Latest report suggests Raptors players will make less money than their peers

The Toronto Raptors have enough barriers to signing free agents.

It's not that they cannot attract role players in free agency; players who need to prioritize money or role above location will still sign with the Raptors. But Toronto has rarely prioritized cap space, including this year when they could have been a major player, in part because it's extremely difficult to attract no-doubt starters, and essentially impossible to court a star.

The handful of times where the Raptors were able to attract a major free agent, they often had to significantly overpay them; DeMarre Carroll is one such example. Hedo Turkoglu may be the biggest outside free agent signing in franchise history, and he (1) reportedly signed because of family ties to Toronto, and (2) turned out to be a massive bust on his contract.

It's difficult for the Raptors to sign free agents

The barriers to NBA stars wanting to sign in Toronto are not perfectly clear, but the fact that Canada is another country is a major factor. Toronto itself may be a cosmopolitan city and have more to offer than Memphis or Sacramento or Oklahoma City, but for players on the team they have to pass through customs every time they fly out or return home.

That means 60+ times per season they are passing through customs, on top of any personal travel they wish to do. Living in Cleveland is not incredibly enticing to NBA players (and they don't exactly kill it on the free agency market either) but you are a short flight from New York. Getting to New York from Toronto means going through customs on the way there and the way back. It's a legitimate aggravation for American athletes.

Additionally, Toronto is an expensive city to live in; the cost of living is as high as any other major city, if not more so. Housing is more expensive, high-end restaurants are more expensive, and all of those costs add up for a player and take away from their salary.

There are likely other reasons as well that are less defined, such as the stigma toward Canada or the distance from relatives. A new barrier may have just been entered into the equation, however, that will affect all American athletes playing in Canada.

A new barrier to Toronto teams

In the past, American athletes competing in Canada could designate themselves as a tax resident of their US-based home. That was beneficial because the tax rate in Canada is often higher than in whatever state they claimed to be residents of. In states such as Florida or Texas with no state income tax, the difference could be significant.

The Canadian Revenue Agency recently ruled that John Tavares, a forward in the NHL who plays for the Toronto Maple Leafs, owed a significant amount of money in unpaid taxes in Canada. Tavares wasn't attempting to commit tax evasion; he was simply following the common application of Canada-US tax law.

The CRA's ruling was that because Tavares spent a significant amount of his time in Canada and worked in Canada that he was a "tax resident" of Canada, and needed to pay taxes accordingly, which meant he had significantly underpaid his taxes as a lower rate. He is currently staring down the barrell of an $8 million bill.

The impact on the Maple Leafs to add players could be stark, especially with the bonus-heavy structure that the NHL commonly uses for such contracts. The CRA specifically ruled that bonuses counted as full income and were subject to standard taxing. Additionally, they are involved in limiting the money players could save by contributing to their retirement.

The NBA uses bonuses much less frequently than the NHL or NFL and therefore its players should be less negatively affected, but there will still be shockwaves. How the law is applied to NBA players may continue to develop as well. This is a sign that players signing in Canada will have to make more money -- significantly more money in many cases -- to come out even when compared to stateside teams.

That's a barrier that the Raptors did not want to have to overcome, and it will have implications for their ability to attract players. Perhaps that's why the Raptors punted on cap space this summer, but whatever the reason, they have to come up with alternative ways to add talent. Free agency is unlikely to be the best path.