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Decline in Salary Cap - Luxury Tax for 2020-2021

Discussion in 'Houston Rockets: Game Action & Roster Moves' started by malakas, Jan 30, 2020.

  1. SuperMarioBro

    SuperMarioBro Member

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    To be fair, not much about the NBA Is looking good at the moment...
     
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  2. thekad

    thekad Member

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    Better hope Tilman has to sell. Morey is running out of first round picks to trade to dump salary.
     
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  3. kjayp

    kjayp Contributing Member

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    I understand that you have to adjust the cap to correlate to earnings to accommodate a semblance of 'profit sharing'....
    but luxury tax threshold is totally arbitrary by the league... isnt it?
    Why screw team over by invoking a lower than anticipated line for luxury tax?
    The league could just as easily say cap is lowered to X... but were only going to charge teams the luxury tax based on the previous years level...
    Lux tax doesnt really concern the players assoc and their deal with the league, right?
    or am i just totally misunderstanding stuff... lol...
     
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  4. Sweet Lou 4 2

    Sweet Lou 4 2 Contributing Member

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    No chance Tillman sells.
     
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  5. Scarface

    Scarface Supremely FocASSed
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    If he is so leveraged that he has no working capital on hand to withstand the downturn then he would be forced to sell the team. NBA owners aren’t banking on the revenue coming in on a year to year basis but rather the return on their initial investment when they sell the team. Their other businesses make them more money on a year to year basis than team ownership.

    Tillman will get back at least what he paid for the team if he were to to sell it today. If he holds it for several more years he could sell it for more. The key is his cash flow. If he is cash poor and hemorrhaging cash in his other business ventures then we could be a couple of months before his companies are insolvent.

    This is an interesting time to say the least.
     
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  6. Sweet Lou 4 2

    Sweet Lou 4 2 Contributing Member

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    A) If he went highly leveraged to buy the team he clearly wanted it badly, and thus will likely go further into debt to retain the team vs selling it
    B) He is unlikely to get the same price given the current market situation. How can the team be worth the same as when he bought it? It is not a 65 win team challenging GS, and the NBA is currently suspended.
    C) Also consider that ever other buyer is likely losing money in some way right now. It's hard to see that this is a sellers market
     
  7. payaso

    payaso Member

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    Does Adam Silver have a Bowie Kuhn / David Stern "Godfather" streak in him to have the gumption to disenfranchise an owner for insolubility, with the rationale that the overall league product suffers when an owner CANNOT afford to field a competitive product? Or, at a minimum, does he have the power to impose eligible interested minority partners onto a cash-poor league franchisee?
    Dave Weiner, Esq. - care to chime in? Curious minds would like to know.
     
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  8. BigBum

    BigBum Member

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    123 million tax line
    Luxury tax profit = dump salary of Gordon and Rivers.

    maybe able to use minimum salary to sign two good players.
     
  9. jev5555

    jev5555 ¯\_(ツ)_/¯
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    All of this is moot. Lux tax rules can be relaxed for a season.
     
  10. BigBum

    BigBum Member

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    That is not good for tax profit. Use profits to sign stars after 2025.
     
  11. Scarface

    Scarface Supremely FocASSed
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    I want to preface my post with this PSA: I do not have intimate knowledge of Tillman’s financials nor am I in the know. I am making an educated guess based off of my understanding of Tillman’s personality traits and having a lot of understanding and experience in the business world.

    A) I 100% agree with you but it’s not up to Tillman. He will be given ample opportunity to incur more debt as long as the financier is willing to take on that risk. The sale of a franchise takes time for the buyer to be properly vetted by the league and the fellow owners. This is a slow process. Tillman might be able to withstand several months of high cash burn rate but he is not sitting on a pile of cash and he has some huge payments that he will have to make while having zero revenue incoming.

    B) He will get at AT LEAST what he paid for. I would venture to say he would easily net $200 million in profit if he were to sell today. Your reason for a loss is irrelevant. Stephen Ross paid $1 billion in 2008 for the Dolphins. This was the same team that was 1-15 the year before. So if your argument is that the economy dictates selling prices this debunks it. If you are saying that the Rockets not being the NBA champions devalues them I give you the Clippers who sold for $2 billion which was wildly considered the most toxic team/ownership that ever was in the NBA. Tillman grossly overpaid for the team and as you stated yourself he really wanted the team and the chance to own his hometown team(more on this next).

    C). Look it really comes down to this, there are only 30 NBA teams, 32 NFL teams, 30 MLB teams, and 31 NHL teams. There are 600 plus billionaires in the US alone. These are highly competitive, motivated, well off people. They crave the chase that sometimes their current ventures don’t give them anymore and only a sports team can give them. There are only a finite number of these opportunities for these people and most wont have the opportunity to acquire one of these teams in their lifetimes. Long story short there are buyers right now that would pay $2.5 billion plus for this team.

    This is not a mom and pop restaurant. This is the Houston Rockets. One of 4 major sports franchises in the 5th most populated city in the US and the 7th largest media market in the US.
     
  12. PhiSlammaJamma

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    What kind of Da' Kline are we talkin about?

    [​IMG] [​IMG] [​IMG]
     
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