Fascinating article on how much money a pro hockey player actually makes

[Temporary_User]

Just seems like a propaganda piece to try and paint the rich as not that rich.

“There’s one number you need to understand: a guy making $4.75 million who’s only spending $180,000 in disposable income, fun money, is only left with $1.7 million,” Shannon said. “It’s nuts.”

Definitely some Hollywood style math to come up with this figure.

For a player making $4.75 million, agency fees will cost in the area of $130,000.

The U.S. federal marginal tax rate is 37 percent, according to Shannon’s estimations a player making $4.75 million can expect to pay roughly $1.84

That 37% is only for the income above 500,000. Everything below is taxed at lower rates, scaling down to the lowest tax rate 10%.


Even if that 1.84 million tax is true, an NHLer earning 4.75 a year would be left with:



4.75-1.84-0.1=2.81

[flamingred89]

Is it propaganda? Or just an interesting article in how NHL salaries are broken down...

[WhiteTiger]

It's an interesting article, true.

I still have trouble drumming up sympathy for broke ex-athletes.

[Samonadreau]

Agreed, its interesting but not gonna feel bad for guys who can only afford a 2k buy in instead of a 20k buy in on road trip card games.

[BACKCHECK!!!]

Lol.

Take a zero off the end of every one of these numbers, and you can rewrite this article for every kid who starts making a paycheque.

"Almost half my money goes to taxes!"
"I can't afford to spend like the guys who make triple what I make!
"Man, I shouldn't have bought that car."

If you live in Alberta, probably ten percent of the people you know fall into the category of "Made lots of money young, blew it all being an idiot, has nothing to show for it except a ridiculous truck they're still paying off, and blames the government for all of it".

[PepsiFree]

Originally Posted by BACKCHECK!!!

Lol.

Take a zero off the end of every one of these numbers, and you can rewrite this article for every kid who starts making a paycheque.

"Almost half my money goes to taxes!"
"I can't afford to spend like the guys who make triple what I make!
"Man, I shouldn't have bought that car."

If you live in Alberta, probably ten percent of the people you know fall into the category of "Made lots of money young, blew it all being an idiot, has nothing to show for it except a ridiculous truck they're still paying off, and blames the government for all of it".

Maybe two zeros lol.

But you’re right. The lesson here isn’t “feel bad for hockey players.” This exact kind of thing happens to people getting out of high school from many different income brackets. Getting approved for credit cards, car loans, etc, that they really can’t afford. But they don’t know they can’t afford it, because everything seems so easy and they don’t understand interest (for example).

People come out of high school without much understanding of savings, debt, interest rates, etc. And a lot of people make some pretty big mistakes with that ignorance.

[Beatle17]

And the whole escrow thing isn't explained to them. The more money they hold out for means the more escrow because the players only get 50%. The owners will never lose in that situation but when the players keep raising the cap using the inflator then the more they pay back. It is like the interest on a loan and they don't get the proper info from the NHLPA.

[Strange Brew]

Originally Posted by Temporary_User

Just seems like a propaganda piece to try and paint the rich as not that rich.



Definitely some Hollywood style math to come up with this figure.






That 37% is only for the income above 500,000. Everything below is taxed at lower rates, scaling down to the lowest tax rate 10%.


Even if that 1.84 million tax is true, an NHLer earning 4.75 a year would be left with:



4.75-1.84-0.1=2.81

Well there’s state income tax as well.

[krazycanuck]

Originally Posted by The Yen Man

LOL, totally ot, but one of my high school teachers said the exact same thing. He was telling the class it was more beneficial to not get a raise because you end up paying more taxes. Dude really should have researched it a bit more before sharing it with the class like it was a fact. It's not like it's a complicated concept either.

The number of people who believe that if you work overtime "all of that extra money goes to taxes" is rediculous.

Suddenly there's an 80% tax bracket for the poor schlub who has to work Christmas.

[MoneyGuy]

Originally Posted by krazycanuck

The number of people who believe that if you work overtime "all of that extra money goes to taxes" is rediculous.

All that and more, apparently.

[Mr.Coffee]

Can’t imagine the “keeping up with the Jones’s” that must go on with NHL locker rooms. You actually get a very significant spread of values, like the difference between a $6MM/ year player and a $2MM is (well, obviously 4) huge but I bet they don’t act like it in the moment.

Out for drinks, out for dinner, the wives hanging out, the investments and purchases and houses and cars and all that crap. I bet there is some serious pressure on some of the lower earner guys who really do make a lot but really do need to be smart about it.

There’s, “I make enough to buy a house and retire somewhat comfortably” money and then there is “I make so much money I have no idea how I’ll ever spend it all or remotely close to all of it and I don’t give a ####” money and the NHL salary band straddles these realms.

[Slava]

Originally Posted by Mr.Coffee

Can’t imagine the “keeping up with the Jones’s” that must go on with NHL locker rooms. You actually get a very significant spread of values, like the difference between a $6MM/ year player and a $2MM is (well, obviously 4) huge but I bet they don’t act like it in the moment.

Out for drinks, out for dinner, the wives hanging out, the investments and purchases and houses and cars and all that crap. I bet there is some serious pressure on some of the lower earner guys who really do make a lot but really do need to be smart about it.

There’s, “I make enough to buy a house and retire somewhat comfortably” money and then there is “I make so much money I have no idea how I’ll ever spend it all or remotely close to all of it and I don’t give a ####” money and the NHL salary band straddles these realms.

I remember an interview with Marc Boerigter (former Stampeder who went and played for the KC Chiefs after). He was saying that about the NFL and how in his position he was making about $175k while players like Priest Holmes were making about $6m a year. He was pretty candid that you can't roll with those guys because its obviously a different world entirely.

[heep223]

I think maybe the difference for pro athletes is that they don’t really get the same basic education as normal people, who at least have to go to university/trade school and figure out how to live within a budget, work entry level jobs to get by, have student debt, buy tools, etc. Most people are forced to learn about money, at least somewhat, through a normal upbringing. These guys go through their youth and young adulthood with one thing in mind - making the show. They are billeted, get per diems, don’t have to pay for hotels, food, equipment, etc.

[Jaybo]

Originally Posted by Locke

Sorry, I dont disagree necessarily but whenever I see this I shake my head a little.

And who exactly is going to be teaching these kids about investment vehicles? Their Gym teacher during his spare?

Teachers are about as knowledgeable on these topics as their students. Its not like they're largely responsible for their own retirement investments and savings either.

I still vividly remember my high school algebra teacher saying "Now, I'm going to teach you about compound interest. If I knew about this when I was your age, I wouldn't be here teaching you little buggers now!" :-)

I mean, teachers aren't super-qualified to teach financial literacy but no one's saying they're going to teach kids to manage their stock portfolios or provide in-depth investment advice (just like a high school science teacher isn't going to show them how to put a rocket on the moon - just introduce the basics.)

It'd be great if high school kids got some basic knowledge about stuff like compound interest, sensible investing, being responsible with your money, appreciating assets vs. depreciating assets - anything that would lessen the chance that those young people would join the majority of Canadians in being one pay cheque away from insolvency (or whatever that recent stat was.)

[DJones]

Originally Posted by Temporary_User

Just seems like a propaganda piece to try and paint the rich as not that rich.



Definitely some Hollywood style math to come up with this figure.






That 37% is only for the income above 500,000. Everything below is taxed at lower rates, scaling down to the lowest tax rate 10%.


Even if that 1.84 million tax is true, an NHLer earning 4.75 a year would be left with:



4.75-1.84-0.1=2.81

Did you even read the article? Nothing about his numbers seemed suspicious. A young man with no concept of money will grossly overestimate how money he has and underestimate how much money he spends.

I'm more shocked that this information isn't expected of managers and agents. If someone is getting 3 to 5 percent of my payday I expect good advice

[Locke]

Originally Posted by Slava

I remember an interview with Marc Boerigter (former Stampeder who went and played for the KC Chiefs after). He was saying that about the NFL and how in his position he was making about $175k while players like Priest Holmes were making about $6m a year. He was pretty candid that you can't roll with those guys because its obviously a different world entirely.

The 'Broke' episode of 30 for 30 was excellent and really put this into a lot of perspective in terms of spending habits of professional athletes.

You only need:

1 House.
1 Car.
1 Watch.
1 Wife.
1 Emerald Encrusted Gold Chain.
Etc.

Even if they try and be prudent with their finances and their spending being in constant close quarters with people spending like crazy rubs off.

[McG]

Originally Posted by Hangman

But it is acceptable for governments to live with debt or deficit spending. How else do you expect them to function? We can't truly expect governments to not borrow to build infrastructure like roads, schools, hospitals, provincial buildings etc.
It's stupid to say we can't build any of those until we have the money in the bank to pay for them. Governments by definition operate with debt, what it must have is a reasonable plan to repay that debt.

You can still aquire debt and live within you means it's not rocket science. But it does require a certain degree of discipline.

Is it actually acceptable for government to run deficits and debt though? And let’s also be clear about the differences between the two. And while we are at it, let’s also be clear about capital and operating spending.

Government does not “by definition” run with either deficits or debt, but if you live in Canada you have been conditioned to believe that. Governments are merely a representation of citizens; governmental income and ability to spend are based upon people’s willingness to pay taxes. Deficits and debt are the government’s (and by extension the citizens) desire to have more than they are able and perhaps willing to pay for. Governments can run surpluses and create savings accounts although citizens generally want tax cuts when that happens.

Schools and hospitals are capital investments and are usually funded over multiple years. The provincial government could literally pay to build a hospital from operating funds, however by spreading the debt and therefore payments over many years, the costs appear to be reduced. Operating funds in this example pay for the medical personnel and supplies, with loan payments included.

Regarding debt repayment, it isn’t enough to have a reasonable plan to pay it, it is mandatory to have the ability to repay.

Our children are having an incredible burden being placed upon them to repay current government debt in the future. Imagine overspending without the current income to pay down debt. There is your deficit, and your debt. Future generations of tax payers should be crazy angry about this, whereas current taxpayers seem quite content to have governments overspend.

To stay on thread though, the difference in take home pay for players based upon where they play would definitely affect where I personally chose to play, if I was an athlete. I’d structure my contract like Austin Matthews did too.

[taxbuster]

As a financial/tax professional advising clients over the past 40 years - I would expect that generating, or at least passing along, financial smarts is MY job. I have done that very thing with both high and low earners over the years, and my comments to most people have been more or less the same: the biggest detriment to a great lifestyle and decent or better retirement is "overbuying" houses and cars, and occasionally just "stuff".

The long-term cost of (over)burdening oneself with debt is crippling to middle-earners and underestimating the exact same thing - or spending as if the tap will never shut off - has the exact same result to high earners.

It's pretty simple really: for all of us "regular people", buy reasonably and spend reasonably. (I'll note that I have great empathy/sympathy for young people trapped with debt right out of school....to me that is just a dreadful way of starting out.)

For most pros and high earners: the tap DOES shut off - some day. Act like it.

[MoneyGuy]

Originally Posted by taxbuster

...my comments to most people have been more or less the same: the biggest detriment to a great lifestyle and decent or better retirement is "overbuying" houses and cars, and occasionally just "stuff"

I’m a 25-year financial advisor and this is true. Financial security and a comfortable, worry free retirement are available to almost all of us but we spend too much on crap we don’t need to impress people who don’t care anyway.

[VilleN]

Originally Posted by The Cobra

You seem to be under the mistaken belief that smart people know how to manage their money.

I know tons of lawyers and doctors who make lots but spend more.

it's not really about knowledge. it's about self restraint.

Spend less than you earn is a good start.

I also know a lot of people who understand basic nutrition but still eat fast food. I know people who understand how to get fit, but never go to the gym. Knowledge and execution are two very different things, but you can’t act if you don’t know how. It’s irrelevant to the discussion - you can’t control how/if people apply knowledge they’ve learned, that doesn’t mean you don’t teach it.