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Future Rockets Concerns: How Much Tax Can the Rockets Handle?

Discussion in 'Houston Rockets: Game Action & Roster Moves' started by BreakYoSelfFool, Jul 8, 2014.

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How Much Tax Can the Rockets Handle?

  1. None - If the Spurs can win without so can we

    6 vote(s)
    9.5%
  2. Must stay one of the most profitable teams

    7 vote(s)
    11.1%
  3. Must at least break even

    20 vote(s)
    31.7%
  4. Must even risk losing money. Les won't go broke

    30 vote(s)
    47.6%
  1. BreakYoSelfFool

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    The Rockets have thus far have been able to remain one of the most profitable teams in the NBA, while gathering a mix of Superstars and young affordable talent. The Rockets reportedly have consistently made over $30 mil in profit, last season breaking the $40 million mark.

    The profit numbers listed are questionable, because they are the numbers used by the NBA for profit sharing purposes. For example, one would think that the Miami Heat with Lebron James and four straight finals appearances would be more profitable. But apparently, high operating costs may keep down some of the profits. Also, there is the matter of the increased franchise value.

    This brings about the question, why would a team like the Heat risk falling from the top of the NBA to avoid luxury tax payments. Is it greedy ownership or smart business. Would the Rockets have the same issue if they built a championship team that crept above the luxury tax level?

    As a fan, I say do whatever it takes to keep winning. If I were the Heat, I would sign Melo and others then resign all my free agents using their bird rights. If the repeater tax for being $14 million over the tax is an additional $40 mil then do it, and make other deals to offset it. Luckily, the Rockets are not currently repeaters and could avoid being a repeater for the next 4 years by avoiding the tax this coming year. This means that $15 mil over the cap is only a $30 mil penalty. This would mean the actual cost of the team would be $45 million over the tax line, for this season that would be around a $92 team payroll actually costing $122 million.

    To be fair, the $40 mil profits was with a payroll of around 60 mil, which would mean by my fan math that a $100 mil actual payroll cost should be acceptable, especially when you account for the added money from playoffs and championships. This would be the equivalent to a payroll of around 85 million for this year.

    The good news, is the Rockets can probably get a major free agent, and resign Parsons all while staying below the tax line. However, it may not be possible to obtain a world champion without the luxury tax. If this is the case, how much can we handle?
     
  2. justtxyank

    justtxyank Contributing Member

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    Please make sure to distinguish between being over the cap and over the tax line. Being over the salary cap does not instantly trigger the luxury tax. Your post sort of mixes the terminology so I'm not clear if your analysis is properly accounting for the numbers.
     
  3. BreakYoSelfFool

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    I am speaking of the tax line which for this season is estimated at 77 million. The tax amount increases incrementally the more you are over the tax line, and the rates also increase if you repeat as a tax payer 3 of the last 4 years. While it is fairly easy to get over the salary cap, it is not as easy to get far beyond the luxury tax without bird rights due to limits on sign and trades
     
  4. Camarograna2

    Camarograna2 Contributing Member

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    there is no "I don't care about the rich option?
     
  5. aelliott

    aelliott Contributing Member

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    For the sake of accuracy, you can't do what you just described. Free agents continue to count against the cap until resigned or renounced. Without first resigning the big 3 first, the Heat have no cap room so they could not sign Anthony.

    The only way the Heat could sign Anthony is if they first resign the big 3 for lower salaries and leave enough cap space to sign Anthony. Based upon Anthony's expected salary, the fact that Lebron wants the max and that Bosh wants $15M or more then it's pretty much impossible unless Wade takes a minimum deal.
     
  6. mrm32

    mrm32 Member

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    Who cares how much they pay in tax? It's not our money.
     
  7. BreakYoSelfFool

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    Sorry cannot edit, did not proofread properly. Correction: replace cap with tax line. Not interchangable, the tax line is an additional $14 mil over the cap. Math is correct though
     
  8. megastahr

    megastahr Contributing Member

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    contribute 5 bucks then edit it ...
     
  9. Rocketman7

    Rocketman7 Member

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    Les needs to spend that $ on making the team better.
    For years he has never paid L-Tax
     
  10. sugrlndkid

    sugrlndkid Member

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    billionaire issues... ill let Les decide what he can and can not afford..
     
  11. Solaris

    Solaris Member

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    Les need to keep his word and go all in.
     
  12. dobro1229

    dobro1229 Contributing Member

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    This year doesn't matter. They have another cheap year for Harden so if you are going to go over the lux tax, that's the year to do so.(only concern is the hard cap issues)

    Next year (2015/16) will matter for Les & Morey.

    The goal will most likely be for the 2015/16 season to stay under 81 million(luxury tax) in salaries to avoid the repeater tax out of respect for Les & the business side of the Rockets, and for Morey his goal will most likely be to avoid the hard cap to not lose flexibility.

    If the Rockets resign Parsons to the max, and bring in Bosh at the max, I am coming up with a number that will be close to 86 million before accounting for Beverley's pay day after free agency.

    The Rockets have some work to do to shave some money if they want to keep Parsons & sign Bosh. If Bosh really does get the max, I would be willing to bet that Morey actually might either S&T Parsons if he truly does get the max or maybe even let him walk. However I think they might very well have a deal in place already to get Parsons on a smaller 12 mil a year type salary. If they can keep the contract in that range, I think they can still keep everyone together.

    Even if they did want to, they could keep everyone, but they flirt with the possibility of hitting the hard cap # which I guarantee Morey doesn't want to do if he can avoid it.

    Its going to be interesting if Morey makes this signing, but my guess (like the Lin & Asik contracts) he's already thinking 7 steps ahead of us, and has found some crazy way he can structure the Parsons contract to help them out with this issue to stay below the hard cap.
     
  13. BreakYoSelfFool

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    Is that all it takes? I always wondered why I couldnt search or edit, thought it had to do with rep. Im over my online budget already, but probably will soon. What other benefits do you get?
     
  14. ross84

    ross84 Contributing Member

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    Considering us fans spend our relatively puny paychecks on merchandise and to see our team win, owners should approach the sport wanting to win first.

    If profit is their number one concern then the door is over there. There are plenty of other avenues they can invest their money in and have a much larger return.
     
  15. CDrex

    CDrex Contributing Member

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    My perspective on owners paying luxury tax has always been:

    -Never, ever pay luxury tax for a bottom-20 team
    -If you have a team that WILL unquestionably contend for the title every year, you pay up to $20M in tax no matter what, for as long as it takes
    -Don't be like the Nets

    But $20 million is 150 times more money than I've even made in my life, so it's just an abstraction to me. I don't really begrudge the owners for being cautious.

    Unless they're like the cheap-ass Hornets team I signed with in NBA2k13 that started with Anthony Davis, Dirk Nowitzki, Ryan Anderson, Eric Gordon, Al-Farouq Aminu, Xavier Henry, Robin Lopez and Aaron Brooks and without ever even crossing the salary cap, much less the tax, four years later it was just Davis, Gordon, and a hundred late-first-round and second-round rookie flotsam fillers. Totally off topic but it made me really mad. :p
     
  16. mac_got_this

    mac_got_this Member

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    I Donated 10 dollars to clutchfans and still haven't received that privilege so I call bs.
     
  17. ScriboErgoSum

    ScriboErgoSum Contributing Member

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    Clutch will get to it but give him time. It's not an automatic thing.
     
  18. langal

    langal Contributing Member

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    There is also the rise in team valuation that is harder to determine.
     
  19. Thefabman

    Thefabman Member

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    lol ive contributed way more than that to the tip jar and i still dont have contributing status.
     
  20. Pat

    Pat Contributing Member
    Supporting Member

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    especially since you are the guy saying spend what it takes.
     

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