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.”

 

Draymond Green adds attention to Conor McGregor’s gag about Floyd Mayweather Jr.’s domestic violence

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Conor McGregor and Floyd Mayweather Jr. are showing nearly no limits in their effort to promote their upcoming fight.

McGregor has repeatedly stoked the flames of racism, making himself a villain to some and a hero to others – but, more importantly, drawing attention from both sides. He also wore a No. 23 Warriors jersey.

Hey, I wear No. 23 for the Warriors, Draymond Green apparently thought to himself. So, Green posted on Instagram to inform everyone he was supporting Mayweather:

We rocking with Floyd bro not you… take that off bruh @thenotoriousmma

A post shared by Draymond Green (@money23green) on

McGregor responded in the comments:

screenshot-imgur.com-2017-07-23-15-11-32

C.J. Watson previously wore No. 23 for the Warriors, and this isn’t the first time McGregor has referenced the guard in relation to Mayweather:

Why does McGregor keep bring up Watson?

Martin Rogers of Yahoo Sports in a 2013 article on Mayweather domestic-violence victim Josie Harris:

The altercation happened when Mayweather returned to Harris’ property at 5 a.m. on September 9. Police had already been summoned following a verbal dispute hours earlier, but Mayweather came back. Harris says she was asleep on the living room couch when she woke up to Mayweather, holding her cell phone, yelling at her about text messages from NBA guard C.J. Watson.

Mayweather and Harris were no longer together; the boxer had by then installed Jackson in his home and as his main love interest. But, according to Harris, it was not acceptable to Mayweather for her to see other men while living in a house he owned.

“Are you having sex with C.J.?” Mayweather yelled at Harris, according to the arrest report.

“Yes, that is who I am seeing now,” she replied.

Mayweather then grabbed her by the hair and punched her in the back of the head “with a closed fist several times,” according to the report. He then pulled her off the couch by her hair and twisted her left arm.

“All I heard is, ‘Who is C.J. Watson, C.J. Watson the basketball player?’ ” Harris says. “From there it was just … bad. I was powerless. He was holding me down. I couldn’t fight back. The kids were screaming and crying, ‘You’re hurting my Mom.’ ”

At one point, Mayweather yelled, “I’m going to kill you and the man you are messing around with,” Harris told police. “I’m going to have you both disappear.”

According to the arrest report, when Harris screamed for her children to call for help, Mayweather turned to them and warned he would “beat their ass if they left the house and called police.”

I don’t think Green realized the context. He responded to McGregor in the comments by hyping his superiority to Watson and talking about boxing:

Knowingly or not, making light of domestic violence is on brand for the NBA.

What’s Kyrie Irving’s problem with LeBron James?

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Kyrie Irving reportedly requested a trade from the Cavaliers because he no longer wants to play with LeBron James.

But what does that actually mean?

Ramona Shelburne, Dave McMenamin and Brian Windhorst of ESPN:

Much of Irving’s disenchantment with James was rooted in game play, sources said. James, as a once-in-a-lifetime talent, controlled the ball more than any other forward perhaps in league history.

But there were ancillary issues that bothered Irving, too, such as how James’ good friend Randy Mims had a position on the Cavs’ staff and traveled on the team plane while none of Irving’s close friends were afforded the same opportunity.

Adrian Wojnarowski of ESPN:

In registering his preference for a trade, league sources said, Irving divulged to Cleveland Cavaliers owner Dan Gilbert that he’s become increasingly uneasy about a future that includes a roster constructed to complement LeBron James — a roster that could be devoid of James come free agency in 2018.

Joe Vardon of Cleveland.com:

Irving wants to take his show away from James so he can grow his career (his on-court acclaim and notoriety, his brand, his voice) outside of James’ shadow.

Numerous people who’ve talked to Irving over the past month have said to cleveland.com that he told them he wanted to leave to grow his career, and it was the message Irving sent to Cavs owner Dan Gilbert when he asked to be traded last week.

These can all simultaneously be true. There needn’t be one singular reason Irving wants a trade.

It can also be true that former general manager David Griffin might have soothed Irving’s discontent. It can also be true that the Warriors’ dominance influenced Irving, as he might have been more willing to remain in a secondary role if it were more likely to result in a championship.

But so much of this comes back to LeBron, a massive presence around whom everything in Cleveland revolves.

Being the top player on a team means so many things – dictating on-court action, having the supporting cast built around you, influencing team staff, building a larger sponsorship presence. Irving can’t get any of that while playing with LeBron.

Irving led the Cavs in shots and usage percentage last season, but that happened only because LeBron allowed it. LeBron obviously retook control in the playoffs. There’s no question whose team this is.

There is also no indication Irving is fighting that. He’s not trying to usurp LeBron’s power, and Irving has molded his game the last few years to fit with LeBron.

But now Irving his exercising his own power so he can get even more the only place possible – somewhere away from LeBron.

Did Cavaliers dropping David Griffin lead to Kyrie Irving’s trade request?

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Cavaliers coach Tyronn Lue said he had the NBA’s hardest coaching job. Following that thinking, former Cavaliers general manager David Griffin might have had the most difficult front-office job.

Not only did he face the same championship-or-bust pressure and oversee the same players (and their egos) as Lue, Griffin also reported directly to Dan Gilbert, the Cavs’ sometimes-difficult owner. The Gilbert aspect is often discussed, as is working with great/brilliant/passive-aggressive LeBron James. But it has probably been undersold how high-maintenance Kyrie Irving – who requested a trade – also was for Griffin before the general manager was ousted last month.

Ramona Shelburne, Dave McMenamin and Brian Windhorst of ESPN:

Over the previous few months, the Cavs had been worried about Irving’s mindset. They knew at times he’d grown unhappy with playing a secondary role on the team. Griffin had several conversations with Irving throughout the year, sources said, trying to find ways to work on the situation.

After the season, there was a desire to arrange a meeting to clear the air from all sides, sources said, but it didn’t take place. Unlike most teams, the Cavs did not have postseason exit meetings with their players.

What followed was a whirlwind, with the Cavs putting forth a series of trade packages looking to acquire either Butler or George. Some of these talks included Irving, which upset him even more when he found out about it, sources said. Previously, Griffin had worked to keep lines of communication with Irving open, but now Irving was in the dark.

Irving’s trade request had been building for years. The reported timing is vague, but Irving might have even requested a trade while Griffin was still in charge.

Either way, there’s no guarantee the Cavs keeping Griffin would have placated Irving. But it seems an experienced voice running the front office could have only helped.

Now, the task of trading Irving or mending fences falls to new general manager Koby Altman – who must solve this issue in a spotlight he never wanted.

If only Cleveland had Phil Jackson to insist on exit meetings. Maybe this would have been smoothed over a month ago.

LaVar Ball gets technical foul, pulls his AAU team off the court, forfeits game it was winning (video)

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Magic Johnson said he’s convinced LaVar Ball’s outlandishness is just marketing and that the father of Lakers rookie Lonzo Ball is truly committed to developing younger players.

This didn’t look like someone who put youth player development over his own image.

With LaVar Ball’s AAU team leading by nine, he got a technical foul then pulled his team off the court:

He (kind of) explained why after the game (warning: profanity):

He also touched on his reasons in a video that, of course, quickly turns to promoting his brand:

This doesn’t mean Johnson is completely wrong, but the Lakers president seemingly misdiagnosed Ball’s priorities. What if Johnson is also wrong about Ball staying clear of the Lakers? That could create problems – if it hasn’t already.

I was never convinced, as NBA commissioner Adam Silver predicted, LaVar would settle down after Lonzo was drafted. I still believe Lonzo’s talent justifies managing LaVar, but that appears increasingly likely to be a burden the Lakers must actually handle rather than just brush off.