Montreal Canadiens: Recent John Tavares Saga Making It More Difficult For Habs To Sign Free Agents

The Montreal Canadiens have never been the most sought after destination for National Hockey League free agents.

For some reason, they always seem more interested in signing with the Dallas Stars, Florida Panthers or Nashville Predators than the Canadiens. Perhaps it has something to do with the weather during hockey season, or the insane media pressure on players in big Canadian markets, or even the drastically better tax situations pretty much anywhere else in the league.

The tax situation has been one that has debated online as not being as big of a problem as many believe. Some point to the basic tax rates in different states and provinces and suggest a player signing with the Canadiens will pay close to 53% of their salary in taxes while a player signing in Florida will pay only 38%.

That's a massive difference of 25% of a gross pay. However, others will point out loopholes players and agents can jump through to keep more of their money. Players technically only work in their home city 41 nights per year and many have residences in other states or provinces and argue they shouldn't have to pay the full tax rate to a province they don't spend much time in.

This was essentially John Tavares argument when he signed a contract with the Toronto Maple Leafs on July 1, 2018. He still lived on Long Island when he signed the contract which had a massive signing bonus of $15.25 million to be paid on the day the contract was signed. He, and his lawyers and agents believed the province of Ontario couldn't charge the full tax rate because he deposited that money into his United States based bank account while living south of the border.

However, Tavares is now in the midst of a legal battle over a total of $8 million that canada revenue agency believe is owed to them. They are basing this off the fact he should pay them $6.2 million in taxes on that initial signing bonus plus another $1.8 million in interest accrued.

Now, I am no financial lawyer so I don't know which way this is going to go. However, the fact Tavares is going to court to sort out a whopping $8 million of his contract, which is just over 10% of the total value of his deal, is not a good look for Canadian teams.

There seems to be a bit of a disconnect between what NHL agents think they can get away with and what the canada reevenue agency believes they are owed. That means if the Canadiens are trying to sign a free agent this summer, that player has to understand he is giving up more than 50% of the contract in taxes, something they only have to do if they sign in the provinces of Quebec or Ontario.

Whether Tavares ends up taking home $36 million or $42 million over his seven year contract doesn't really affect me, or him really as its an insane amount of money either way, but the drama unfolding is worth keeping an eye on as it could have a huge impact on the Canadiens ability to attract free agents in the future.

It has already been difficult enough to bring big ticket UFAs to Montreal, but if Tavares loses another $8 million in court, even more players will put Canadian teams on their no-sign list.