Location, tax rates can have big impact on contract’s value

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With the mind-boggling money being doled out in NBA contracts, players don’t seem to be overly concerned about state taxes – or the lack of them.

Stephen Curry signed a $201 million deal with Golden State and Blake Griffin got a $175 million from the Los Angeles Clippers. The rub: In California, the top tax rate of 13.3 percent is the highest in the nation. To get just a rough indication of how much state tax they might face, consider that 13.3 percent of $201 million is about $26.7 million.

Meanwhile, Houston Rockets guard James Harden signed a $228 million extension to play in Texas, which has no state income tax.

Players are keenly aware of the differences, but it’s just one of many factors in their decisions.

How big a factor, it depends on the player and situation.

“It’s a consideration” for players, said Sean Packard, the tax director for Octagon Financial Services. “It’s not always the be-all and end-all, but it’s definitely something agents look at and that players look at.”

But when it comes to the IRS, the dollars connected to a player’s contract don’t tell the whole story about how much he’s going to be making. Where a player chooses to play – for instance the Boston Celtics or the Miami Heat – could go a long way in determining how much money he ends up receiving.

Players realize they could make more accepting a deal for less money from a team located where there are no state taxes than by signing with a team offering more money but located where there are state taxes.

“You’ve got to remember the best gross contract might not be the best net contract,” said Robert Raiola, who includes many professional athletes among his clients in his role as director of sports and entertainment for the PKF O’Connor Davies accounting firm.

Raiola cites former Utah Jazz forward Gordon Hayward‘s recent deal with the Celtics as an example. Boston and the Miami Heat could have offered Hayward essentially the same contract, but Hayward would have made more in Miami due to the different tax rates in Florida and Massachusetts. Of course, that would depend on where he had taken up residence.

Hayward agreed to a four-year deal with a total value of around $128 million. But according to Raiola’s calculations, Hayward’s “net” deal adds up to about $69.4 million after taxes are taken into consideration. Raiola said the same contract from Miami would have netted Hayward about $71.4 million.

If Hayward had stayed in Utah, he could have received a five-year maximum deal worth over $172 million. Raiola said that would have equated to about $91.3 million after taxes.

These types of comparisons aren’t uncommon.

Packard says he has a client who was choosing among three teams last year. Packard said a team from a state without an income tax offered his client the lowest salary, but it actually turned out to be the most lucrative deal once taxes were taken into account.

Packard says teams located in places without state income taxes use it as a leveraging tool and make players well aware of the advantages of signing there. In the NBA, that would include the Heat, Rockets, Orlando Magic, San Antonio Spurs, Dallas Mavericks and Memphis Grizzlies.

“When they’re pitching a player, they’ll say (that) we may be offering you less money, but they’ll kind of do their own calculations for the taxes and show that this is how you end up netting,” Packard said. “They know what other teams are pitching as well.”

Massachusetts has a 5.1 percent tax rate, whereas Florida doesn’t have a state income tax. But figuring out the difference in what Hayward would have made in Miami rather than Boston isn’t as simple as comparing those figures.

That’s because many states have a so-called “jock tax” that charges athletes visiting from other states to play games. For instance, Texas doesn’t have a state income tax, but members of the Mavericks, Rockets and Spurs are taxed for each day they spend practicing or playing road games in states that do have this tax.

Under that same rule, even if Hayward chooses to live somewhere other than Massachusetts, he’d be taxed by the state for each day he spends in Boston playing in a game, practicing or participating in some other team function.

So the difference in net pay an athlete might receive for choosing a team in a low-tax state over a team in a high-tax state isn’t as great as it might be if he were only being taxed in his home state.

These types of decisions must be made by free agents in all sports – not just basketball.

When defensive tackle Ndamukong Suh left the Detroit Lions for the Miami Dolphins in March 2015, he received $60 million in guaranteed money. Raiola said the difference in tax rates meant the Lions would have needed to offer him $65 million guaranteed just for the two contracts to have the same net value.

But tax rates are just one factor in a player’s decision.

“It’s all up to the player’s preference,” said Josh Horowitz, a co-founder of the sports and entertainment division at the WithumSmith+Brown accounting firm. “Maybe a player wants to live in New York and wants to live that lifestyle, so they’re willing to pay the extra tax, as compared to going to Miami or Texas.

“It depends on what they want to do. If they want to go chase a ring, they’ll go to Golden State right now and pay the higher tax to chase a ring. It all depends on what everyone’s preference is.”

 

Lakers fan hits halfcourt shot to win $100,000 (VIDEO)

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The Los Angeles Lakers are having a pretty good January.

The team has a losing record overall but is 6-5 in 2018, despite the noise from the Ball family and the need for public confidence for Luke Walton as coach.

Still, I’m not sure they’re having as good a time as the guy who won $100,000 by banking in a halfcourt shot on Sunday.

Via Twitter:

The fan’s name is apparently Suni Strong, and he’s from Palmdale. He played high school basketball, works at Space-X, and was on a canceled A&E show about bounty hunting.

Seriously.

Via OC Register:

“When I first walked in I said have my check ready,” he said. “I knew I was going to make it. I had to.”

Asked if he called “bank,” Strong replied, “Why would I do that? I called money.”

That’s some serious scratch.

Spencer Dinwiddie hits game-winner for Nets over former team (VIDEO)

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Spencer Dinwiddie was once a member of the Detroit Pistons. They traded him to the Chicago Bulls back in 2016 for Cameron Bairstow, and the Bulls promptly waived him less than a month later. That same day, Bairstow was waived by the Pistons.

On Sunday, Dinwiddie got his revenge on Detroit by ending their matinee matchup with a step-through jumper that two Pistons failed to defend.

The play came with 4.7 seconds left and the Brooklyn Nets trailing, 100-99. Dinwiddie ran across the far side of the floor to receive the ball from the sideline, then to the near elbow before putting on a series of moves to get his shot off.

The play gave Detroit just 0.09 seconds left, and they couldn’t get an attempt off.

Brooklyn beat the Pistons, 101-100.

Meanwhile, Dinwiddie continues to have the best season of his career. He’s averaging 13.2 points, 6.5 assists, and 3.3 rebounds per-game, all career-highs. He’s also boosted his VORP to 1.1, another personal best.

Enes Kanter’s teammate told him “You’re about to get 50 dropped on you” after LeBron troll

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Enes Kanter likes to inject himself in situations he doesn’t belong in.

The New York Knicks forward likes to take aim at the biggest star in the game, LeBron James, and has said in the past that he would fight LeBron if he had to.

Some previous comments from LeBron riled up members of the Knicks organization, and there’s been animosity between the two sides ever since.

So it wasn’t too much of a surprise when Kanter had something to say on Twitter about his former team, the Oklahoma City Thunder, dropping 148 points during a win over the Cleveland Cavaliers on Saturday. Heck, even former Cavaliers coach David Blatt jumped in on that one, albeit immediately before his own team got 151 scored on them.

Kanter took to Twitter, using LeBron’s own catchphrase against him:

Of course, that’s probably not the best idea. Kanter is a role player and LeBron is one of the best who ever played. Even if the Cavaliers are stinking it up lately, you can’t go after the King like that. You just might miss.

Via ESPN:

“One texted [teammate] me just to say — I’m not going to say who — but he texted me ‘You’re about to get 50 dropped on you, boy.'” Kanter said before Sunday’s matinee against the Los Angeles Lakers. “I responded something back, but I’m not going to say what it is.”

Kanter added that he’s just “having fun” and wanting to put “a smile on people’s face” with his constant prodding.

We’ll see if he ends up smiling the next time Cleveland and New York meet on April 9 at MSG.

David Blatt’s troll on the Cavaliers backfires when opponent scores 151 (VIDEO)

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David Blatt, perhaps sensing his time to pounce as rumors swirl around Tyronn Lue’s departure, decided to troll the Cleveland Cavaliers on Sunday. It did not go so well.

Blatt, who was fired from the head coaching spot in Cleveland in 2015, now heads Darüşşafaka S.K. in the Turkish Super League.

Blatt was also coaching Team Europe vs. Team Asia in the Turkish BSL All-Star Game on Sunday. During the game Blatt joked during a TV interview that he was just hoping his team didn’t give up as many points as the Cavaliers did to the Oklahoma City Thunder on Saturday. That game ended with a score of 148-124.

Via Twitter:

So what happened to Blatt’s Team Europe in the All-Star Game?

According to Erik Gundersen over at LeBron Wire, Team Europe promptly got rolled on with a tally of … 151 points.

The final total in the Turkish All-Star matchup was 151-142 in favor of Team Asia.

Oops.