The NBA teams with the worst salary cap problems heading into the 2013 trade deadline could face the stiffest luxury tax penalties over the next couple of seasons.
Under the former collective bargaining agreement (CBA), teams are penalized dollar-for-dollar when exceeding the luxury tax line. This year, that line is drawn at $70.3 million.
This means that a team like the New York Knicks, who are approximately $10 million over the luxury tax limit this season, are scheduled to pay that same amount in luxury tax penalties.
Beginning in 2013-14, however, those penalties become steeper under the new CBA.
According to the details outlined by Larry Coon's NBA Salary Cap FAQ, teams who are anywhere between $0-$4,999,999 over will be taxed $1.50 for every dollar over the tax, and rates escalate from there.
Next season, then, the Knicks being $10 million over the luxury tax line would include a tax penalty of roughly $16.3 million—or the combined incremental max totals of $7.5 million and $8.75 million, as identified by CBAFAQ.com.
Additionally, there are penalties for repeat luxury tax offenders, beginning during the 2014-15 season. Those tax rates start at $2.50 for every dollar spent over the luxury tax.
These tax penalties are part of the reason why we saw the Memphis Grizzlies trade Rudy Gay and his contract to the Toronto Raptors last month. They could influence other teams to do the same as the Feb. 21 trade deadline approaches.
The harsh reality is that if teams do not get in line with these new luxury tax penalties, they could face a difficult, expensive future.
The following teams are listed in ascending order of guaranteed salary figures currently on the books for 2013-14.