When NFL fans think about the markets that attract free agents, they likely think of the city they play in. Whether it’s an entertainment hub or a rural area, every athlete has a preference. However, from a fiscal perspective, some NFL players look at the bottom line. In this case, teams like the LA Rams, LA Chargers, and San Francisco 49ers could get held back due to state and city tax laws.
The market advantage of some sports teams
It’s no mistake that many of the best teams in sports also play for the biggest markets, details Bleacher Report. After all, the New York Yankees have been America’s team in baseball for over a century. The LA Lakers just tied the record for most franchise championships. The Dallas Cowboys, despite their mediocrity, remain one of the most valuable sports teams in a market that lives and dies by their success.
However, just because a team plays in a major media market does not mean that they are guaranteed success. The New York Knicks play in the world’s biggest basketball city and the world’s most iconic arena, and they still struggle to get free agents. The same can be said about the Los Angeles Clippers before they changed this course with Kawhi Leonard.
The market may mean slightly less in football, although the Cowboys, Patriots, and several other popular teams play in top areas. However, during times when a player’s money might not be what the average fan expects, players may consider these markets financially. As such, some of the biggest markets might be at a disadvantage.
Why are some NFL teams struggling?
In 2019, Kiplinger explained taxes’ effects on a free-agent market. It broke down why taxes could be the difference between signing a player and seeing them go elsewhere:
“A player’s federal taxes won’t be affected by which team signs him, his state and local taxes certainly will. That’s because state and local income, sales, and property tax rates vary widely from place to place. (Note: Athletes also pay state income taxes in most states to which they travel for road games throughout the season.) For this reason, teams located in lower-tax states, counties, and cities have an advantage in free agency over teams in higher-tax places.”
This is where markets like Miami, which makes up for its smaller market size with not only its beaches but also fewer taxes, can compete for free agents looking in Los Angeles. As attractive as LA is, it also has the highest tax bracket. Its tax twin is San Francisco, which is famously among the most expensive places to live in the U.S.
These high tax rates reportedly cost teams big-name players in the past. San Fran’s 13% income tax rate can cost a player millions if they sign a major contract. While not as bad, it also makes the Chargers and Rams undesirable locations. Players would rather keep more money and play in a smaller market. NFL general managers must find a way to negate these concerns to convince players to sign. However, it doesn’t always matter.
Do taxes matter?
It always depends on the player. NFL free agency is not always as rapid as the NBA or MLB. While players often leave their teams, it’s more common for a superstar to do so via trade as not to cost the team its future.
Whatever the case may be, studies show that big-market teams have advantages in some areas, explains Research Gate. But it might not be as big as some expect. While some players might be willing to pay a tax on their location, others might have different goals. In the end, it’s all about the player’s desires.