# A Complete Free Agent Analysis for Teams and Players: This Year is a Buyer's Market



## Dan Rosenbaum (Jun 3, 2002)

At the bottom I list the assumptions made in this analysis of the salary/luxury cap situation and free agent situation.

Some of the potential free agents or team options are in parentheses. RealGM estimates (as of 7/12/02) are in brackets. (I think the RealGM figures only include rookies who have signed, while mine include all of the first rounders. Something seems to be wrong with the more recent versions.)

*DEFINITELY OVER THE LUXURY CAP*

*Portland* - $96.6M [$94.4M] for 11 players (Wells, Brunson, M Butler, Dudley, Boumtje-Boumtje)
*New York* - $92.5M [$90.4M] for 11 players (L Robinson, Spencer, Postell)
*Dallas* - $58.1M [$60.2M] for 8 players (LaFrentz, Buckner, Newman, Livingston, Zhizhi, Najera, Manning)
*LA Lakers* - $60.0M [$55.5M] for 10 players (Richmond, Shaw, McCoy, Medvedenko)
*Philadelphia* - $58.1M [$58.1M] for 8 players (Harpring, C Blount, Cummings, D McKey, R Bell, D Brown, A Jones, J Smith)
*New Jersey* - $58.1M [$55.0M] for 12 players (A Johnson, Scalabrine)
*Milwaukee* - $55.0M [$53.9M] for 9 players (Foster, Ham, Alston, Pope, Redd, Anthony)
*Memphis* - $56.3M [$56.4M] for 12 players (Long, Buford, Fotsis, Solomon)
*Sacramento* - $55.4M [$55.6M] for 12 players (Bibby, C Brown)

*OVER THE LUXURY CAP WITHOUT CREATIVE SALARY DUMPING*

*Miami* - $51.6M [$51.6M] for 6 players (Gatling, K Gill, J Jackson, R Strickland, Marks, Stepania, M Allen, House, E Brown, M James)
*Minnesota* - $50.2M [$50.9M] for 6 players (Nesterovic, Lopez, Avery, Mitchell, Trent, Evans, Woods, Pack)
*Atlanta* - $52.9M [$53.3M]for 11 players (Bowdler, E Davis, M Strickland, L Smith, Newble, Mottola)
*Phoenix* - $52.5M [$54.3M] for 10 players (J Wallace, Palacio, Majerle, Voskuhl, A Ford, Crispin)
*Indiana* - $52.8M [$50.1M] for 12 players (Ollie, Sundov, Brewer, C Rogers)
*Toronto* - $52.1M [$53.2M] for 12 players (K Clark, Childs, D Curry, Jackson, Dial)
*Boston* - $51.5M [$52.3M] for 11 players (McCarty, R Rogers, E Strickland, McCleod, M Blount)

*WOULD PREFER TO SAVE FREE AGENT MONEY FOR LATER YEARS*

*Houston* - $50.0M [$44.3M] for 12 players (Willis, W Williams, Langhi, T Brown, Torres)
*Orlando* - $48.8M [$46.1M] for 14 players (Garrity, Hudson, M Williams, J Jackson)
*Denver* - $47.0M [$41.6M] for 10 players (V Lenard, Cheaney, Z Hamilton, Satterfield, C Anderson, Batere)
*Golden State* - $46.0M [$46.3M] for 10 players (Blaylock, Garrett, Henderson, Oliver)
*Seattle* - $46.4M [$40.8M] for 11 players (R Lewis, A Long, Sesay)
*Cleveland* - $44.3M [$42.0M] for 11 players (Doleac, Langdon, Skinner, R Davis, Trepagnier)

*MOST OF THEIR FREE AGENT ACTIVITY WILL PROBABLY BE FOR THEIR OWN FREE AGENTS*

*Utah* - $40.9M [$40.2M] for 7 players (D Marshall, Russell, Starks, Q Lewis, Crotty, Padgett, LaRue, J Collins)
*New Orleans* - $43.6M [$43.6M] for 13 players (Traylor, Nailon)
*Detroit* - $43.4M [$43.2M] for 11 players (D Jones, Rebracca, Barros, Alexander, Cardinal, Varda)
*San Antonio* - $39.5M [$39.5M] for 9 players (Porter, M. Rose, B Bowen, Hart) 
*Washington* - $42.3M [$38.7M] for 13 players (Nesby, Simmons, P Jones)

*TEAMS UNDER THE SALARY CAP*

*Chicago* - $37.1M [$37.5M] for 10 players (Oakley, Guyton, Best, N Richardson)
*LA Clippers* - $27.6M [$26.6M] for 11 players (Olowokandi, Piatkowski, McInnis, Ekezie, Overton, Fowlkes)

Looking at this list, only the Clippers are likely to be able to offer anyone more than the mid-level exception (about $4.5M). There are six players who might get more than the mid-level exception.

*LaFrentz* - Dallas will re-sign for more than the $5-$6M starting salary that he could get on the open market.
*Wells* - Portland will probably re-sign for more than the $5M starting salary that he could get on the open market.
*R Lewis* - Seattle will probably re-sign, but I wouldn't be surprised if he was offered only a $5-$6M starting salary. It sounds like he is considering a mid-level exception from Houston. It might make sense for the Bulls to make a run at him, but probably not.
*Olowokandi* - I doubt if he gets an offer of more than a $5M starting salary from anyone other than the Clips. I also don't see Kandi going anywhere in a sign-and-trade. Kandi may take his qualifying offer and try his luck next year.
*M Bibby* - I have changed my mind and think that there is no way the Kings can get under the luxury cap. Since they are already over the cap, they play a little hardball with Bibby offering him a $8-$10M starting salary and he stays with the Kings.
*K Clark* - Toronto will have to make trades to keep Keon and stay under the luxury cap. I do not see Keon getting more than a $5M-$6M starting salary, and it is very possible that Toronto lets him walk or signs-and-trades him. [Update: It looks like Toronto will let Clark walk.]

I think that only Philly (maybe 1), New Jersey (maybe 1), Houston (maybe 1), Utah (1-3), Chicago (1-3), Washington (1-2), Denver (maybe 1), Portland (1), Dallas (1-3), New York (1-2), Seattle (1), Detroit (1), Cleveland (1), Golden State (maybe 1), San Antonio (2-3), New Orleans (1) may be will be willing to pay $2-$5M to sign a player or two (even their own). Not all of these teams will do so, so I think that there will only be 15-25 players signed at salaries in this range.

Here are free agents (or team options) that might be worth that much:

*C*: Nesterovic, Rebraca, J Collins, Zhizhi, Stepania, Garrett, Willis
*PF*: Rose, R Rogers, Garrity, P Jones, Doleac, Traylor, Gatling, Oakley, Trent, McCarty, Skinner, Manning
*SF*: Marshall, Harpring, M Williams, Najera, Mitchell, Nailon, Newman, B Russell, J Jackson, Mottola, Cheaney, Fowlkes, Nesby 
*SG*: R Davis, Redd, Bowen, Buckner, E Strickland, Piatkowski, K Gill 
*PG*: McInnis, Best, G Anthony, D Jones, Porter, E Davis, Childs, R Strickland, A Johnson

There are about 50 players in this list, so fewer than half of these guys are going to get $2M. There are going to be a lot of bargains out there this year, including a lot of players not on this list that the Bulls might be able to pick up for $1M or less.

Even though this free agent class is weak, teams have so little money to spend, this year really is a buyer's market with the potential for great bargains for good players.

*ASSUMPTIONS* 
*(1)* I have assumed a salary cap of $40.271M and a luxury cap of $52M. (I know the press reports claim a luxury cap of $50M, but $52M is the projected luxury cap based upon a $40.271M salary cap.) 
*(2)* I have assumed that teams under the cap renounce all of their free agents and trade exceptions, unless their trade exeptions would put them over the cap.
*(3)* I have included salaries for 1st rounders at 120% of rookie scale. See Larry ****'s site for a nice description of CBA issues. 
*(4)* For the Bulls I have assumed that the Bulls owe Anthony $1.9M. This is a change from a previous version, thanks to Dickie and Tony Farr. This is inconsistent with what ESPN reports and RealGM used to report. For other teams, I have relied on a post byTony Farr and salaries form Patricia Bender. I assume that the Nets owe $6.6M to McIllvaine, the Knicks owe $18.6M to Johnson and Longley, the Sixers owe $8.8M to Geiger, the Mavs owe $1.5M to Bogues, the Nuggets owe $4.2M to Alexander and Hardaway, the Rockets owe $3.3M to Maloney, the Clippers owe $4.2M to Strong, the Grizzlies owe $13.0M to Reeves, and the Wizards owe $7.6M to Williams and Vaught. I may still be missing some salaries from other teams, since I am pretty reliant on the salaries from Hoopshype.
*(5)* I have assumed that teams do _not_ exercise team options, except in the most obvious of cases. I do assume that players will exercise player options, except in the most obvious of cases (R Lewis, B Bowen, etc.).

I might add some more to this post later, or add some additional analysis in a later post in this thread. Please let me know if you see some mistakes in this thread, and I will try to make changes if I agree with what you call a mistake. I certainly hope this starts an interesting set of conversations. Have Fun!


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## Songcycle (May 29, 2002)

This is really an excellent, thorough well researched compilation of materials on free agency. I was glancing at a couple of sites over the weekend and found discrepencies between sites on salaries. As an example, one site had the Clippers carrying Derek Strongs salary, the one you used didn't. I do think there is a minimum a team must spend on players and the Clippes will have to spend at least another $10 - $12 mil to reach that minimum.
Excellent work NCBulls Fan. I will be studying your compilation, thanks.


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## Dan Rosenbaum (Jun 3, 2002)

*The Luxury Tax is Very Likely for 2002-2003*

Adding up these salaries implies that on average teams are already at $51.5M for 2002-2003. Adding in the big six (Bibby, Clark, Kandi, Lewis, LaFrentz, and Wells) at an average of $7M kicks this up to $53.0M. Teams have signed already an average of 10.6 players counting the big six.

Why is this important?

Because for the luxury tax to kick in, the average team salary needs to be greater than the luxury cap. So if the salary cap stays at $42.5M for 2002-2003, the likely luxury cap will be $54M, which would mean that if the average team spends just $1M on free agents (including their own), team options (except for a couple that I have already counted), and second round picks, then the luxury tax will kick in next year.

Thus, unless the luxury cap is much higher than $54M (say $57M or $58M), then the luxury tax probably will be in effect next year.

Moreover, I think there is likely to be about 12 teams over the luxury cap. That means that the 17 teams not over the luxury cap will get back approximately $9M in escrow payments and probably around $8M in luxury tax penalties. In other words, the lump sum penalty for being over the luxury cap by just one dollar is likely to be around $17M. _That is not counting the one-for-one luxury tax penalty._

Faced with such a huge penalty, maybe a few of these teams will do desperate things to get under the cap. In that case, having a trade exception or being slightly under the cap will be incredibly valuable. I really hope that Krause sees what's coming and is positioning the Bulls to take full advantage of the desperation that some teams will be facing.

For example, suppose that the Heat struggle again next year and are sitting a million dollars or so above the projected luxury cap around the trade deadline. Suppose we are a couple million below the salary cap. A trade of Caron Butler for Trent Hassell might be attractive given that it might save the Heat more than $17M.

Or maybe Garnett gets hurt and the Wolves are struggling and a Hassell for Wally trade that saves the Wolves more than $17M does not look so crazy.

Or maybe the Memphis owners tell Jerry West that they won't pay the luxury tax on a team that is not going to win 30 games. We could take advantage of the Grizzlies' fire sale.


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## Shaqs big toe (May 21, 2002)

That was just a fantastic post, very informative. Thankyou


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## Johnjo (Jun 4, 2002)

last year when i thought that paul pierce's class only had a 3 year contradct liek the othes i wanted the bulls to sign bibby so badly. i knew he was just not getting any reputation in vancouver, i even posted a ton of sign and trades for him on the old bskball.com. well anways, what if the bulls made a run for him now?

could they offer him lets say 10 mil a year, something the kings might not be able to match, and do a sign and trade with the number two and Erob lose some salary. (i know it sounds really stupid to pay that much and trade the #2 but that pick will have a nice salary and we have to dump it to get him). we also lose Erob and gain some money to sign Keon Clarke. think of this lineup

pg-bibby, aj
sg-crawford, hassell
sf-rose,clark
pf-chandler, clark
c-curry, clark

that seems pretty good to me. of course i would rather the bulls get butler but nobody seems to agree with me on that.


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## Dan Rosenbaum (Jun 3, 2002)

With the latest news that TV revenues in 2002-2003 will be lower than in 2001-2002, I am revising my projections for the salary cap to $42.5M and luxury cap to $54M. I suspect these may be too high. The article below is a great article. It also suggests that I might be right that escrow refunds going back only to teams below the luxury cap, thereby creating a huge penalty for being just a dollar over the luxury cap.

http://www.sportsline.com/b/page/pressbox/0,1328,5450662,00.html

I also now agree with Dickie and others and have included $1.9M for Anthony in 2002-2003.

Thus, I have the Bulls with $6M to spend this summer, so it is very possible that they may be in the same boat as all of the rest of the teams, only having the mid-level and million dollar exceptions to work with.


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## faust (Jun 7, 2002)

Great Job NCBullsFan.

http://sportsillustrated.cnn.com/inside_game/marty_burns/news/2002/03/15/burns_insider/

Anthony, by the way, had to give back $1 million of his $3 million salary next season to the Bulls in order to get them to waive him.

It lok like your estimate of $1.9 mil for Anthony is good.


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## Dan Rosenbaum (Jun 3, 2002)

I have updated a couple of my posts in this thread and thought some of you might be interested. I have included some payments to players who are retired or have been released.

I am amazed that talk of the impending luxury tax is not dominating the summer. Maybe it will after the new figures come out next week.


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## GB (Jun 11, 2002)

*gettinbranded*

Good info.

But the Maloof brothers are going to eat the luxury tax and re-sign Bibby.

http://espn.go.com/nba/columns/howard-cooper_scott/1402394.html


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## Songcycle (May 29, 2002)

Thanks for the update NCBullsfan and thanks for the article gettinbranded.


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## Showtyme (Jun 24, 2002)

Good post, NC. The big free agent summer has not yet come, and teams will probably keep their purses as closed as possible... at the same time, a lot of your post seems to indicate that some good players might come at fairly good prices this summer, for the right team. Mmmm...


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## Dan Rosenbaum (Jun 3, 2002)

*Why are we hearing nothing about the potentially huge penalty for going over the luxury tax threshhold?*

I apologize for this length of this post, but this issue is perhaps the single most important issue in the NBA this season, and nobody is really talking about it.

The luxury tax is very likely to be a reality in 2002-2003. Looking at the post that I started this thread with, if the luxury tax threshhold is set at $54M, my best guess is that there could be between 9 and 16 teams over the luxury cap. 

Suppose 12 teams end up being over the luxury threshhold, that the average team salary is $56M (a conservative estimate), making escrow payments (10 percent of total salaries) equal to $160M. Also, assume that teams over the threshhold pay $130M in dollar-for-dollar luxury tax penalties (the Knicks and Blazers alone are likely to pay $90M). 

*Together, $290M would flow into the Stern's office due to escrow payments and dollar-for-dollar luxury tax penalties. Stern is not just going to flush this money down the toilet. Otherwise, I am going to apply for a plumbing license in NYC.*

If Stern gives this money back to just the teams under the luxury cap (as it appears he will do with escrow payments for 2001-2002), he would be sending a $17M check to each of the 17 teams under the luxury tax threshhold and nothing to the 12 teams over the threshhold. *In essence, it would cost $17M to be just one dollar over the luxury tax threshhold, and then the dollar-for-dollar penalties would kick in.* 

If just 9 teams are over the threshhold (probably the bare minimum), the lump sum penalty probably would be around $13M. If 16 teams are over the threshhold, the lump sum penalty could be as high as $23M. Even if Stern kept $100M for other purposes, the lump sum penalties could range from $9M to $15M. 

*This is a boatload of money, and I would be amazed if this did not alter the behavior of a lot of teams.*

Why is this not the number one issue dominating the NBA news this summer? Why is Memphis willing to pay this $17M penalty on a team that is unlikely to win more than 30 games? Why is Miami considering adding a marginal player like Travis Best or Duvean George when it likely will cost them more than $20M? Why is Toronto considering signing Keon Clark, when it is likely to cost them more than $25M _both this year and next_? 

Do you get the sense that because Stern has not been explicit about what will happen with the escrow money or the dollar-for-dollar luxury tax penalty money that teams are not realizing that this lump sum penalty is a good possibility? Are the folks that run these teams not smart enough to understand what might happen and demand that Stern divulge his escrow and luxury tax policy so that they can plan accordingly? Is this just too damn complicated, and it makes people's heads hurt, including those of owners who might lose $17M because they don't understand what might be happening to them? 

*I just don't get it. $17M is what owners get from an extra 10,000 fans for every home game at $42 a pop. If these owners are indifferent to losing the equivalent of the revenue from half of their fans for the entire season, then I guess these owners are a lot richer than I thought they were.*

And I know that a lot of this speculation, but speculation that has a very high probability of occuring. And we speculate about things all of the time. We speculate about whether ERob will be healthy next year or whether Fizer or Crawford will turn out to be stars. If I had a $1 for every time we have speculated about trading for Wally, I might just be able to pay one of these $17M penalties. This issue dwarfs all of these issues in terms of how it might affect the league and probably even the Bulls, but nobody is talking about it.

I just don't get it.

*The single most important thing the Bulls can be doing right now to prepare for the day when owners figure out what is going to happen to them is to acquire trade exceptions, which could be used later to absorb salaries from desperate teams.*

We should ASAP sign-and-trade Best to Miami and pick up a $3M or so trade exception. We might also get a 2nd round pick from them, although I would be willing to give them Best _and_ a second round pick in order to get this trade exception. (I am not sure this is legal.)

We might be able to do something similar with the Lakers and Oakley.

*I am interested to hear what people think about this issue.* I realize this is complicated, so not everyone will be interested. I would be fascinated to hear what those of you with Bulls' connections (HJHJR and MBSH) think the folks down at the Berto center are thinking about this issue.


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## Showtyme (Jun 24, 2002)

The luxury tax certainly is a daunting issue. Teams like the Kings who are willing to pay $17 mil for Mike Bibby have some rationale, as their window of opportunity for beating the Lakers will only last for the next few years until Divac becomes completely ineffective and Webber begins to slow down. Or teams like the Mavericks, with owners like Mark Cuban already spending ridiculous amounts of money to put playstation 2 into each of the player's lockers...

Teams like the Grizzlies.. it doesn't make sense.

I don't think owners are being ignorant, and falling into some hypnotic David Stern spell. If anything, the owners might have an understanding of the luxury tax that we don't yet see... maybe they know something we don't. Maybe that's why no one is scared of it.

Otherwise,

I'll go be a plumber in NYC too.


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## Dan Rosenbaum (Jun 3, 2002)

*Luxury Tax at $52M*

I made some more minor updates to the original post on this thread.

With a salary cap of $42.271M, if BRI ends up at what it is projected at right now (about $2.60B), then the luxury cap threshhold should be at about $52M, a little higher than what ESPN and others are reporting.

Last year, the NBA projected BRI at $2.73B and it ended up at $2.67B, so these projections are pretty good estimates.

At a $52M luxury cap threshhold, my guess is that 12-17 teams will be over the luxury cap threshhold. This would result in escrow and luxury tax payments of $17M to $25M to the 12-17 teams under the luxury cap threshhold.

In other words, Toronto may have saved $17M to $25M today by renouncing their rights to Keon Clark, and that doesn't even count what it would cost to re-sign him or the dollar-for-dollar luxury tax penalties. All in all, not re-signing Clark may very well save the Raptors $20M-$35M just this year. Now does anyone wonder why they probably will let Keon walk? This also means that they won't be interested in any sign-and-trades.

Also, the Seattle/Boston trade puts Seattle precariously close to the luxury tax threshhold if they re-sign Lewis. I think he may be available if we wait long enough. I also suspect that R Rogers or P Jones will be available if we wait long enough.


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## Songcycle (May 29, 2002)

Thanks NCBullsFan. I was actually thinking about pulling your thread back up so people can see what is going on. Great work and much appreciated.


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## Sicky Dimpkins (May 28, 2002)

What if we combine 2 previously obscure CBA rules? The luxury tax and BYC.

Would a team trade a BYC player for 1/2 his value IF it could escape the tax?

Are there any teams on the edge of being taxed that have BYC players of interest that could be had for a player making 1/2 of their salary?


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## Dan Rosenbaum (Jun 3, 2002)

But remember Sicky, if we trade for BYC player, his salary counts for the full amount for us, so we need to give back the other team almost as much in salary as we get.

There are two ways around this: (1) being under the salary cap (which isn't going to happen for us this year and (2) getting a trade exception. That is why I keep harping about getting a trade exception.

Suppose Boston struggles out of the gate next year and it still looks like they are going to be paying the luxury tax and we have a $3.46M trade exception.

A trade of JWill/ERob/Fizer/Hoiberg/Bags for Pierce/Battie/Delk/Sundov might work.

But these trades are very hard to pull off, so I wouldn't get your hopes up too high.

By the way, Phil Miller of the Salt Lake Tribune has a nice article today about some intricasies of the luxury tax. 

http://www.sltrib.com/08012002/Sports/758222.htm

He and Frank Hughes both now are reporting a $7M-$9M bonus for staying under the luxury cap threshhold. My estimate is that the bonus will be in the neighborhood of $18M.

I have sent e-mail to both of these guys to check my estimates. I will let you know if I hear anything.


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## Sicky Dimpkins (May 28, 2002)

The "being under the cap" option is the one I was thinking of. It's still a remote possibility although the Blount signing reduced the amount that could be available.

I wondered both in a general sense if a team might do this to avoid/lessen the tax and of course specifically in regard to the Bull.

The Buck can't avoid the tax completely but what if they could lighten the hit?
If the Bull wanted to clear the air between JC & "Jay" and move JC, what about trading him to the Buck for Redd? Let's say Redd is offered $2 mil more than the $2,026,680 JC will make next year. Wouldn't that be like them "saving" $4 mil given the dollar for dollar hit of the tax? They would get a guard who could backup Sam C. and do some time at the 2 too. The Bull would have no more tension at the 1 and would have a clear 2 who can drill the 3. "Jay" would then concentrate on driving.


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## blkwdw13 (Jun 12, 2002)

NCBullsFan what can the teams use this bonus money for, does it just go into the owners pockets, or can they pay the players with it? I was just wondering what the can can be used for.


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## Dan Rosenbaum (Jun 3, 2002)

Sicky, you are right. Milwaukee will never be able to get under the luxury cap threshhold, so maybe a trade for Redd would work. And yes it would save them 2x whatever the savings in salaries were.

Blk, the "bonus" goes into the owners' pockets. It does not create additional cap room. But maybe after a few years of getting these bonuses, Reinsdorf will be willing to forego getting it when he has to re-sign Curry, Chandler, and JWill.

And, by the way, Frank Hughes responded to my e-mail in less than two hours. I actually think he might be calling some sources to find out whether some of my speculations are accurate.


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## Sicky Dimpkins (May 28, 2002)

What is the date when the NBA determines if a team is over the tax limit? Is it the same time cap situation is decided?
If it's before the season starts then maybe we will start to see some action soon. 

I really hope the Bull can reap a windfall but so far all I've seen is Blount.

It says here:

Cap

that the cap resets the day after the:

July moratorium

My guess is that the date of tax liability determination would be sometime in October just before the start of the season(?)

Important dates 

===========================
The Real GM wiretap is reporting that Orlando has traded foul magnet extraordinaire Don Reid AND a future 1st rounder(one they got from the Clipper) for a 2004 2nd round pick! The reason for this salary dump(1.1 mil) is speculated to be an attempt to sign Keon AND still avoid the tax. (Reid was #1! in fouls per 48 at 12.1 last season which more than doubles the rate the leader in fouls per game Kurt Thomas fouled/48(5.9). FWIW EC came in at #10 and TC at #27.


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## Dan Rosenbaum (Jun 3, 2002)

The 2002-2003 salary cap was determined at the end of July moratorium last month.

The 2002-2003 luxury cap threshhold is not determined until the end of the July moratorium next year (2003).

And yes, that means all of these teams are trying to get under a threshhold that won't be finalized until after the end of next season. In other words, they have to make their decisions based upon guesses about what the threshhold will be.

A crazy rule that is going to cause a lot of owners to lose sleep wondering if they are over the luxury cap. Yes, but those are the rules.

And the Orlando trade was legal, because I think that Reid was a minimum-salary player who counts for $0 in trades for the team that is receiving him. Orlando also gets a $1.1M exception in this trade.

Just the latest example of the crazy things that the luxury tax is going to cause - trading a player and a first round pick for a second round pick.


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## blkwdw13 (Jun 12, 2002)

I wasn't talking about it creating extra cap room, I was more along the line of thinking an end of the year bonus kind of like a profit sharing bonus or would that go against the CBA.


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## Dan Rosenbaum (Jun 3, 2002)

No, none of it would go back to the players, even as a bonus or profit-sharing.


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## blkwdw13 (Jun 12, 2002)

Thanks I'm just trying to understand this tax, and it seems that you know almost everything about it. Also how did you come to getting all these inside contacts, did you meet them in school or work with them somewhere down the line.


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## Sicky Dimpkins (May 28, 2002)

It certainly is crazy. I wonder if the teams are waiting until the last minute for a better deal that may never materialize. Maybe that's why no blockbuster player liquidation has occured so far.

It sure didn't stop the Sun from fattening Marion's wallet.


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## Dan Rosenbaum (Jun 3, 2002)

Thanks, blk!

Until my e-mail today with Frank Hughes, everything that I have learned has come from published articles, looking over web-sites, and posts from other knowledgable posters.

I have learned a lot from Tony Farr over at RealGM. He even has offered to let me write an article about all of this stuff for the front page over there.

Larry ****'s CBA FAQ, though, is the single most important contribution to my knowledge. I have read through that thing probably dozens of times by now.

http://members.cox.net/lmcoon/salarycap.htm 

I also am an economics professor, so I have a naturaly inclination towards these financial details, so I think that is why I have picked up on a lot of this stuff.

Read through the Rashard Lewis thread for more about the luxury cap stuff, especially how it applies to Rashard Lewis and the Sonics. On that thread, I have detailed part of the e-mail that I sent to Frank Hughes.

http://basketballboards.net/forum/showthread.php?s=&threadid=3935

This Rashard Lewis thread is a wonderful place for discussion of sign-and-trades and the use of trade exceptions. For anyone who wants to better understand the CBA, reading this thread is a must.


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## Sicky Dimpkins (May 28, 2002)

Since trades that affect teams' budgets can and will happen between now and the end of the 2003 July moratorium, how will the league settle on a figure in determining tax liabiity status?

Seattle has 2 significant contracts(Payton/Anderson) that die after this upcoming season(only 1 of which really needs to be revived since both play the same position) but I guess that won't help for next summers "judgement day"; right? Any chance they will take the hit for 1 year and resign Lewis? After that they seem to be OK. If they don't resign Lewis could negative fan reaction cost more $ than the tax?

Seattle salaries

I guess the really forward looking teams would have sought out contracts that ended after this past season to better position themselves. Too late now. 

Teams with sizeable contracts ending after this season include:

Cleveland: T. Hill, N. Anderson
Denver: J. Howard
Detroit: C. Robinson
Indiana: R. Miller(presently BYC2 and I don't know when the 2 year anniversary of his contract is), J. O'Neal, B. Miller
Miami: A. Mourning
New Orleans: E. Campbell, PJ Brown
Philadelpha: D. Coleman
Portland: S. Pippen
San Antonio: D. Robinson(has no trade clause), S. Smith
Seattle: G. Payton, K. Anderson
Utah: K. Malone, J. Stockton

Maybe these players will be moved this year.

I wonder if the league will keep its' resolve and stick to this self imposed tax.


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## Dan Rosenbaum (Jun 3, 2002)

The luxury tax threshhold will depend on the salaries at the end of the season, including payments to retired or waived players (e.g. we owe $1.9M to Anthony).

But the final figures aren't computed until July 2003. So it is possible that a team may shed players and get to $51.5M by the end of the season, only to find out in July that the luxury cap threshhold is lower than expected, say $51M, and that they are over the cap despite all of their efforts.

Yes, that is unfair, but that is how the CBA is written, and it is a legal document that cannot be changed without opening up everything else up to bargaining.

And if the league changes the rules at the last minute to avoid the luxury tax, it will lose a lot of credibility. I suspect it could open up the league to lawsuits from players who would claim that they were hurt by colluding owners who played by one set of rules while contracts were being signed and another set of rules later on. I think the owners would have a good chance of losing this lawsuit.

There are a few things Stern has discretion over that could change the size of the bonus for staying under the luxury cap threshhold, and I don't understand why the owners are not pushing him to know exactly what those policies might just be.

Teams over the luxury cap are not going to have much luck getting under it, since it is very difficult to reduce salary by a significant amount.

But we will continue to see a lot of strange things as teams keep trying.


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## Sicky Dimpkins (May 28, 2002)

Is there any way for a team to renounce FA's either just before the end of the season or after the end of the season but before the July determination? 

(I know the Bull don't face the tax but if they did: The Bull owe Anthony for next year(only) but because he's not their FA anymore I wonder if he might be in a different category. I don't see why he would count against the Bull since their obligation would be over before July and they couldn't renounce him if they wanted to.) 

Seattle would be fine even with Lewis signed if they could renounce Payton 1 day before the end of the season(would it make a difference whether or not the team was in the playoffs?) and avoid the tax. Can they? I know it's crazy since he's been a Sonic for his entire career but he's not part of the future. Can teams pull off this "cute" manuever or would it be too late at that point? 

Sorry for being "cute" about it but if teams can still manuever(as your posts seem to say) to avoid the tax then I'd like to know when they must stop and accept their fate. When exactly is -that- date? 

P.S.: May your career be as fruitful as that of Nobel Prize winning political economist James Buchanan who at least for a time was at the U. of N. Carolina if I remember right.


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## Dan Rosenbaum (Jun 3, 2002)

Practically all contracts in the NBA are guaranteed, so, except for a few non-guaranteed contracts (lots of 2nd round rookies), renouncing or waiving players does absolutely no good. It is the salaries for your team on the final day of the season plus ALL of your waived guaranteed contracts, buyouts, payments to retired players, etc.

So the best teams most teams can do is waive a couple non-guaranteed, proabably minimum-salary contracts.

Anthony's $1.9M will count for us, unless JK was clever enough to get it to count on last year's salary total. But I think that was not possible.

But it could be worse. The Knicks will be paying Larry Johnson and Luc Longley nearly $19M next year and then will get hit with another $19M in luxury tax penalties for those players. LJ and Longley will cost the Knicks $38M, which will be more than the net salary (after counting payments back from the league) for the ENTIRE Bulls team next year. Ouch!


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## Sicky Dimpkins (May 28, 2002)

Would it be your opinion then that the trade deadline would be the last chance to try to do something to reduce/avoid the tax?

Waiver deadline 

Trade deadline


No escape from the tax from these either?

What about buyouts?

Couldn't a buyout done now reduce the pain in July 2003?

What about team options?

Can a decision to NOT pick up a team option be made NOW in order to ease the pain come July 2003?

I understand and accept your point about waivers but a player whose contract ends this coming year has no guarantee of being resigned. I don't understand why a team can't renounce FA's like Hoiberg for example.


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## blkwdw13 (Jun 12, 2002)

Isn't their contract garunteed until July or some time after the season ends. Which means he is still part of the team and not a free agent yet.


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## Dan Rosenbaum (Jun 3, 2002)

I am not 100% sure about all of the dates, but I suspect the trade deadline is the last time teams can cut salary. I thought they could waive non-guaranteed contracts a little later than that, but I guess I was wrong about that.

I think buyouts can help, and I think that is what Orlando is doing with Buechler right now. Buechler will still count as part Orlando's total team salary, but maybe not for the full amount of his salary.

Only not picking up team options for the 2002-2003 season would be useful. But I think most of those decisions have already been made. 2003-2004 options do not affect the 2002-2003 cap calculations.

Hoiberg probably has a guaranteed contract for the 2002-2003 season, so he is going to count for the 2002-2003 luxury cap calculations even if he dies tomorrow. It doesn't matter what his status in July 2003 is.


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## Sicky Dimpkins (May 28, 2002)

This is why I wonder about when a team must act to avoid/reduce the tax. Sorry about the repeat questions. 

Last day of season confirmed 

For tax purposes: When is the last day of the season? 

a. Last regular season game(if not in playoffs)?

b. When a team is eliminated from the playoffs?

c. When the last game of the playoffs is decided?

d. June 30?

e. Same for all teams or different?

===========================
Silence is expensive 

ZERO responses? Bad.
===========================

Trades after February but before July 1 

I remember the more extensive discussion Tony refers to but can't seem to find it.
===========================

Trades in June 

Teams in playoffs can't trade until out of them but teams not in the playoffs can trade after regular season but before July 1.
===========================

Trades before June 30 use "last" years salary #'s but what about for the tax? 

Seems significant to me but what do you think?
===========================
Waivers in March? 

Challenges the January 10 link I gave before but gives credence to your understanding.
============================

P.S.: Not worth a thread but I found this interesting given the recent talk on the topic.

BYC expirations


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## blkwdw13 (Jun 12, 2002)

Isn't Krause going to look like a real genius when he eventually does sign everyone on the team because by then the players are going to realize that they can't sign for as much. Then they will resign with the Bulls because they will just want to win, and if everything goes as Krause plans they will win a lot.


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## Dan Rosenbaum (Jun 3, 2002)

*Bulls' 2003-2004 Salary Cap Position*

(This is a copy of a post from another thread. Please reply to it here.)

MichaelofAZ, your post on the Bulls's salary cap position was littered with inaccuracies. BCH pointed out some of the mistakes and was right on everything that he pointed out.

First of all, you were right that the Bulls have $30.1M committed to Rose, Williams, ERob, Curry, and Chandler. Add in another $0.6M for Hassell (we will pick up his option) and another $1M-$4M for our first round draft pick, and we are at $31.7M-$34.7M.

Second, the Bulls have three options with Crawford, Fizer, and Bagaric.

i. They can pick up their options (that decision has to be made early this Fall): Fizer ($3.7M), Crawford ($2.6M), and Bagaric ($1.6M). This option would put the Bulls at $39.6M-$42.6M. Excluding Bagaric, they would be at $38M-$41M.

ii. They can choose to not pick up the options and try to re-sign Fizer, Crawford, and Bagaric with renouncing them. Until they sign with the Bulls or another team, they count against the cap for the Bulls at 300% of their previous year's salary: Fizer ($8.9M), Crawford ($6.1M), and Bagaric ($2.7M). This would put the Bulls at $49.4M-$52.4M. Excluding Bagaric, they would be at $46.7M-$49.7M. 

iii. They can choose to not pick up the options and renounce them. In this case they do not count against the cap, but then they are treated like any other free agent in the market, meaning the Bulls can only re-sign them if they stay under the salary cap.

Third, if a team is under the salary cap, they lose their exceptions. (BCH was right about this.)

Thus, if we renounced Fizer, Crawford, Bagaric, our other free agents, and all of our exceptions, we would be at $31.7M-$34.7M. If the cap rose to $44M, then we would have $9.3M-$12.3M to re-sign free agents. (This assumes that we do not sign any other players to more than a 1-year contract and that we do not trade these players for a player with more than 1 year left on their contract.)

Most likely, we will pick up the options for at least Crawford and Fizer, in which case, putting us at best $4M-$6M below the salary cap. More than likely, factoring in other potential free agent signings (including Baxter and Mason), we are likely to only have our mid-level exception next year. We will not be signing big-time free agents, like Duncan. Trading for Rose essentially ended that possibility.

Also, I think that we won't have our million dollar exception, since we used it this year.


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## Dan Rosenbaum (Jun 3, 2002)

*An Update*

After receiving replies to my first two e-mails to sportswriters, I decided to go a little higher up the food chain. I e-mailed a front office person who is supposedly one of the foremost experts on the CBA and salary cap issues. Amazingly, I am now 3 for 3, since I received a phone call from this person within an hour of sending the e-mail. Here is what I learned.

Right now, the redistribution policy for escrow and luxury tax penalty money (which I estimate will be around $370M next year) has not been set. The policy is set not by David Stern, but by the NBA Board of Governors. The impression that I got was a vote by all 29 teams would determine the policy.

I said that given that more than half the teams are likely to be over the luxury tax threshhold, it probably is likely that an equal redistribution plan where all 29 teams get the same amount is very possible. He agreed that this was a good possibility.

The upshot of this is that the bonus for being under the luxury cap threshhold could be anywhere from $0 (an equal redistribution plan) to $31M (if there are only 12 teams under the threshhold and only they get the money). Since teams are unlikely to vote for a policy that hurts the majority of teams and a majority of teams are likley to be over the threshhold, I suspect that something closer to $0 is much more likely.

This source also suggested that most NBA teams probably do not fully understand the full ramifications of these redistribution plans. Given the huge amounts of money that we are talking about, this absolutely floored me.


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## Sicky Dimpkins (May 28, 2002)

They created it so they can change it. 

If they can still alter this in such a significant way then maybe this is why there hasn't been as much tax related activity?

Does the Player's Union have a say in possible changes?

If a majority are over and this group votes as a unified block for equal distribution then wouldn't this reduce the need for "activity" due to the tax?

NCBullsFan is our bridge to the big shots!


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## Songcycle (May 29, 2002)

This board will be going offline shortly for 18-24 hours to its new dedicated server and before it goes off I wanted to thank NCBullsFan for his great research and the knowledge he has imparted. I was out of town for close to a week and have been unable to fully respond as I am still absorbing what he wrote but I plan to save it as a text file and review it offline.
Thanks much NCBullsFan. The ramifications of the luxury tax will play a major factor in ways I don't yet fully understand.


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## Dan Rosenbaum (Jun 3, 2002)

*Check out my RealGM article.*

I just got an article of mine posted on the RealGM front page. It does a good job summarizing a lot of the issues brought up in this thread.

http://www.realgm.com/src_gm_articles.php?artid=brave_world

I hope the moderators don't mind this, since I have done a lot of promoting of this site over at RealGM, as well.


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## truebluefan (May 27, 2002)

*Re: Check out my RealGM article.*



> Originally posted by <b>NCBullsFan</b>!
> I just got an article of mine posted on the RealGM front page. It does a good job summarizing a lot of the issues brought up in this thread.
> 
> http://www.realgm.com/src_gm_articles.php?artid=brave_world
> ...


Of course we dont mind. Wizardskev does the same thing. What we do mind is someone new come in and spam just for the sake of spam. And then never adds quality to the site.


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## Dan Rosenbaum (Jun 3, 2002)

*Luxury Tax and Escrow Disbursement Policy Update*

From a variety of unofficial sources (league and team officials are under a gag order about the luxury tax disbursement plan until this issue gets out of arbitration), it appears that about half of the luxury tax penalty money will be distributed back to teams below or just above the luxury tax threshold. The amount distributed back to those just above the luxury tax threshold will decline quite rapidly, in essence resulting in much more than a dollar-for-dollar penalty (about $3.13 to $1 penalty) for about the first $3.3 million dollars over the luxury tax threshold.

The team owners apparently have yet to decide what will happen with the other chunk of luxury tax money (about $100 million). Depending on what they decide, it could result in even more severe penalties for crossing the luxury tax threshold.

Also, on this note, it appears that the disbursement plan for the escrow money held from player's checks will result in about a $2 million lower disbursement for teams above the luxury tax threshold.

In total, it looks like teams will lose about $2 million once they cross the luxury tax threshold, pay about $3.13 for every dollar they spend up to about $3.3 million over the luxury tax threshold, and then they return back to the dollar-for-dollar penalty. And the penalties may get more severe when the owners decide what they will do with about $100 million of luxury tax penalty money for which there is no disbursement plan.


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## robyg1974 (Jul 19, 2002)

NCBullsFan:

As you probably know, I e-mailed the webmaster over at RealGM and asked HIM to ask the author of that "Brave New World of the Luxury Tax" article to give us an update on the luxury tax situation. I had no idea that YOU were that author. Good to know.

Anyway, I'm a little confused by this update (i.e., the post right above this one, that you posted and/or edited today). Could you give us some specifics? Maybe some examples? You had previously mentioned that a team over the "luxury tax threshold" stood to lose upwards of $15 million (depending on the number of teams above this threshold). So it's no longer such a drastic black-and-white scenario?

It seems to me that a team like Toronto--who CLEARLY hurt themselves in a BIG WAY from an on-the-court standpoint by renouncing Keon Clark and making that draft-day deal with the Lakers--would be AWFULLY IRATE if they found out that their financial manuevering was all for naught! Same deal with the Sonics--they nearly lost Rashard Lewis this summer, and have possibly completely alienated their franchise player (Gary Payton) because of luxury tax implications--if you were the Sonics owner or a member of Sonics management, wouldn't YOU be AWFULLY IRATE to find out that YOUR financial manuevering was ALSO all for naught?

Again, if you could be more specific, and perhaps give us some examples, that would be terrific. Your work this summer has been GREATLY APPRECIATED by those of us who are interested in the nuts and bolts of the NBA.

ALSO, could you give us an update of which teams are definitely above the luxury tax threshold and which teams are right around the luxury tax threshold? Seems like this luxury tax situation has a lot to do with what happens to a guy like Michael Redd, as the Bucks appear to be capable of getting BELOW the luxury tax threshold, by my calculations (by letting Redd go and by trading Sam Cassell for Keyon Dooling).

Again, you're doing a great job, keep it up! Thanks!


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## ScottMay (Jun 15, 2002)

*Re: Luxury Tax and Escrow Disbursement Policy Update*



> Originally posted by <b>NCBullsFan</b>!
> From a variety of unofficial sources (league and team officials are under a gag order about the luxury tax disbursement plan until this issue gets out of arbitration), it appears that about half of the luxury tax penalty money will be distributed back to teams below or just above the luxury tax threshold. The amount distributed back to those just above the luxury tax threshold will decline quite rapidly, in essence resulting in much more than a dollar-for-dollar penalty (about $3.13 to $1 penalty) for about the first $3.3 million dollars over the luxury tax threshold.
> 
> The team owners apparently have yet to decide what will happen with the other chunk of luxury tax money (about $100 million). Depending on what they decide, it could result in even more severe penalties for crossing the luxury tax threshold.
> ...


Scott Layden and Bob Whitsitt: hear the bell, it tolls for thee. Yikes.


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## Dan Rosenbaum (Jun 3, 2002)

*10/2 Update*

Roby:

Sorry for taking so long to get back to you, but I am going to be pretty tied up for the foreseeable future, so my posts are probably going to be pretty few and far between.

I have e-mailed a couple of sources, but have not gotten any confirmation on what I speculated the disbursement policy will be. For that reason, this may not be the actual policy.

For my example, I will assume that the luxury tax threshold (61.1% of BRI) hits at $52.0M, although this will not be determined until July 2003.

*Teams below $52.0M (61.1% of BRI)*

- receive 100% share of the escrow (about $7.1M)
- receive 1/29th of luxury tax penalty money (about $7.1M)

*Teams between $52.0M (61.1% of BRI) and $55.1M (65% of BRI)*

- pay one dollar for every dollar their payroll is over $52M
- receive 70% share of the escrow (about $4.9M)
- receive a share of 1/29th of the luxury tax money ($0 to about $7.1M)

This share is equal ($55.1M - TS)/($55.1M - $52M), where TS is the team salary. For a team with a TS of $54M, their share would be about 35%, so they would get 35% of 1/29th of the luxury tax money (about $2.5M). In essence, every dollar a team spends between $52M and $55.1M costs them one dollar in luxury tax penalties and $2.27 in lost luxury tax disbursements. In other words, over this range, the marginal tax rate is not 100%, it is 327%. For a team in this range adding a $350,000 miminum salary rookie will cost them $1.5M in salary, luxury taxes, and lost luxury tax disbursements. Ouch!!

[By the way, trading for Mercer rather than Oakely is costing the Pacers $6.75M in salary, $2.1M in lost escrow, $1.8M in luxury tax penalties, and $4.1M in lost luxury tax disbursements for a grand total of nearly $15M. Double Ouch!!]

*Teams above $55.1M (65% of BRI)*

- pay one dollar for every dollar their payroll is over $52M
- receive 70% share of the escrow (about $4.9M)
- receive none of the luxury tax penalty money

*MY ASSESSMENT OF WHERE TEAMS ARE NOW*

I have assumed that Redd and Wang Zhizhi end up with Dallas.

The first number is team salary, the second is luxury tax penalties minus escrow and luxury tax disbursements, and the third is net payroll.

*GET THE CHECKBOOK OUT - above luxury tax threshold, above 65% of BRI, and net payroll is higher than actual payroll - teams that will send checks to the league in July 2003*

POR 105.2 48.3 153.5
NYK $93.9 37.0 130.9
DAL $76.8 19.9 $96.7
SAC $69.0 12.1 $81.1
PHI $64.6 $7.7 $72.3
LAL $63.2 $6.3 $69.5
NYJ $60.8 $3.9 $64.7
MEM $60.1 $3.2 $63.3
MIN $58.1 $1.2 $59.3
MIA $57.2 $0.3 $57.5 

*BARELY ABOVE THE 327% TAX BRACKET - above luxury tax threshold, above 65% of BRI, and net payroll is less than actual payroll - teams that will receive small checks from the league in July 2003*

ATL $56.8 -$0.1 $56.7
MIL $55.3 -$1.6 $53.7
TOR $55.2 -$1.7 $53.5

*IN THE 327% TAX BRACKET - above luxury tax threshold, below 65% of BRI, and net payroll is less than actual payroll - teams that will receive reasonable checks from the league in July 2003*

PHO $54.8 -$2.9 $51.9
IND $53.8 -$6.2 $47.6
SEA $53.2 -$8.2 $45.0
SAS $52.7 -$9.8 $42.9
BOS $52.4 -10.8 $41.6

*NOT PAYING THE LUXURY TAX - below luxury tax threshold, below 65% of BRI, and net payroll is less than actual payroll - teams that will receive $14.2M checks from the league in July 2003*

ORL $50.9 -$14.2 $36.7
DEN $50.4 -$14.2 $36.2
UTA $49.4 -$14.2 $35.2
HOU $49.3 -$14.2 $35.1
CLE $48.9 -$14.2 $34.7
DET $48.2 -$14.2 $34.0
GSW $47.8 -$14.2 $33.6
NOH $46.6 -$14.2 $32.4
WAS $46.2 -$14.2 $32.0
CHI $44.2 -$14.2 $30.0
LAC $37.7 -$14.2 $23.5 (if Zhizhi stays with Mavs, Clips have a little cap room)

*One last thing to note*

The disbursement plan that I have outlined still leaves about half of the luxury tax money undisbursed (about $108.5M). Depending on how this is disbursed, this could result in further penalties for teams above the luxury tax threshold. If this money went back evenly to all 29 teams, every team would get back another $3.7M, which would mean that Memphis, Minnesota, and Miami would no longer be sending checks to the league.


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## BCH (Jun 25, 2002)

This is some great work.


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## robyg1974 (Jul 19, 2002)

*Re: 10/2 Update*



> Originally posted by <b>NCBullsFan</b>!
> *One last thing to note*
> 
> The disbursement plan that I have outlined still leaves about half of the luxury tax money undisbursed (about $108.5M). Depending on how this is disbursed, this could result in further penalties for teams above the luxury tax threshold. If this money went back evenly to all 29 teams, every team would get back another $3.7M, which would mean that Memphis, Minnesota, and Miami would no longer be sending checks to the league.


Excellent, excellent, excellent work, NCBullsFan. I'm sure that you find it as inexplicable as I do that NO mainstream NBA sportswriters have done this kind of work all summer long. I'm just glad that we have you around.

This last bit here is pretty important, though. You have only eleven teams projected under the luxury tax threshold. There is an additional $108.5ish mil yet to be disbursed in yr analysis. So it is POSSIBLE that this $108.5ish mil could be distributed among ONLY these eleven teams, correct? Each team receives nearly $10 million--MILLION!--extra dollars? What's yr take--do you think the league will disburse it to all 29 teams, or to only these eleven teams? Or perhaps only to the 16 teams in the 327% tax bracket (i.e., each of these 16 teams would receive nearly $7 million--MILLION!--additional dollars)?

Do you have a clue what the league will do with this remaining $108.5ish million? Seems to ME that, if it gets put to a VOTE among the 29 NBA owners, that 11 isn't a majority, but that 16 IS. That's how it works, right? The 29 league owners vote on how the money gets redistributed? Surely the league office doesn't get to make a unilateral decision here, right?

As it turns out, the consequences of the luxury tax are not quite as severe as you had speculated earlier this summer, although the difference between what a team like Orlando--who is just under the luxury tax threshold--is getting back and what a team like Seattle--who is just $1.2 mil over the threshold, and whose payroll is only $2.4 mil HIGHER than Orlando's payroll--is getting back is hardly insignificant: $6 million.

Of course, as you point out, a LOT hinges on what the league decides to do with that remaining $108.5 mil. If they decide to redistribute it equally among all 29 teams, well, if I were a team like Toronto, or Orlando, or Milwaukee, or Boston, or, well, one of any number of teams who made several unpopular luxury tax-driven moves (or NON-moves) this summer, I'd be pretty pissed!

Anyway, yeah, thanks for the work. Whenever you find out more on this subject, or whenever you have more thoughts on the subject, let us know. I don't go on the Bulls board very often, so if you feel like sending me another PM, to tell me that you have re-posted some stuff, I would appreciate it. Thanks again!


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## Dan Rosenbaum (Jun 3, 2002)

First, remember that none of what I am speculating about has been confirmed by a league source, so I could have the disbursement policy completely wrong. But my source does have a lot of contacts around the league, so there is a good chance this is right.

Second, my understanding is that the NBA Board of Governors will vote on how the remaining $108.5M will be disbursed. My impression is that this means that every team will have one vote, which would suggest that the 11 teams below the luxury tax threshold won't be sharing that $108.5M. I suspect an equal disbursement is more likely, precisely for the reason you cite.

However, note that, according to my calculations, 16 of the 29 teams would have been better off financially under an equal disbursement than they are under the current disbursement plan (assuming the remainder goes back evenly to all 29 teams). However, teams voted for this plan probably without knowing where the luxury tax threshold would hit (I think the vote was before July 2002) and there are considerations for the future that must be taken into account, but it still is a little strange that teams would vote for the current plan.

I have come to the conclusion after conversations with a few folks who might know something about this that most teams just don't have the personnel to understand all of the implications of the luxury tax. They rely very heavily on league sources for their information, making it very easy for the league to manipulate teams into voting for plans that aren't in their best interests. As an economist I find this behavior utterly unbelievable, but I am starting to come around to believing it.

Third, I am not sure Toronto, Seattle, Orlando, etc. are going to be angry if the remainder of the luxury tax penalties is disbursed back equally to all 29 teams. I think the current plan was voted on well before this summer, so it is likely that these penalties (and not the ones in my RealGM article) were driving decisions this summer. While they are not as draconian as the penalties in my RealGM article, they are, as you noted, still pretty significant.

Fourth, I think sportswriters do not write about these issues, because (1) they do not understand it themselves and (2) their readers won't understand it and will ignore the article. I have had one sportswriter make this second argument when I mentioned that he should write an article on this. I think this assessment is right, since over at RealGM, there has been practically no mention of my article, even though it has been featured on the front page for more than a month.

When I see the sophistication with which MLB writers write about financial issues and statistical analyses, I really wish that NBA writers had that same sophistication. (Ultimately I suspect this is driven by differences in NBA vs. MLB fans.) Sometimes, it seems that NBA writers are nothing much more than gossip columnists.


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## robyg1974 (Jul 19, 2002)

> Originally posted by <b>NCBullsFan</b>!
> ...When I see the sophistication with which MLB writers write about financial issues and statistical analyses, I really wish that NBA writers had that same sophistication. Sometimes, it seems that NBA writers are nothing much more than gossip columnists.


Good lord, I feel exactly--and I mean EXACTLY--the same way! Take a look at some of the baseball stuff on ESPN.com (obviously a mainstream sports product, as opposed to the sagely ramblings of a North Carolina economics professor, writing for fun (not for pay), on RealGM!)--I am a stats geek, and the world of baseball statistics is, to be honest with you, more interesting than the ACTUAL GAME of baseball ITSELF! There are always links to lots of baseball stats geeks on the baseball section of ESPN.com. Hell, Peter Gammons, the most respected baseball writer in the country, is HIMSELF a stats geek! However, like you say, we see none of this in the world of basketball. It's annoying. When the best stuff that is being written about the NBA this summer is stuff on RealGM and here on basketballboards.net, by people writing FOR FREE, as a HOBBY, that is PATHETIC!

Anyway, thanks again, NCBullsFan, for yr work and yr insight here. I agree that the irrational economic moves by numerous NBA fans is absurd. Next summer, when several teams are screaming "Foul!" because of this luxury tax stuff, I'm not going to have a lot of sympathy for them. I'm sure YOU would have been more than willing to provide them some extremely inexpensive (if not FREE) consulting regarding these matters. Have you ever considered offering your expertise to NBA franchises for a fee? An NBA luxury tax consultant? I bet you could make some decent money on the side!


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## Dan Rosenbaum (Jun 3, 2002)

*Nice Article by Frank Hughes*

Below is a link to an article by Frank Hughes that details the latest developments on the luxury tax issue. 

http://www.tribnet.com/sports/basketball/sonics/story/1987045p-2089198c.html

When I have time I will detail exactly what Frank is talking about. 

Frank did make a couple of minor mistakes in this article, but other than that this article represents our best estimates of how the luxury tax will work. (And believe me, "our" is the correct pronoun here.) 

(It would be nice if this thread could be moved or better yet cross-listed in the Salaries & CBA forum.)


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## BCH (Jun 25, 2002)

A copy has been added to the CBA forum. It is now its own separate thread so anything new should be added there.


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