my knowledge of what actual celebrities make on endorsements (i.e., frequently not as much as you'd think from big brands), I can assure you that this payment stream is overstated for all but the top, top, top names in the league.

You don’t consider your boy one of the top, top, top names in the league? Seems like for $11 mill annually he ought to be…

 

[CH1]

This is what I said, though. He has connections and they use him to get info out there. They don't care if people know about Lane Lambert.

With regard to Marner though, both sides have been cautious in saying things like he "hasn't discussed" the NMC or "hasn't been asked" to waive it. Doesn't mean a great offer won't come in tomorrow or that they've made any decisions yet, though.

Yeah… it’s perfect weasel language that keeps the media at bay until the next cycle post Cup final

 

[MindzEye]

Alleged loophole*

I believe "assumed loophole" is a better way to put it.

The loophole did and does exist, but apparently the CRA is arguing that it doesn't count as a bonus because John would have been required to pay it back prorata had he, for example, fucked off that January and said he didn't want to play anymore. The CRA is arguing that makes it part of his salary and not a bonus by their definition.

But at the time, his team clearly assumed they existed within the loophole.

 

[LeafOfFaith]

You don’t consider your boy one of the top, top, top names in the league? Seems like for $11 mill annually he ought to be…

Tavares' name has never had the marketing equivalence of like an Ovechkin or Crosby or McDavid or Matthews, no.

 

[MindzEye]

Who says SJ wouldn't have given him a comparable signing bonus when they were willing to pay that much more than us?

the tax exemption is a Canadian tax treaty with the US regarding American tax residents playing in Canada. John used his status as a US tax resident (as he should) to fit into this exemption. His signing bonus would have been taxed as income in California. Structuring the contract that way wouldn't have been as much a benefit to John as it is in Toronto.

 

[Wayward DP]

Tavares' name has never had the marketing equivalence of like an Ovechkin or Crosby or McDavid or Matthews, no.

Overpaid bum, agreed

 

[LeafOfFaith]

I believe "assumed loophole" is a better way to put it.

The loophole did and does exist, but apparently the CRA is arguing that it doesn't count as a bonus because John would have been required to pay it back prorata had he, for example, fucked off that January and said he didn't want to play anymore. The CRA is arguing that makes it part of his salary and not a bonus by their definition.

But at the time, his team clearly assumed they existed within the loophole.

Lots of guys structure their deals with big signing bonuses.

How can you prove they had this plan going into it, rather than not just something they decided to try when they were doing his taxes a year later?

 

[MindzEye]

Lots of guys structure their deals with big signing bonuses.

How can you prove they had this plan going into it, rather than not just something they decided to try when they were doing his taxes a year later?

This is a fucking joke, right?

Is it really this hard for you to admit that John wanted to come home, as long as the money in the bank was equal or roughly equal to elsewhere? These guys aren't nearly as sentimental about this shit as you are.

 

[hockeylover]

View: https://x.com/FAN590/status/1798033266299289992

Friedman: "Put it this way. If I say something about the Leafs and they perceive it to be wrong, I hear about it very quickly"

Yeah, I still think when Tre is actively out there exploring returns we'll hear about it.

Just like we heard they explored a Nylander trade for a dman. Just like we heard about every single person they've been interested in in advance.

 

[CH1]

Isn’t the prob with JT that he lives in Canada.

The bonus loophole works great with guys like Auston

 

[axlsalinger]

I would also suspect that JT was okay making a few million dollars less here, figuring he could make some of that back in endorsements.

 

[CH1]

I would also suspect that he was okay making a few million dollars less here, figuring he could make some of that back in endorsements.

That radiant personality of his was too powerful for California

 

[LeafOfFaith]

This is a fucking joke, right?

Is it really this hard for you to admit that John wanted to come home, as long as the money in the bank was equal or roughly equal to elsewhere? These guys aren't nearly as sentimental about this shit as you are.

I think you don't have anything to prove that he wouldn't have left a decent chunk of net money on the table for the chance to join the Leafs and get the C on arrival. The tax angle could very well have been something they decided to try later on, and going into it, Tavares might've been sure, if it works, great, and if not, that's a shame, but I'm going home.

Dealing with lots of big names over my career, I've seen the tax stuff come into play on the fly or much later in the process, unless the deal is some sort of M&A transaction and requires serious planning for capital gains, which these aren't. When it comes to a straight payment for services deal, you pick the opportunity you want (in the celebrity context, a film or a brand to endorse), then you negotiate the number as best you can without blowing the deal, and then you leave it to the tax guys to worry about how to treat the cash after the fact.

 

[MindzEye]

I would also suspect that JT was okay making a few million dollars less here, figuring he could make some of that back in endorsements.

Yeah, I don't know enough and can't be bothered to look up what tax planning would have been available to him in California because I'm sure there's something. The long and short of it is that through the signing bonus loophole and the RCA loophole, John was looking at saving about 6 million in taxes using the signing bonus loophole in yr 1, and then the RCA on the 61 million remaining, which would have gotten him to 35.5 in post tax income on that chunk for a total of 51 million of the 77 in his pocket when all is said and done. Cali is ~50% to start, so 45.5 on a 91 million dollar deal. So we're into some pretty big deductions/breaks to get to parity with John's canadian tax situation despite the higher base salary. Which I'm sure exist. But it does kind of blast the idea that John left a pile of money on the table to come to Toronto.

and yeah, I know it's a bit more complicated than this because where each game is played, how many days spent in whatever tax jurisdiction, etc matters. This is not financial advice and I'm not a registered tax professional. But that's the rough gist above.

 

[MindzEye]

I think you don't have anything to prove that he wouldn't have left a decent chunk of net money on the table for the chance to join the Leafs and get the C on arrival.

Well, a couple of things. First is that he didn't get the C on arrival. He got it after the end of year 1 because Auston showed his ass to a security guard while drunk.

And my proof that he wouldn't have left a decent chunk of net money on the table is that he didn't.

The tax angle could very well have been something they decided to try later on

Nah, we know he claimed it at the time because the CRA is going after him now for it, and it required him to be a US tax resident to do it. He could have maintained US tax residency after moving back to Toronto, but that's highly, highly unlikely.

Here's the thing, none of this should change how anyone looks at Tavares. He's a professional athlete with a short career and at the time mediocre career earnings. 15-20 million in post tax income after 9 years in the NHL is nice, but it's not generational money either. He clearly liked the idea of going home, but he also very clearly wanted similar net money in his account from Toronto as he was expecting from San Jose or the Islanders. There was no big chunk of coin left on the table as it appears at a glance. Tax fuckery worked in our favour this time instead of a place with no state income tax for a nice change.

Well, atleast, he didn't plan to leave a big chunk of coin on the table. The Taxman didn't like he plan so much though.

 

[LeafOfFaith]

Well, a couple of things. First is that he didn't get the C on arrival. He got it after the end of year 1 because Auston showed his ass to a security guard while drunk.

And my proof that he wouldn't have left a decent chunk of net money on the table is that he didn't.



Nah, we know he claimed it at the time because the CRA is going after him now for it, and it required him to be a US tax resident to do it. He could have maintained US tax residency after moving back to Toronto, but that's highly, highly unlikely.

Here's the thing, none of this should change how anyone looks at Tavares. He's a professional athlete with a short career and at the time mediocre career earnings. 15-20 million in post tax income after 9 years in the NHL is nice, but it's not generational money either. He clearly liked the idea of going home, but he also very clearly wanted similar net money in his account from Toronto as he was expecting from San Jose or the Islanders. There was no big chunk of coin left on the table as it appears at a glance. Tax fuckery worked in our favour this time instead of a place with no state income tax for a nice change.

Well, atleast, he didn't plan to leave a big chunk of coin on the table. The Taxman didn't like he plan so much though.

I've seen so much crazy shit here from tax experts on deals that I've been involved in, that I can say that I bet there would've been something just as creative he could've done if he wanted to take the extra money from SJ and keep more in his pocket. They have the most random loopholes in the tax code here, including letting people write off the full cost of "heavy" luxury SUVs from their business in the year it was purchased (even if you financed it and only made one payment) an unlimited number of times; letting you take the first $5M of proceeds on a sale of corporate stock (but not LLC equity) tax-free; previously allowing you to deduct state tax from federal tax liability, until Trump changed that, and then they came up with an equivalent called the PTET; plus added benefits like deducting your mortgage interest from your income.

Point being, there are so many games played here. The CRA one is a big one, no doubt. But the US is the king of tax scamming by the rich. I'm sure all these guys get away with absolute murder here that they wouldn't be allowed to try over there, even just because of the sheer lack of true enforcement here given the cuts to the tax jobs and the inability to audit as much as they want to.

 

[mbow30]

Peak ME here. Arguing over the tax treatment of Tavares contract and whether he left 14m on the table signing here vs San Jose.

Holy fuck a barnburner thread here. Peak ME.