Tag: NBA luxury tax

Chicago Bulls v Miami Heat - Game Four

Jerry Reinsdorf says the Bulls will pay to win. We’ll see.


If you want the model of how to win without spending like Mark Cuban, you look at the Bulls. Even during the Jordan era owner Jerry Reinsdorf was a guy who won as cheaply as he could. He does not like to pay the luxury tax.

Right now, the Bulls are doing that again — they made the Eastern Conference finals last season with a $55 million payroll. But that is about to change. Once they give Derrick Rose his max deal that means in two years they will have more than $57 million tied up in a core or Rose, Carlos Boozer, Luol Deng and Joakim Noah. That’s the year the luxury tax starts to get more punitive with higher rates.

Reinsdorf told the Chicago Tribune he would spend to win.

Chicago Bulls Chairman Jerry Reinsdorf on Wednesday reiterated through a team spokesman that he would give strong consideration to incurring the luxury tax if the player acquisition gave the team a reasonable chance to win a championship.

That answer is similar in sentiment to Reinsdorf’s response on the subject from a 2009 interview. However, with a more punitive luxury tax poised to take effect in 2013-14 of the pending 10-year collective bargaining agreement, as well as increased revenue sharing, the question applied anew.

He might go a little over the tax, but not a lot. That despite how much money the Bulls rake in (although Reinsdorf is now going to have to pay more of that out in revenue sharing).

If the Bulls are going to win a ring, GM Gar Forman is going to have to be smart and find a few deals out there.

Lakers, Mavericks, other big spenders safe for two years

Image (1) jbuss-thumb-250x140-15577.jpg for post 3061

Part of the reason we lost 480 NBA games this season is because a bunch of owners were pissed at the Lakers, Mavericks, Heat, Celtics and other owners willing to spend over the luxury tax. Small market owners wanted to tie the hands of the big spenders in the name of the mythical “competitive balance.”

They got their wish… but not right away.

The most punitive measures for big spending teams don’t kick in until year three of this labor deal, reports Ken Berger at CBSSports.com. So spend away, Buss family, you’ve got a couple more seasons before a bill comes due.

Luxury tax rates: The same dollar-for-dollar as in the previous CBA for the first two years. Starting in Year 3, the rates increase to $1.50 for the first $5 million over; $1.75 for $5-$10 million over; $2.50 for $10-$15 million over; $3.25 for $15-$25 million over; and an additional 50 cents for each additional $5 million (same as previous proposal).

Repeater Tax: A dollar-for-dollar additional tax for teams that are above the tax line for a fourth time in five years (same as previous proposal).

That means the tax is the same for two seasons and the repeater tax can’t hit a team until 2015 at the earliest. These are delayed bills that give today’s big spenders a chance to reduce salary — except they are all are already in a pretty good spot in a couple years.

To use the Lakers as an example, they currently have only $61 million on the books by the time the higher taxes kick in ($30 million of that goes to Kobe Bryant and $19.2 million to Pau Gasol). The Lakers will have time to bring their payroll to whatever level they deem reasonable (which will still be over the tax, just likely not in the $90 million range anymore).

Even the Heat, with their current big three and others roster, are at $71 million for the season the tax rates jump. They, too, will spend more but have time to prepare. That or ship Chris Bosh out.

In the short term none of these teams will not have as large a mid-level exception as others, but that is about the only new restriction on them for now. For the next couple years, it’s business as usual for the spenders.

Report: Owners back off 50/50 split demand. For now.

David Stern, Adam Silver

NBA owners and players will be back across the table from each other negotiating on Wednesday. Something they should have been doing every day since talks blew up last Thursday, but we won’t get into that. At least they are talking again.

The reason they are talking again is the owners have backed off their stance that if the players didn’t agree to a precondition of a 50/50 split of basketball related income (BRI) there was no reason to talk, reports Chris Sheridan at Sheridanhoops.com.

That condition is why talks broke apart last week. The owners demanded the players take it — Cavs owner Dan Gilbert said to “trust him” that if the players accepted the split they would get a deal on the luxury tax they liked — the players said no and the talks fell apart. And that led federal mediator George Cohen to throw up his hands and leave.

That the owners backed off that condition could be a good sign. Both the owners and players have been talking about “bands” of BRI split. In a hypothetical situation, let’s say the band was 50 to 52 percent. If the league’s revenue projections are at the low end of preset expectations, the split would be 50/50. But if revenues are way up, the players get 52 percent of the revenue in salaries. It makes the two sides true partners in wanting to grow the NBA because if revenue goes up everyone gets more money. So this is rocket science, no wonder they have such a hard time hammering out a deal.

The real challenge is that the owners want an increased share of BRI (remember the players got 57 percent in the old deal) and they want to radically change the system in which those contracts are delivered. The owners want shorter contracts, the ability to waive underperforming players but spread out the financial hit against the salary cap, and they want a much tougher luxury tax system to control big spending teams. The players are not huge fans of all those things and think that since they’ve given up so much BRI they should get consideration there.

Hey, but at least they are talking again.

I’m pretty sick of writing that, but it’s the most optimistic thing I can say.