How much does an NHL player take home on a $1 million salary? Not as much you think

Earning $1 million a season is still big bucks but if you aren’t careful with your pennies, the dollars definitely don’t take care of themselves.

There was a time when, if you made $1 million in a season as a hockey player, you were living on Easy Street.

It was almost like winning a lottery.

That is not the case these days.

Earning $1 million a season is still big bucks and affords an athlete a comfortable lifestyle others can only dream of. However, if you aren’t careful with your pennies, the dollars definitely don’t take care of themselves. And it is definitely not a lottery win.

“If you win a lottery in Canada, it is tax free so it is a true $1 million dollars,” said Rand Simon, a Toronto-based player agent with Newport Sports Management Inc. “Depending on your age and where you live it could set you up for quite a while. A million dollars in Toronto is very different from a million dollars in North Bay or somewhere in rural Saskatchewan. It all depends on context. It is the same thing with hockey players; a million dollars in one place is not the same as a million dollars somewhere else because of taxes and the cost of living.”

Now, before you scroll down to the comments section to write ‘cry me a river’, this column is not to suggest earning $1 million a year is no big deal. It most certainly is. If handled properly, it can go a long way in setting up an athlete for a comfortable life after their playing career concludes.

However, if mishandled, it can set the same player up for some frustrating and challenging days ahead.

So what is the breakdown of a $1 million? Obviously it depends where the player is located. If he plays for one of the seven Canadian-based teams his $1 million is closer to $1.4 million because of the weak Canadian dollar coupled with the fact players are paid in U.S. currency.

For the purpose of this story, though, we will assume $1 million is $1 million.

The first thing a player faces is escrow. The collective bargaining agreement stipulates 50 per cent of hockey revenue must go to player salaries and players are required to provide a certain percentage of their salary to the league to cover potential shortfalls.

Currently that is 18 per cent. Escrow is calculated after taxes and players have always received some of that money back. At that rate a player would pay the NHL $180,000 and keep their fingers crossed the league is profitable so they get all or some of it back.

Next comes income tax. Having paid escrow, the player is now taxed at a rate of around 50 per cent on $820,000, depending on where the player lives in Canada. A player in Montreal, Toronto or Ottawa pays the government $410,000.

Players pay their agents between three and six per cent depending on the amount of services provided by the agent. The agent’s fee is calculated after escrow is paid. If a player pays his agent four per cent of $850,000 (after escrow) it would be $34,000.

Simon, who tries to educate young players on the importance of setting and sticking to a budget, estimates players will spend around $70,000 a year for hockey-related expenses – things such as agent fees, personal trainer, disability insurance, trainer tips, supplements, workout equipment, etc.

So there goes another substantial chunk of the $1 million.

Simon estimates players need to budget $50,000 for rent and utilities assuming one can get a 10-month lease. A young player who takes on a roommate to split costs, it could be less than $50,000. If you are an older guy renting a house in New York or California it will be closer to $100,000.

“I know guys who are renting in Chicago or New York for $15,000 a month,” Simon said. “And you probably can’t get a 10-month lease there; you almost always have to do 12 months.”

For basic living expenses (food, clothing etc.) Simon budgets $3,000 a month and he budgets another $3,000 a month for miscellaneous expenses (entertainment, gifts etc.). That works out to a combined $72,000. He also budgets $25,000 a year for car expenses which includes monthly payments and insurance.

At the end of the day the player is left with a net savings of around $240,000.

“This is a player with one home,” Simon said. “If the player is married with children and is maintaining two homes, there are obviously more expenses. If you are lucky, you are renting out your off-season home during the season so you are covering your expenses.”

Simon said young players are shocked – completely shocked – when this is explained to them. They have no idea. They think that when they sign and they see these dollars that it is going to be a lot of money.

It is…and it isn’t.

“The message that I get back from fans when I tell them $1 million isn’t as much as many people think is, ‘Poor babies,’ ' Simon said. “It is important to understand the players are not complaining. Nobody is complaining about anything. Everybody feels very blessed to play in the NHL and to make what they do, but the purpose of this is to inform people and let them know it’s not as much as it seems on the surface. It’s not cash for life and if a player isn’t careful, he could go through his money quickly.”