NBA Teams with Worst Salary Cap Problems Heading into 2013 NBA Trade Deadline
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.
No. 6: Boston Celtics
According to Hoopsworld.com, the Boston Celtics are one of six NBA teams currently over the luxury tax limit for this season by at least $1 million.
If the Celtics found themselves over the luxury tax by the same $1.2 million next season, they'd be scheduled to pay roughly $1.8 million in taxes ($1.50 x $1.2 million).
At the moment, however—even with Kevin Garnett under contract next season for a guaranteed total of $12.4 million—the Celtics are only flirting with next season's tax line at $60.4 million in contracts currently on the books.
If Garnett is not eventually moved before next season, though, it might be difficult to bring additional help to Boston without paying for it with tax penalties.
No. 5: Los Angeles Lakers
If the Los Angeles Lakers were to exceed the luxury tax limit by the same total they do this season in 2015-16, they would pay through the nose in penalties.
A breakdown of how the repeat offender penalties affect teams by then is as followed from CBAFAQ:
A team with a team salary $4 million over the tax level in 2015-16 pays a tax of $10 million ($4 million times the repeater rate of $2.50 for $0 to $4,999,999) if they also were taxpayers in three of the previous four seasons.
The Lakers, this season, are almost $30 million over the luxury limit. They would exceed $80 million in luxury tax fines as a repeat offender, for example, under the new CBA during the 2015-16 season at that same number.
Fortunately, the Lakers are only scheduled for Steve Nash's $9.7 million by the 2014-15 season, and they have plenty of time to avoid those fines.
If they do want to bring Dwight Howard back, though, Pau Gasol's $19.3 million salary for next season may very well need to be moved in order to avoid penalties next year.
With Gasol on the books, while not accounting for Howard, the Lakers currently owe $68.1 in guaranteed deals for the 2013-14 campaign.
No. 4: Chicago Bulls
The Chicago Bulls are scheduled to pay Carlos Boozer $15.3 million next season and $16.8 million the year after that. With Boozer's deal on the books, if the luxury tax limit stayed around the same number it is now, there is a good chance the Bulls would be into the penalty during both of those seasons.
In 2013-14, they'd be over already without making any roster moves between now and then.
In 2014-15, with the addition of at least a couple draft picks, there's a good chance the Bulls would be over again.
By that time, they'd also be paying the repeat offender penalties previously outlined with the Lakers' example, unless they were able to improve their salary cap situation in the meantime.
While it's not the only way, one way that situation could improve is by moving Boozer before the deadline.
No. 3: New York Knicks
The New York Knicks will have an opportunity to improve their salary cap situation by the 2014-15 season. At the moment, they only have $25 million on the books for that year.
Next season, however, there is a good chance the Knicks will be over the luxury tax limit again.
Unless a team is willing to take Amar'e Stoudemire and the $21.7 million he's owed for the 2013-14 campaign, odds are the Knicks will have no other choice but to pay the increased tax penalty next season.
After that, though, decisions will have to be made on how to structure their team around Carmelo Anthony moving forward.
The salary cap restrictions will not make it easy to afford two other players surrounding Anthony who make the dollars that Stoudemire and Tyson Chandler currently do.
If New York wants to pay those salaries by 2015, it will be paying heavy tax dollars to do so.
No. 2: Miami Heat
Assuming LeBron James, Chris Bosh and Dwyane Wade opt out of their current deals—scheduled to pay them just over $60 million in combined salary for the 2014-15 season—the Miami Heat currently have no "guaranteed dollars" on their books two years from now.
However, if the Big Three were to opt in, or re-sign at figures similar to their current salaries, they'd be close to the projected luxury tax line themselves.
After being over the tax by $13 million this season, the Heat will likely again cross that line at $75.5 million.
While they'd simply bite the increased tax bullet next year, the summer of 2014 will be a monumental one for the Heat.
Under the new CBA, signing three superstars who earn max contracts without paying the aforementioned huge penalties is simply not possible.
One of the current Big Three may be playing elsewhere by then as a result.
No. 1: Brooklyn Nets
Looking to next season, the Brooklyn Nets have the highest guaranteed salary number of any team in the NBA.
They also have the highest guaranteed total for the 2014-15 campaign at the moment as well.
Joe Johnson and the $44.5 million he's scheduled to earn over the next two seasons are the biggest reason why.
While currently paying $1 for each of the $12.8 million dollars they are over the tax this season, that number becomes crippling over the next few years.
Here is what $12 million over the tax next season would look like in fines according to Larry Coon:
A team with a team salary $12 million over the tax level in 2013-14 pays a tax of $21.25 million (the incremental maximum of $7.5 million for $0 to $4,999,999, plus the incremental maximum of $8.75 million for $5 million to $9,999,999, plus $2 million times the incremental rate of $2.50 for $10 million to $14,999,999).
That's $21.25 million in addition to the $84.4 that's already on the books—roughly $105 million for a team featuring Joe Johnson, Deron Williams and Brook Lopez next season.