There's been a lot of speculation on this bbs about different trade scenarios, but maybe we should just wait & see what shakes out. What do ya'll think? http://www.suntimes.com/output/basketball/nba08.html Teams seek tax loophole July 8, 2001 BY SCOTT SOSHNICK NEW YORK--From purely a basketball standpoint, the Cliff Robinson for Jud Buechler and John Wallace trade didn't make much sense for the Phoenix Suns. Robinson, after all, is a former National Basketball Association All-Star and Sixth Man of the Year who averaged 16.4 points for Phoenix last season. Career journeymen Buechler and Wallace averaged a combined 9.3 points for Detroit. Suns president Bryan Colangelo knew that, talent-wise, it wasn't an equitable trade. He said he made the move to ensure that Phoenix wouldn't be among the teams paying the so-called luxury tax next season. "We've made it clear that we will not be taxpayers," Colangelo said. "With the trade, we're saving in the first year, roughly [$1.4 million]. Over two years, it's about $6.2 million." The tax, installed as part of the collective bargaining agreement that settled the 1999 lockout, is designed to curb spending on player salaries and to keep a level playing field among the NBA's 29 teams. While Colangelo might have been the first executive to accept less talent in a trade, he won't be the last, general managers said. "It's going to be wild," Colangelo said. "Teams that aren't playing well are going to be hustling to get under the threshold. I've already fielded some of those offers." Teams will be taxed based on the players that finish the season on their roster. The precise tax threshold will be determined at the end of the regular season. It's estimated to be between $53.5 million and $55.2 million, said Colangelo and Indiana Pacers president Donnie Walsh, citing NBA officials. Colangelo said he expects his 2001-02 payroll to be about $54.6 million. So, for example, if the tax threshold winds up being $54 million, then the Suns would owe $600,000 to the kitty. Some Will Pay Nets president Rod Thorn, whose owners have mandated that New Jersey not be among the taxpayers, said the Robinson trade, while puzzling to some fans, made fiscal sense to him. "You're going to see some deals made that might, on the surface, seem like `Wow, why did they do that?' " Thorn said. "When you dig a little deeper, and understand the economics of it, you see why." Not every owner is tax conscious. The Blazers are owned by Microsoft co-founder Paul Allen, who, according to Forbes, is the third-richest American with a net worth of $36 billion. Cablevision Systems Corp. owns the Knicks and billionaire Mark Cuban, No. 363 on the Forbes list, owns the Dallas Mavericks. Cuban said he'd never make a bad trade just to save a few bucks. What about the tax? "It doesn't bother me at all," Cuban wrote in an e-mail interview. "We all make our own business decisions." "For the first time, the NBA has a hard cap--and it's the luxury tax number," said Indiana's Walsh, adding that he, like Colangelo, expects more Robinson-like trades. "The majority of teams don't want to go over that number. In order to do that, you have to drop salary. It calls for me and some of my colleagues to make some really hard decisions." Bloomberg News ------------------ Nothing is impossible, if you believe it's possible.
Why would a team owner or GM balk at paying a 600K luxury tax when they routinely pay 53 million in player salaries, several million of that, to non-roster players. It seems like such a small percentage of the total. Especially when you consider that a player like Cliff Robinson puts people in the seats and gives you a chance to earn playoff money. I am begining to think I prefer the Billionaire owners who see their team a extension of their egos and, will do anything to win rather than those who just see the NBA as a business where you can make more money by putting out cheaper but inferior product. I can't afford to pay $100 a ticket either way but if I could I would atleast want to watch a competitive team. ------------------ I find my own ignorance amusing
As of now, Portland will have to pay(assuming a $54 mill luxury tax threshhold) about $25 mill to the league office. Even a multi-billionaire can't continue to throw money like that around. A lot of the older established veterans are going to start feeling the financial repurcussions of this new hard cap. The good thing about this, is that it will probably spread the premier talent more evenly around the league. You'll start to see teams with only one major high priced super star, a few above average priced players, & the rest as minimum salary role players. I guess that some of the players will just have to make do with $5-6 mill a year. How will they survive? I think they call that parity. ------------------ Nothing is impossible, if you believe it's possible.
In addition, the 10 percent withheld from players checks (if the players total salaries exceed a given percent of revenue) is split among the teams that are UNDER the tax threshold. Conceivably the tax money is also distributed among the teams under the tax but I don't know. On another note, it will be nice to see that every "pretty good" player doesn't get the maximum from now on. ------------------ [This message has been edited by UTrocket (edited July 09, 2001).]
I'm TIRED, TIRED, TIRED... of hearin' bout Cuban... tell that sucka to go back to moonin' refs and stop talkin' that jibba jabba bout basketball... ------------------ "I find that the harder I work... the more luck I have" -- Thomas Jefferson "Weezie !!" -- George Jefferson
But don't you see Gene - that is what it this is all about - creating competitive teams. By discouraging teams from doing a "Portland", they are promoting equity - superstar players will be more evenly distributed throughout the league, and your team will be more competitive as a result. ------------------ God help me, ...I was only nineteen. Current Rocket's Salary & Contract Info
I agree with the overall concept of Salary caps and parity. The teams with better organizations will dominate, not just the teams with the most money, Baseball will have to go through a painfull readjustment. I just don't see how the Cliff Robinson deal is justified. ------------------ I find my own ignorance amusing
The tax isn't $600K. It's however much you're over the luxury tax line: 54 million or whatever. Thus, if a team's player salaries total 64 million, they have to pay $10 million in tax. That's what everyone's afraid of. ------------------
