If a team is over the luxury tax milestone and over the Cliff Threshold, they get none of the luxury tax back. But, do they get any of the player salary back if the luxury tax is in effect? Or, if the tax is not in effect? $174 million (player escrow) split 29 ways is $6 million per team, a pretty significant chunk of money. If the league ended up at 60% BRI, triggering player escrow but not the luxury tax, am I right in thinking the Trailblazers would have been given $6 million back? And, because the league did go over, they don't even get that $6 million, which instead is divided among teams that remained under the luxury tax threshold?
1) Once the salary goes over 55% BRI, the players have to pay to get it back under 55% (up to 10% of their salary, which is a total of $174 mil) whether the luxury tax is triggered or not. 2) Every team gets a portion of this player's escrow money. In my example above, team A (under the lux tax threshold) gets back $6 mil. The other 3 teams get back a minimum share of 4.2 mil each (the figure changes next yr..). There would be some left over money, the commisioner office gets some, the rest is divided evenly among the teams.
When did the team get this money back. I mean, I'm still confused, they got money back but it was proabably used to pay salary. Or do they get the money this year? The sequence is important. If that money has been used, then if we match and get Posey back, this year, for him being at 6 mill, I'm not sure where we're at, but I think with the luxary tax, we would actually be paying 10 mill for him. That's more than half of the 16 mill we got back or are supposed to get back. And when Rice's salary comes off the books next year, with the 9 mill that we'd be paying Po and Pike and Francis's extension kicking in, we wouldn't really gain anything from Rice's contract expiring. I don't have any #'s and I admit I'm a little confused here, I'm just trying to throw out some generalities and some questions for the capologists to help clear things up for me. Also, does anybody know who some of the big name FA's will be next season?
btw: when I say the tax was triggered for last season...I mean that it just trigggered this month for last season's payroll. It takes that long to do the auditing required of calculating the BRI. In fact, the season's salaries do not end until the June 30th following a season. There is a new thing called the "cliff provision." It prevents owners from falling off the cliff for being just barely over the tax. Between the 61.1% of BRI and something like 67% is a range where you get a % of a full share of redistributed tax money. The % is a prorated % of how far between those two %ofBRI numbers you fall. btw: The Seattle owner hasn't gotten any money back, yet, because the redistribution hasn't happened..
More accurately, the players get 10% taken out of the salary each pay day. And that gets put into escrow. The escrow account is contributed to throughout the season. At the end of the year, when the BRI is calculated, the players can get all of that back, a %, or none at all... JuanValdez, regarding your question about "would the owners be better off" if the escrow got paid to them. Not really. It may seem like all teams benefit when money is given to them, but the fact is, that the escrow money is returned to the players, unless their salaries/benefits were too high. The escrow just ensures the owners don't pay too much as a % of BRI. It is actually better that revenues be much higher than salaries....bigger profit margin. imo, there actually is no advantage to the Luxury Tax triggering, in the case that revenue shortfalls occured. While it would mean teams under the Tax get tax money back, it also means that their owner share of league revenues is be a smaller check.
Don't mix next year's numbers with this year's. They are entirely independent. For 2002-03, the players pay 10% of their salary back, some owners pay some taxes and some owners "will" get some money back. When? I don't know but knowing how accounting works, it will be a while. This money goes into the owners' pocket. It has nothing to do with next year salary's caps. Next year's numbers will be calculated based on next year's salary, BRI ...
Yeah, HeyPee says it best. And if you really want to learn about the CBA, go here: http://www.nbpa.com/cba/cba.html I'm trying to read it but my eyes are hurting. The drug test part is kind of funny though. Your pee gets divided into two cups by the "collector" who just peed in front of and if you fail the drug test, the second cup was frozen and can be sent to be independently tested at your request. But back to the point. The percentages deal with overall player salaries ratio of NBA profits. So, even if the Knicks do pay out $90 a year, and they are greatly responsible for overall player salaries being high, I believe that the MSG group were way in the black (profited big) last year. I don't know if the ratio was more/less than the average team, but it wouldn't be suprising if they held they're end. They spend a lot and make a lot more, but if other teams aren't making enough % wise, then the Knicks get hit up big come Tax time. And teams like the Clippers get away with (IMO they're cheating their fans) putting a cheap crappy product on the court and turning profit while not helping out the NBA BRI much and getting even more rewarded come tax refund day.
I think I can simplify this. When do you get your IRS rebates back? You get them back after the salary year that was used to calculate your tax. In the NBA, the players pay a tax into the escrow account, and can get a full rebate (with interest) at the end of the year. But if salaries are too high, they get no rebate or just a %. Owners, on the otherhand, pay a tax after the season, not before. They do not get pretaxed. I'm not sure about this, but this is probably not an actually Bill to pay. This probably just works out to be money taken out of their league-wide revenue-sharing checks, that the league pays the owners at the end of each season. That is what is happening here, and why it is somewhat confusing. The league audits take a long time; it's a huge business. The season payroll is from July 1st, 2002 to June 30th 2003. We are calling that fiscal year the "last year." Now, there is no way to calculate league revenue until after the playoffs (when final TV revenue numbers are reproted). When they said the tax triggered, they couldn't give a final number on that until after the playoffs...until BRI is calculated after the payroll season and revenue season ended. So, the owners over the tax are "billed" after the season for going over the tax numbers of "last year," which probably just means getting a smaller revenue-sharing check from the league. Owners under the tax get a larger league revenue-sharing check.
So what's the best guess on whether there will even be a luxury tax next year? Coon says the BRI luxury tax threshold will be 63.333...% in 04-05; I did not see a number for 03-04. This is still less than this year's 65% final number. But perhaps player salaries will be down next year in correlation to revenues (especally if the Rockets sell a lot of new jerseys in China ). You would think CD is already armed with projections (generated in-house by their accountants?) for next year's BRI, in pondering whether to match Posey or not.
Correct me if I am wrong. I read that the Luxury tax threshold for 03-04 will be ~ $57 mil (compared to 52.9 mils in 02-03.) The Rockets has committed for 03-04: Rice: $10.4 Steve: $10.1 MoT: $7.7 Cato: $7.4 Cat: $5.4 Mooch: $3.6 Yao: $3.5 EG: $2.3 Boki: $1.1 ----------- Total $51.5. Add Pike's 2.5 mil, -> $54.0 mil. We have ~3 mil to complete the roster. Resign Posey will add $4.9 mil and make it $59.9 mil and we still need to add 1 or 2 more players. Correction thks to my accountant: $58.9 mils and not $59.9
There are two caps: soft and hard. If you get over the hard cap, you pay lux tax. We are over the soft cap, and there is no hope to get back under in the short future. What is important is not to get over the hard cap. Otherwise you not only pay lux tax, but also forfeit the share of lux tax money from NBA. In and out, that is a lot of money! That is why Les and CD decided not to match Posey'f offer sheet. By signing Pike not Posey, they saved 7-8 mil a year. That is a big deal.
Cuban made the same argument for the Mavs. Their salary for 02-03 is $80 mil. Cuban said they 'd break even except for the luxury tax they will have to pay. The question is: Are the teams with the higher payrolls (hence more talents) contribute more to the league's BRI? 1) They contribute to their own higher gate's receipts and the gate's receipt of the teams they visit. 2) They contribute to declining attendants for teams with smaller payrolls (less talents). 3) In a whole, does total attendant go up or down if you have a few big name teams vs. many average teams? 4) They may or may not contribute to the higher TV's revenues. Does TV's viewership go up with a few big name teams or does it go up with many teams with the same caliber which provide more competition? Does it go up because the bigger market teams compete for the championship? ... If you look at it simplistically, the league-wide's talent pool stays the same -> BRI for the whole league should be the same no matter who has the talents, right? If u agree with that then teams should not compete to pay ever escalating salary to players. This is driven mostly by the teams with higher payroll. Hence, they should be made to pay the luxury tax.
I use "hard cap" to refer the tax threshhold. The point is getting over the tax threshhold IS a big deal.
Kim is correct. It is a multi-tiered soft cap. A hard cap is a cap that can not be exceeded under any circumstances. The NFL is a hard cap system. We can exceed the luxury tax, we just have to pay extra for it. That is a soft cap. Please read what others have posted before, even if we exceed the lux tax figure, we will not forfeit our entire luxury tax share (if the luxury tax is enacted). ps, ragingFIRE: I agree, I'm not sure where this 55 mill number kept coming from. I believe Maloney is still on our books however in some fashion, not sure for how much (I've heard buyout counting for 500K/year). But, one thing- 54.0+4.9 does not equal 59.9.
aside from others correcting you, there isn't even a tax unless it gets triggered league wide. The tax threshhold is not as big as a deal as you make it sound. There is a tax threshhold, for sure, but that does not mean that there will be any tax payments for any given season. Despite many teams being over the tax threshhold every year, no one has ever paid a cent of tax money. This is the first time (and likely last time) that the tax has actually triggered.
The 02-03 team salary is how much you paid your players on the last day of the regular season. No matter who we signed this summer, Posey's salary last season would be always counted. So we replaced Posey with Pike to save our ass from the luxury tax? come on! Nobody knows what the BRI will be next year.
iOrange. Only the salaries of 02-03 are counted (including Francis's rookie scale versus max contract). No new salaries are counted with regard to the tax that triggered for last year. The tax that triggered has nothing to do whatsoever with Pike's signing or resigning Posey. The tax would have to trigger again at the end of next year to count these summer moves.
Non of all that wrote made much sense. Please break it down better and site some more sources to backup to figures. You maybe unto some interesting here but if you can convey or communicate your input clearly, I am afraid you may have wasted your time.
