NBA Teams on the Verge of Salary Cap Hell
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With the current NBA CBA (Collective Bargaining Agreement) in place, the luxury tax is increasingly punitive for teams that are repeatedly and/or flagrantly over the tax line. Five squads might already have problems with it as early as next season.
ESPN NBA writer Larry Coon summarized the new luxury tax rules and the consequences for breaking them.
Teams pay $1 for every $1 their salary is above the luxury-tax threshold in 2011-12 and 2012-13. Starting in 2012-13, teams pay an incremental tax that increases with every $5 million above the tax threshold ($1.50, $1.75, $2.50, $3.25, etc.). Teams that are repeat offenders (paying tax at least four out of the past five seasons) have a tax that is higher still -- $1 more at each increment ($2.50, $2.75, $3.50, $4.25, etc.)[…]
Taxpaying teams have a smaller midlevel exception, can acquire less salary in trade, and cannot use the biannual exception. Starting in 2013-14, teams more than $4 million above the tax level cannot receive a player in a sign-and-trade transaction.
We don’t yet know what the cap and tax numbers will be for the 2013-14 season—the tax line is currently $70.307 million. Still, a handful of teams run the risk of taking real estate in luxury-tax purgatory if things don’t change.
All salary numbers courtesy of Hoopsworld.com.
The Brooklyn Nets have already buried themselves in Luxury Tax Land by agreeing to mega-deals with Deron Williams and Brook Lopez in addition to trading for the league’s most overpaid player in Joe Johnson.
Their payroll exceeds $83 million.
Johnson’s salary is set to escalate from $19.8 million to $21.5 million in 2013-14. Williams’ will go from $17.2 million to $18.5 million. Lopez’s will jump from $13.7 million to $14.7 million.
The Nets’ acquisitions and retentions have set the stage for a grand opening in New York, but they’re likely to pay dearly for it in years to come. Role players Kris Humphries and Gerald Wallace are also scheduled to receive eight-figure salaries for the next one and three years, respectively, despite being outplayed by Reggie Evans and his sub-$2 million annual agreement.
Evans averages 11 rebounds a night in 24.5 minutes per game, more than Wallace (4.7 boards in 30.3 minutes) and Humphries (5.6 in 18.1) combined.
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Carlos Boozer and Luol Deng are on the books for upwards of $13 million per year, apiece. Joakim Noah will soak up $11.1 million of next year’s cap space.
And the man himself, Rose, will absorb $17.6 million of that room.
Chicago is already dealing with tax issues, and not much is set to change between now and 2013-14. Richard Hamilton’s $5 million salary isn’t guaranteed for that season, but power forward Taj Gibson’s cap number will jump from $2.2 million to $7.5.
Nate Robinson has been playing well in Rose’s absence. He’s only under contract for one season, though—at a modest $854,389. It’ll be difficult to retain him at that rate next year after his recent production.
Los Angeles Lakers
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Dallas Mavericks owner Mark Cuban finds the Los Angeles Lakers’ tax troubles to be entertaining, at worst. It’s little consolation for the owner of a team that is all but out of the playoffs, but Cuban’s squad is far, far away from paying luxury tax in 2013-14.
The Lakers are extremely likely to be deep into it.
Only Steve Nash is signed through 2014-15, but Los Angeles has publicly committed to keeping Dwight Howard—who is in a contract year now—on board. That’s why they didn’t trade him, instead pairing him with Pau Gasol under Mike D’Antoni in an offensive system that had everyone puzzled about their usage.
Unless they move one of their bigs this offseason, the Lakers would be set to pay a massive chunk of luxury tax. Pau’s due $19.3 million. Dwight would probably expect at least that much.
ESPNLosAngeles.com’s Ramona Shelburne went behind the ESPN Insider wall to report the potential consequences:
As ESPN.com salary-cap expert Larry Coon outlined earlier this week, with the changes to the NBA's new collective bargaining agreement really starting to kick in next season, if the Lakers again field a roster about $30 million over the luxury-tax line -- as they are this season-- they'd be on the hook for a whopping $85 million in tax, due to the new progressive luxury-tax system.
In other words, L.A. would be shelling out about $28 million more than the Charlotte Bobcats’ entire payroll—in taxes.
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There’s also Mike Miller and Udonis Haslem, who are set to take up $10.5 million combined. The five players will total $67.3 million.
And that’s not their starting five.
NBA.com blogger Jeff Caplan even assigned the team an expiration date of June 30, 2014. Unless Heat owner Mickey Arison is interested in footing a major luxury tax bill, somebody’s taking his talents away from South Beach.
New York Knicks
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The New York Knicks already amnestied Chauncey Billups when they traded for Tyson Chandler, meaning they can’t use the clause on oft-injured power forward Amar’e Stoudemire.
As a result, $58.2 million of next year’s cap will be dedicated to their frontcourt of Carmelo Anthony, Amar’e and Chandler. New York already has a guaranteed cap hit of $74.8 million—$4.7 million less than 2012-13’s payroll—spread across just eight players next season.
That’s not even enough spots to fill a roster, but it may very well be enough cash to place the Knicks in line to pay a luxury tax.
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