The Rays could split their home games between the Tampa area and Montreal under a new proposal. (AP Photo/John Raoux)
This afternoon, ESPN’s Jeff Passan broke the news that the Tampa Bay Rays could become a two-city team, playing the early portion of their season in St. Petersburg and then migrating north to Montreal for the summer’s hot months. Under the plan, Passan reports, each city would build a new stadium to house the team for 41 or 40 or however many games each season are split between the two.
We are going to forget for a minute about the complications involved in persuading two cities to build or maintain stadiums for half of a baseball season. Given the team’s attendance numbers, a new stadium in the Tampa area might have to resemble a minor league ballpark, although there is little doubt that baseball-hungry and sports-crazy Montreal would sell more tickets.
We will ignore that such a plan would likely have to get through the players’ union, which would have to agree to allow a team to force its players to obtain housing for themselves and their families for part of the season in one city and housing nearly 1,500 miles away for the remainder of the season.
Finally, we will have to suspend our disbelief that the MLBPA would allow Rays players to be hit with additional taxes for a quarter of the season’s games by playing in Montreal. While I sympathize with the players’ families over the hardship they would endure and the added living expenses they would incur, I am most concerned about the taxes they would have to pay.
As a team based in the income-tax-free state of Florida, Rays players pay only the federal income tax (maximum rate 37%) on their home games. If home games are suddenly shifted to Montreal, players will pay a maximum rate of 53.31% on those games.
Athletes both in the U.S. and in Canada are taxed based on the ratio of duty days in the jurisdiction compared with total duty days for the season. In 2019, Rays players will have a total of 224 duty days from the beginning of spring training through the end of the season. If they played 40 games in Montreal in a season, 17.86% of each player’s salary would be taxed at Quebec rates.
As U.S. tax residents, the players would receive a foreign tax credit for some of the Canadian taxes paid on those Montreal games. The credit is calculated by determining the U.S. taxes paid on Canada-source income. Such income includes the allocable wages for all games played in Montreal, which are taxed in Canada at the Canada-Quebec rates, and those played in Toronto, which are exempt from taxation in Canada based on the U.S.-Canada tax treaty.
Because the Blue Jays are a division rival, the Rays play nine games in Toronto each year. This means that over 18% of their total Canada-allocable income used to calculate the foreign tax credit is not even taxed in Canada.
So what would be the real-world impact of this partial-season move? Well, the Rays already have the lowest payroll in baseball, so not much overall. A player making the league minimum of $555,000 would pay an additional $9,600 in taxes. A player making a million would pay $16,000 more than he currently does. The Rays’ highest-paid player this season, Charlie Morton, makes $15 million, according to Spotrac. He would pay an extra $215,000.
Players from teams visiting the Rays in Montreal would not be impacted tax-wise by their move. Under the U.S.-Canada tax treaty, their income earned in Canada is exempt from Canadian taxes.
In the end, this partial-season plan would be similar to the Rays playing half of their season in California. They would still be a more attractive team tax-wise than any of the California clubs.
But let’s face it, this move will never happen. Today’s announcement was nothing more than an effort to get Tampa and Montreal to compete over which city will be the permanent home for the really good but largely unseen Rays. If I were a gambler (I’m not), I’d bet on Montreal to become the team’s permanent home before we see a split-season scenario.
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