TSN Report: NHLPA Gearing Up For Lawsuit over Tennesee’s Privilege Tax

TSN’s Aaron Ward reports this evening that the NHLPA is following through on its threats to fight Tennessee’s Privilege Tax through the courts:

Since the 2009-2010 season, the state has taxed NHL players $2,500 – with an annual cap of $7,500 – under a ‘Professional Privilege Tax’ each time they were on their club’s playing roster for a game in Nashville.
The Players’ Association believes this is unfair and possibly unconstitutional, saying a player making the league minimum would in fact lose money playing there and would be better off financially by not playing.

This tax first came to prominence when Detroit Red Wings defenseman Brian Rafalski criticized it, making a similar case to that noted above – that especially for NHL players on a minimum contract, the $2,500 tax (along with federal income tax, and escrow) could exceed the daily earnings for that game day.

There is a provision (PDF) in there to protect guys on two-way contracts who only spend a few days at the NHL level, and under the new CBA under which the NHL operates, the league reimburses the players in a bit of a financial circuit (since as J.R. Lind notes the revenues go to the arena operators in Memphis & Nashville, i.e. the NBA’s Grizzlies and the NHL’s Predators).

How might this impact the Preds?

For the players, things are a wash today since the league reimburses them for the expense, but the lawsuit could allow them to recover taxes from previous seasons. For the Predators, a back-of-the-napkin guess could cause the team to lose slightly more than a couple million in revenues generated by the tax (figure 20-22 players apiece for each visiting team, at $2500 for each of 41 home games). That’s an absurdly rough estimate, so take it with the appropriate sized grain of salt.

TSN Report: NHLPA Gearing Up For Lawsuit over Tennesee’s Privilege Tax

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