When u r in business, u have to have projection of income/ spending and u assume the worst, not the rosiest scenario. (You will go broke that way.) I think the player's union'd made estimate for next year BRI and put the Lux tax threshold at $57 mil. As more contracts are signed, we will also get the spending end figured out soon. My guess is that we will be close. If I were Les, do I go over the tax threshold and pray it will not get triggered next year? My early calculation gives our salary at $54 mil. Add $1 mil for minimum salary for 2 more players, plus the salary counted against us for Maloney ... maybe another $.5. That would put us around $55.5 mil, under lux tax threshhold with a little breathing room to upgrade the remaining slots. Posey will push the figure to $60.4 mil - 1 min contract, we end with $59.9. $2.9 mil over the threshold will mean ~$8 mil out of Les's pocket IF the tax gets triggered. A big IF ... but is Posey worth that risk?
I can't agree more. Some people here just keep saying that lux tax may not be enforced so we shouldn't worry about it. This is really irresponsible. They are suggesting that Les should take the risking of losing extra 8 mil. It is not your money so you don't care. But it is our team and Les is the guy paying for the team. If Les lose money, I don't see how that benefit us in the long run.
not really. the owners can know by a pretty good guess what revenue and salaries will be. Cuban is on record saying one year that he knew the tax wasn't going to trigger. There are many indications that the tax will never trigger again. The NBA had a one time shortfall with their TV contract that they will not see again. The NBA is also expanding its contracts into other nations every year. Yao Ming and the Euros are making them a lot of *new* money. Also, there have been talks that the owners just want to get rid of the tax, anyhow. This thing might not trigger again.
I think the player's union has already used all your indications to estimate the lux tax threshold of $57 mil. Why would they put out a number without considering all new income sources?
Les's not matching Posey's contract is a strong indicator that he DOES believe the tax will be triggered next year. If it is not for the lux tax, and the loss of lux tax money distributed from NBA, it doesn't make much sense to be stingy on a couple of $mil, after you opened a new area, after you hired a new coach while the old coach is still getting paychecks. The fact Les and CD decided not to match implies they believe the difference will not only be a couple of $mil, but $8 mil due to the lux tax. You are just full of wishful thinking.
canoner2002, You seriously need to research how the luxery tax works before entering into a debate. Perticularly against HP.
just what I was thinking... canoner and fegwu need to read the thread carefully before saying anything..these people posting in here are the ones that know how this works. one other thing... correct me if Im wrong.. The decision HAS NOT been made yet on whether or not to match the Grizz offer sheet.
no it isn't...not if he goes out and uses his full MLE on two vets. That would be the same as matching. All it means is he doesn't want to spend both the MLE *and* match Posey.
I might have under-estimated Maloney's salary. Patricia's source counts $2.7 mil of his salary against our cap in 02-03 and only $170k against Atlanta's cap. His contract should run thru 05 too, I believe.
Fine, research is what I do everyday. Regarding whether lux tax will be enforced next year, i don't want to argue any more. Different people see different indicators, heavily depends on which way you want to believe. Our interpretation of indicators are no less nor no more scientific or objective than Bush's interpretation on those two trucks and aluminum tubes found in Iraq. We will just have to wait and see. Correct me if I am wrong. If lux tax is enforced, when you go over threshhold, you 1) pay lux tax on 1-1 base for the portion over the threshhold 2) collect less or no tax money distributed by NBA
because not all TV contracts have been sold to Asia, yet, for one. I am pretty sure there is not one flat fee broadcast rights contract in Asian (like here)...that the revenue increases as coverage increases. But all I meant to say was that a tax threshhold and the tax triggering are not one and the same. I said all indications are that a tax won't trigger again. And that increase to $57m is a pretty good indication that it won't trigger, imo. It is very important to note that the tax triggered its first time because of a anomaly in the TV contracts. The new contract called for a one time significant shortfall...and that's why the Cap went down for one year,,,,because estimated BRI went down. I just don't see salaries/benefits increases like revenue is.
My understanding of the Maloney situation is that his salary counts against the cap as if he hadn't been waived. However, he has chosen to take the salary over an extended period of time (as agreed with the Rockets). This fact does not impact on salary cap calculations though.
I am not clear what you are saying but the Rockets owe Maloney money and it hits the salary cap. The only question is how much. My understanding is that Maloney was waived (as opposed to a buyout). In which case, he receives the contract money less what he recieved from another team as he came off of waivers that year. The installments and the associated $ hit the cap each year. Had Maloney accepted a lump sum buyout, the amount of the buyout is amortized over the remaining life of that bought out contract. IOW, the buyout amount hits the cap - regardless of whether Maloney took a lump sum or installments. If Maloney's contract runs until 2005, he hits the cap until 2005...be it the balance owed after being waived, a one-time lump amount (amortized) or an agreed to lump sum spead out over a number of years (for tax purposes). If he had a contract and the league did not give the Rox medical cap relief...he's on the books as if he were on the team.
i'm curious, did we sign maloney to a seven year deal or a seven hundred year deal? will that MFer just come off the cap already. i would've thought we signed him for 97-98 (for the year after making the WCF), which would be gone after 03-04. but it sounds like we signed him in 98-99, which would be pippen's first year? i don't even remember him on the same team as pippen? if it runs to 04-05 and he didn't play with pippen, did we sign his sorry ass and waive him immediately? back to the whole buyout thing. so say a contract had 6M left for 3 years. if you waive someone, you take the hit as usual. but if you buy them out for say 3M lump sum, i assume they then just count as 1M per season against the cap. or if you agree to installments of say 500K for 8 yr, is it then a 1.333M cap (8*.5M/3)hit through the 3 years or does the installment thing affect it?
This is my understanding. If a player has 3 years remaining on their contract and they are bought out for $3m in a lump sum, then the cap hit is $1m/year ($3m/the # years left on the contract). We agree on this. Perhaps I confused the issue, but the installment portion of your example does not make sense. Why would a player agree to take $4m over 8 years if a team already owes him $6m over 3 years? You can intuitively see which has more value. Regarding installments, I meant to imply this. From a tax standpoint, there may be certain circumstances where it is beneficial tax wise to have the lump sum amount spread out over a number of years. This will almost always be large amounts for long time periods. Let's use the Maloney example. Assuming the original contract was 7 years for $28m with a start in 98-99 and an end 04-05. Prior to the 99-00 season (six years and ~ $4m/yr remaining), Rockets management and Maloney agree to part company for the lump sum amount of $15m. Maloney may be better off taxwise to have the $15m spread over 3 years than to to lump sum it that year. So you see, Maloney could have just taken his ~$4m for 6 years but he is taking $5m/year for three. My assumption is that the tax hit for $5m/year is less than $15m all at once. (Yes. I know the PV of the 3 years is less than $15m but if he is in a 50% tax bracket and has no shileds, he's better off with the spread than the lump IMO). In my Maloney/installment example the Rox cap hit is $15m/6years = $2.5m/year. It's the lump sum which is amortized not the installments.
Now that I'm reading Maloney's contract numbers, it makes me want to give Moochie a big hug, lol. He's pulling down 5M/season and was supposed to get 4M/season over 6 years? Wow. Reading this thread gives me a better understanding of why the Clippers do what they do. The guy is making money, and that is what business men want. So, after reading everything, I've come to the assumption that we can re-sign Posey, as well as 2 more players, and be barely over the luxury tax threshold and most probably will not paid the tax anyway because it won't be triggered this time around? So, if we have access to this information, and the Rockets obviously know all this stuff, what's really stoping them from matching the Posey offer right now? Aren't they losing out on FA's that are being signed each day?
Businessmen enter business to make money. However, between naming rights and expansion fees I expect the Rox' owner's ROI is quite fine for a businessman. Let some of the windfall profits go towards making the play offs (and, Heaven forbid, a play off run! There is great profit from every home play off game, BTW).
But why would the Clippers take a chance? What if they pony up the dough and then they DON'T make the playoffs? More money. That's all they want. It's not a bad thing, because in the NBA, if you TRULY manage your money and COMMIT to making only the best investments in players, arenas, etc you will be succesful. Much like the Pistons. I don't think there are ANY bad contracts on that squad. If we had passed on Glen Rice (let Shandon walk), Mo Taylor, and kelvin Cato's contract, we wouldn't have made the playoffs. However, if we had held out and were committed to only signing players to Mobley and Posey-like contracts, then our team would be in a better position, and JUST LIKE NOW, would'nt have made the playoffs till we were ready.
Sane - IMO (and I have seen it expressed by many others in this GARM), the Rox management doesn't think Posey is worth tying up $24m for 4 more years. As much as I like JP, I must somewhat agree...he's just not worth that much money. Close...but no cigar...
