I'm a capologist-in-training, so if some cap experts want to come in and refute my reports, I take no offense. Note that all of my cap knowledge comes directly from Coon's FAQ. Anyhow, even though I haven't been keeping up too much with NBA reports on ESPN and such this last week, I'm pretty sure the the SalaryCap figures for 03/04 and final luxury tax figures for 02/03 being released went under the radar. So here's the breakdown: Basketball Related Income for the NBA in 02/03 was $2.662 billion. Total Player Saleries and Benefits came out to be $1.744 billion, which is 65.5% of the BRI. The percentage was so high that not only did it trigger the escrow tax (past 55% BRI), but also surpassed the luxury tax threshold (61.11111111111111% BRI). This means that 10% of all NBA player's salaries ($174.4 million) were set aside in an Escrow Account. And it means that teams above the luxury tax threshold ($52.88 million)-THIS IS NOT THE SALARY CAP- had to pay a dollar-for-dollar tax that it was over it (me bad english can't write). The luxury taxes paid total by all teams are an estimated $187.5 million. So where does all the escrow and luxury money go? Well, according to the Collective Bargaining Agreement signed back in stike-shortened-Spurs championship*-99 season, some of the money goes to the Commissioner's Office, but most of the $361.9 million goes back to the teams. It's not an even divide of course, but I won't take the time to explain the details here. So how did this effect the Rockets? Well, according to USAToday, the Rockets player salaries total in 02/03 was $50,181,240. So because they were below the tax threshold, they didn't pay a luxury tax, they received a full share of Escrow, full share of Luxury tax, and full surplus share. So bottom line: Les Alexander paid his players $50.181 million in 02/03, but because of the Luxury Tax and Escrow, the NBA gave Les Alexander/The Rockets $16.34 million (money coming from other teams). So essentially, it's like the Rockets only payed $33.841 million is salary last year. Other examples: LA Clippers 02/03 player salary total - $42,768,280 taxed - nothing received - $16,340,000 essentially it cost them $26.42828million on players Portland Trailblazers 02/03 player salary total - $104,321,823 taxed - $51,441,823 receieved back - $8,070,000 essentially, the Blazers/Paul Allen paid $147,693,646 My opinion: The idea that being over the salary cap ($40,271,000 in 02/03 and $43,840,000 in 03/04) will lead to a back breaking tax is complete horsecrap; IT IS A MYTH perpetuated by stupid media and uninformed BBS users. Take for example the New Jersey Nets, who had a team salary of $60,412,919 in 02/03. That's more than $20 million over the Salary Cap. Because of idiots spreading misinformation, many believe that means the Nets lost another $20 million. Total Crap. As stated, the Luxury Tax was administered for the 02/03 season and guess what happened to the Nets? They ended up receiving $537,081. How's that for a luxury tax.
I think you r right in general but don't chastise the guys/ gals about not wanting to go over the tax theshold. The Nets did lose ~16 mils on money NOT received!
Major props for the post Kim. Great timing! This just proves the point many of the BBS' most respected posters have been making about the tax and how we should (and hopefully will) match the Grizzilies' offer for Posey.
If you are completely right this is amazing. The logic of what you are saying makes sense to me. Thanks you very much for the information. No wonder Portland is slashing. I personally believe that the teams trying to spend less are more to do with the fact that there are more good players available for the spaces required and as a result there is no need to spend more. Prices should be dropping. Just my theory. Anyway thanks again and I hope it means we can match Posey's offer.
No offense, but other than a brief mention of the Rockets' 02-03 salary from USA Today you have not sited a single source reference for your data. I request this because you have the Clippers listed with a $42.8m payroll which I maintain is only about $33.9m + Jaric, Wang Zhi Zhi and a few other low salaried players. That $33.9m number is lower if they did not waive Bryant Stith and he wasn't a cap hit. It's hard for me to imagine Jaric, Wang and a few others added nearly $10m to the Clipps annual payroll. Michael Olowokandi...$6,061,213 Elton Brand................$4,895,656 Eric Piatkowski...........$3,000,000 Lamar Odom..............$3,557,585 Sean Rooks...............$2,640,000 Andre Miller...............$2,460,709 Bryant Stith...............$2,000,000 Keyon Dooling...........$1,769,760 Corey Maggette........$2,069,764 Quentin Richardson..$1,174,080 Derek Strong............$4,247,100 Total:......................$33,875,767 Please provide your sources of financial data (other than Larry Coon's info).
If players salaries do not exceed 61.1111111111111(infinite)% of the BRI, there would be NO LUXURY TAX = THERE WOULD BE NO LUXURY TAX REFUND. Get It? (This reads like attitude, but i'm totally light-hearted right now, so please don't take it like me trying to be offensive) My point is two-fold: 1) the CBA is complicated and should be talked about in-depth before making assumptions as basis of arguments for/against signing players and its effects on a teams salary 2) Many people are Wrongly thinking that the Salary Cap is when you start getting taxed, but it's the Luxury Tax Threshold. 3) (I can't count either) Not everyone receives $16 million refund. It's complicated. And besides, it's not lost money. It's only there if there's a luxury tax. Sources: http://members.cox.net/lmcoon/salarycap.htm http://www.usatoday.com/sports/basketball/nba/2002-2003-nba-salaries-western-conference.htm
One thing about that is confusing me...IIRC the cap-masters have been saying that the luxury tax was not triggered for last year..but according to Kim's post...it was. Am I remembering wrong, or were they wrong in saying that it wasnt triggered?
Kim - Not to sound egotistical, but I am versed enough to carry on a reasonable CBA conversation. I surely know the difference between the salary cap and the Luxury Tax. And I'm smart enough to take 61.1% of a number to find if that number triggers a financially responsive action. What I'm missing is where you found the NBA's BRI was $2.662b? I have not seen the exact BRI figure quoted anywhere.
The tax was triggered most definitely. The confusion is what salaries the tax is paid on. Feigen has been saying that the tax is paid on new salaries of 2003-2004, thus the worries of Posey causing a double bill. (btw: if true, that would apply equally to us using the full MLE on two vets rather than siging Posey.) Put me in the camp who is convinced Feigen is wrong. The tax is paid on 2002-2003 salaries (the salaires that were used to calculate the tax to begin with). Which means Kim is correct, Les is fixing to get his share of tax money being billed now on salaries of last season. Look around, do we see any teams really worried about spending this year, as much as last season? The tax that triggered hurt Rashard Lewis's negotiations last summer....I don't see Kenny Thomas or Posey getting hurt at all.
I'm definitely not refering to you GATER. It's the loads of newbies mainly, and many others who just throw out "luxury tax" as reasons and have no idea what they are talking about. All the figures are from Larry Coon's website. Numbers 14, 15, 16, 17 around there. All that stuff was updated on July 22, 2003- says so at the bottom of the page. Whoa! I see Heypartner's name down there. What the hell? Cool.
Kim - I did not take offense. And I had not seen Coon's 07.22 update. The BRI lags salaries by a long time frame and I had not seen it anywhere else. One thing that is often overlooked in the LT discussion. The revenue from the new ESPN/ABC contract started low in the 1st year (2002-03) but has a fast rise to it. I think this substantially impacts BRI for 2003-04. So far, it looks true. A good catch by Kim. I'm going to take a deeper look...time permitting.
I remember last year, I read an article on how the league was not sure if they were going to split the money among all the teams or just the teams under the luxury tax threshold. This was one of the reasons Rashard was signed to an amount that made their salary number just above the luxury tax threshold which allowed them to get most of the rebates. Is there anything that says how this was resolved.
Ok, so the tax was triggered last year, but it didnt affect the Rockets at all since they were below the threshold? but because of the new tv deal being (much?) higher than last year, it isn't likely to trigger for this coming season? Just trying to keep all this straight, you know I get lost when yall start discussing cap issues..
What would have happened had the tax not been triggered? I mean, if the 55% mark was passed to trigger the player escrow, but the 61% BRI figure was not surpassed to trigger the luxury tax: would the Rockets have been given money back? Were the Rockets actually better off because the tax was triggered? And, perhaps more importantly, was New Jersey actually better off because the tax was triggered, even though they were slighly over the theshold?
Read Larry Coon's FAQ. It explains everything very well including this question. The NBA board of governors came up with the "Cliff threshold" which is about 56.5 mil. Teams over this get nothing back. Teams between cliff threshold and lux tax threshold gets a pro-rated share. Teams under lux tax threshold get a full share.
the next time Carroll Dawson is on Sports radio 610 someone should call in with info. Since most people think your penalized by going over i wonder what CD's response would be.
There are 2 different groups that have to pay: 1) The players If salary goes over 55% BRI (Baseketball Related Income), the players put in 10% of their salary into an escrow and this is paid back to the owners. The idea is to get the salary back under 55%. 2) The teams that go over the lux tax threshold. If 1) does not bring salary back down enough and if it is over Luxury tax threshold (61.1% of BRI), the owners that go over pay dollar for dollar into a pool. The escrow money from 1) and the Lux tax money from 2) are paid back to the owners depending on their team's salary.
MWAHAHAHAHA!! I have to laugh! Portland spent $104 million on their team last year, and lost in the first round! Pippen, Wallace, and Stoudamire's combined salaries were $47 million! That's $7 million more than the entire Denver Nuggets team got paid (it's also more than the Clippers' entire team)! BTW - this thread is excellent! Thanks Kim! -- droxford
There is a very good table at the end of answer 16 in Larry Coon's FAQ. http://members.cox.net/lmcoon/salarycap.htm#16 I couldn't put the table here so I will just give the bottom line: Ex. for 2002-03: Team A's payroll: $50.0 mil. Gets back 16.34 mil Team B's payroll: $54.7mil. Gets back 9.49 mil Team C's payroll: $60.0 mil. Gets back 0.95 mil Team D's payroll: $80.0 mil. Pays out $19.05 mil.
so basically Les Alexander has decided that since he's going to make a killing off of the new arena why not pocket an extra 9 million bucks.
