There are enough obstacles for the Toronto Raptors to sign free agents.
It’s not like they can’t draw in role players in free agency; players who have to sign with the Raptors regardless of location in order to prioritize their role or money will still do so. Though Toronto might have been a huge role this year, they have rarely emphasized cap space, in part because it is very hard to court a star and very tough to recruit players who are certain.
In the few occasions the Raptors were successful in landing a big free agent, they frequently had to pay them a substantial premium; DeMarre Carroll is one such instance. Hedo Turkoglu may be the largest free agency signing in team history; he was a huge flop on his deal and, according to reports, signed because of family links to Toronto.
The Raptors have trouble signing free agents.
The fact that Canada is a different nation plays a significant role in the obstacles that NBA players face when they choose to sign with Toronto. Even though Toronto is a more diverse city than places like Memphis, Sacramento, or Oklahoma City, team members still have to go through customs each time they travel abroad or back home.
That implies that, in addition to any personal travel they choose to conduct, they go through customs more than sixty times a season. NBA players aren’t particularly drawn to Cleveland (and they don’t exactly perform well in the free agency market either), but it’s only a short trip from New York. Traveling from Toronto to New York requires passing through customs both ways. American athletes have valid reasons to be irritated by this.
Furthermore, living in Toronto is costly; the cost of living is equal to, if not higher than, that of any other large city. Luxurious dining establishments and housing have increased in cost, which can significantly impact a player’s earnings.
There are probably other, less well-defined factors as well, such the negative perception of Canada or living far from family. But it looks like a new obstacle has now entered the picture, one that will impact every American athlete competing in Canada.
A fresh obstacle for Toronto teams
Formerly, US athletes participating in Canada might claim to be tax residents of their US-based house. That was advantageous as tax rates in Canada are sometimes higher than in the states where the individuals claimed to reside. The difference may be substantial in areas like Florida or Texas where there is no state income tax.
John Tavares, an NHL player for the Toronto Maple Leafs, was recently found by the Canadian Revenue Agency to owe a substantial sum of money in back taxes. Tavares was only adhering to the standard interpretation of US and Canadian tax law; he wasn’t trying to evade taxes.
According to the CRA’s determination, Tavares was deemed a “tax resident” of Canada due to his prolonged stay and employment there; thus, he had to pay taxes at a reduced rate, which resulted in a large underpayment of taxes. Right now, he faces a $8 million bill in the face.
Adding players might have a significant influence on the Maple Leafs, particularly given the bonus-heavy structure that the NHL often employs for these kinds of contracts. In particular, the CRA declared that bonuses were fully taxable and subject to ordinary taxation. They also play a part in restricting the amount of money that players may save for their retirement.
Although the NBA employs bonuses far less frequently than the NHL or NFL, there will still be shockwaves and a potential detrimental impact on its players. It’s possible that the laws governing NBA players will change in the future. This indicates that, in comparison to clubs in the United States, athletes who sign in Canada will need to earn much more money in order to break even.
The Raptors didn’t want to have to go over that obstacle, and it will affect their capacity to draw in players. The Raptors may have punted on cap space this summer for that reason, but whatever of the rationale, they need to find other methods to bring in quality. It’s doubtful that free agency is the greatest option.
