Tuesday, October 21, 2008
Super Luxury Tax Breakdown
ESPN has all kinds of great behind-the-scenes resources. I got permission to reprint this big load of a document about the NBA's luxury tax. It's something that has huge implications on personnel decisions, but fans seldom get to know the nitty gritty like this. Also worth noting: The difference between how much the NBA has collected in luxury tax in recent years, compared to how much they have dispersed. Not a bad little moneymaker.
Teams that Pay Tax
In the last three years the NBA has received about $219.5 million in luxury taxes from teams.
Here is the breakdown:
- 2005-06: $71.6 million -- Knicks ($37.2M), Mavericks ($17.3M), Magic ($7.8M), Pacers ($4.7M), Grizzlies ($3.7M) and Spurs ($900K).
- 2006-07: $55.5 million -- Knicks ($45.1M), Mavericks ($7.2M), Nuggets ($2.0M), Timberwolves ($1.0M) and Spurs ($200K).
- 2007-08: $92.4 million -- Knicks ($19.7M), Mavericks ($19.6M), Cavaliers ($14.0M), Nuggets ($13.5M), Heat ($8.3M), Celtics ($8.2M), Lakers ($5.1M) and Suns ($3.9M).
The luxury tax numbers won't be final until the last day of the 2008-09 season, but early team payrolls already show the NBA will most likely collect over $100 million in taxes this year. Here are the numbers:
- 2008-09: $107.3 million - Knicks ($27.0M), Mavericks ($23.9M), Cavaliers ($19.2M), Lakers ($11.9M), Celtics ($10.4M), Nuggets ($6.3M), Suns ($5.6M), Rockets ($2.3M) and Heat ($439K).
The numbers could slightly change when the final roster cuts are made, and of course will be adjusted during the season depending on trades, signings and buyouts. And further adjustments will be made after the season once the NBA updates the bonuses earned by players.
The Trail Blazers will become a tax-payer and owe about $7.9 million if Darius Miles plays in at least 10 combined games this season.
Teams that Collect Tax
Each of the non-tax paying teams today would receive about $3.6 million from the first distribution and all teams could get around $1.07 million back from the NBA for the second.
- The Miami media has accurately reported on several occasions that the Heat were about $415,000 below the tax line before signing Shaun Livingston to a minimum contract. Obviously Pat Riley will need to make a move to reduce their payroll by at least $440K, but that shouldn't be difficult.
- The team which is actually closest to the luxury tax is the Toronto Raptors. Counting the 13 players with guaranteed contracts and the buyout for Jorge Garbajosa, the Raptors are a mere $1,100 below the tax. This means the team will be going with a skeleton roster for the season -- similar to the Washington Wizards last season -- if they are to avoid the tax. GM Bryan Colangelo will need to be extremely creative, so that he brings back more players then they send out and similar or lower salaries they take back, if he needs to make any deals.
- Teams currently within $2.5 million of the luxury tax include the following: Kings (803K), Bucks ($1.2M), Bulls (1.31M), Timberwolves ($1.37M), Magic ($1.4M), Wizards ($1.5M), Trail Blazers ($1.8M), Pistons ($2.1M), Pacers ($2.1M) and Hawks ($2.4M).
- The Kings will be about $7 million under the tax once Shareef Abdur-Rahim's (retired) salary comes off the books after November 12.