11 NBA Teams Set to Pay Luxury Tax
Eleven of the league's 30 teams will be paying the luxury tax this summer. That number would have been higher had New Orleans, Houston and Washington not all slipped under the threshold this month. (Washington got under at the last moment, literally: the Wizards traded Dominic McGuire to Sacramento just after the Thursday deadline. The Kings also figured in the Rockets and Hornets getting under the threshold.)
Between them, the 11 tax-paying teams will cough up a combined $119 million, barring substantial league suspensions the rest of the way. (Teams can take 50 percent of a player's pro-rated salary off the luxury tax bill for games in which players are suspended by the league. As such, suspensions to J.R. Smith and Rashard Lewis have been figured into this. The Gilbert Arenas and Javaris Crittenton suspensions helped get Washington under the tax threshold.) The non-tax teams don't split that entire pot, however. Each team gets 1/30th of the kitty, so those 19 franchises under the threshold can expect to receive roughly $3.98 million each. The league keeps the remaining $43.8 million; this money can be for the league's mysterious revenue sharing system, or for other league purposes. (Adam Silver needs a new mini-fridge!)
So who are these tax-payers?
Lakers: $21.42 million. The Lakers were not bashful about spending large last summer, re-upping Lamar Odom and giving Ron Artest the full mid-level exception despite already sitting over the tax line. If any team's behavior makes the argument for a steeper luxury tax that might actually deter insane spending, it's the Lakers.
Mavericks: $17.79 million. The streak is alive! Dallas has been a tax-payer every season since the luxury tax was created. Mark Cuban is never shy about shelling out bucks to get wins. Ask Jason Kidd and Shawn Marion.
Celtics: $14.98 million. Back in 2007, when the Celtics traded for Ray Allen and Kevin Garnett, they knew they'd be joining the tax club for the foreseeable future. Even though Allen's contract expires this summer, don't expect Boston to escape the tax next year: the threshold will be decreasing a decent amount, and the Celtics will need to replace Allen and some expiring-contract bench players, at the very least.
Cavaliers: $14.8 million. No surprise here: Danny Ferry has to pay a premium to get the type of players LeBron James needs to be surrounded with heading into the summer of 2010.
Knicks: $14.65 million. New York took on salary (and thus tax) this year to get further under the cap next year. Like Dallas, New York has paid the tax every year it's been collected. It could be different next season should the Knicks' big free agency plans fall through. (Or, the plans could fall through and the team could be forced to pay Tracy McGrady another $23 million.)
Magic: $12.07 million and Spurs: $8.853 million. Orlando and San Antonio wanted to make a run at a title this season, and had to pick up marquee players off the trading block to do so. Neither acquisition (Vince Carter and Richard Jefferson, respectively) has worked out aces, but regret doesn't seem to be in play: the Magic are still excellent, and S.A. had little choice but to swing for the fences with Manu Ginobili wearing down and Tim Duncan getting closer to "old."
Nuggets: $5.19 million. Denver reportedly had to pass on a few big man options in the run-up to the deadline because of the tax bill. But at least the team didn't have to sell anyone off at a discount to get under.
Suns: $5.01 million. I think we can put the argument Suns owner Robert Sarver is cheap to bed. This isn't a title contender, and Sarver is shelling out about $80 million in payroll (including the tax).
Heat: $2.83 million. Upset of the year: Miami didn't find a taker for Dorell Wright! Wright, who averages 19 minutes a game in his sixth season with the Heat, makes $2.88 million this season, and has an expiring contract. Figuring the tax paid on Wright's salary ($2.83 million), his salary for the rest of the season ($995,000, assuming a six-game playoff run for Miami) and the missed opportunity of a pay-out for the Heat ($3.98 million), keeping Wright past the deadline essentially cost Miami $7.8 million. If the Heat could have gotten, say, Oklahoma City to take Wright off their hands for $3 million -- the maximum amount of cash allowed to be transferred in any trade -- the Heat would have still come out ahead, saving $1 million in tax and collecting the $3.98 million in non-tax pay-out. The Thunder would have netted $2 million after accounting for Wright's salary the rest of the season, and the Heat would have netted $5 million. Assuming the Thunder would have been game for something like that (I don't know many people who turn down a free $2 million), Miami decided 30 games of Wright was worth a whole lot more than the $2.88 million he'll actually make this season.
Jazz: $1.99 million. Utah shed Ronnie Brewer for tax considerations and a draft pick at the deadline. Had they kept Brewer and shed Kyle Korver, the Jazz would have erased its tax bill and earned the $3.98 million league pay-out. But the Memphis pick could be worth something, and Korver (making more than $5 million this season) is tougher to move than Brewer or Wright. We should all be amazed Kevin O'Connor shrunk the tax bill by this much after the Carlos Boozer flip-flop and Portland's mean-spirited toxic offer sheet to Paul Millsap. (I'd be more congratulatory if O'Connor didn't make a big fuss a month ago about how he wasn't going to make deals just to cut costs ... only to lose a starter in Brewer for that very reason.)