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Brooklyn Nets tax bill could be $87 million for next season

Aug 1, 2013, 10:16 AM EDT

Newly acquired Net's Pierce, Garnett and Terry hold up their new jerseys as they pose for a photo with principal owner Prokhorov after a news conference in Brooklyn Reuters

The largely free market loving, Republican owners of the NBA teams pushed hard in the last Collective Bargaining Agreement for something that you would think goes against their nature — an increased and very stiff tax structure that sets up a more socialist system. (They would argue the system is needed for the growth of the overall sport.)

But the tax penalty only works if an owner is afraid to pay it.

Brooklyn Nets own Mikhail Prokhorov laughs at it. Or at least isn’t going to blink writing a very large check.

With the addition of Alan Anderson on a minimum deal, the Nets will have a payroll of $102,211,009 next season (figures via Hoopsworld). The NBA’s salary cap is set at $58.7 million for next season, the luxury tax line is $71.7 million (meaning the new escalating taxes start at that figures). Marc Stein of ESPN did the math from there for TrueHoop:

Adding Anderson on a minimum deal nudges those figures to $30,463,009 (dollars over the tax line) … and a mind-numbing $87,199,293 (in taxes due)

So the signing of a player due to make just under $1 million next season will cost Brooklyn more than $4 million in additional taxes under the league’s much more punitive tax laws that go into effect this season.

The tax the Nets will pay will be based on their salary figures on the last day of the regular season, so it is possible for the Nets to make moves to lower that number.

But it doesn’t look like Mikhail Prokhorov wants to — he wants to win at any cost. So he will write a big check at the end of the season. What kind of winning he will get for that remains to be seen, but I don’t think it’s the title he is looking for.

  1. loungefly74 - Aug 1, 2013 at 10:37 AM

    i wish every owner was like Mikhail Prokhorov. i’m serious. Teams would never relocate, penny-pinching owners would be gone, yeah…i like the Russian.

    • fanofthegame79 - Aug 1, 2013 at 10:54 AM

      I have to agree with you. I’m a Heat fan and we just amnestied Mike Miller to pinch pennies. And he was a good player for the Heat….and he was part of some huge moments. Someone like Prokhorov wouldn’t have cut him.

      • kinggw - Aug 1, 2013 at 11:24 AM

        That is a ludicrous statement. I too am sad to see Miller go, but I wouldn’t call a move that saves $17M pinching pennies.

        Miller’s salary plus the $17M tax penalty would mean the the Heat were paying Big 3 type of money for the 10th guy in the rotation. What sense does that make?

      • heat256 - Aug 1, 2013 at 12:15 PM

        I’m a Heat fan but I’d have to disagree. If Mike were in the starting 5 it’d be harder for Micky and Riley to justify amnestying him. However, he is a fringe rotation player that has been hurt more than healthy. $17 million, even to a billionaire, isn’t exactly “chump change”. It’s easy for us fans to whine about money that isn’t our own. It sucked to see him go, but it’s a business.

      • fanofthegame79 - Aug 3, 2013 at 12:26 PM

        I hear you when it comes to his position in the rotation – but you also have to take into consideration what he did in the playoffs, and more specifically, both winning Finals.

      • loungefly74 - Aug 1, 2013 at 6:50 PM

        who knows what goes on in the mind of a billionaire. if he thought the $17 million to bring back a role would help bring another title chance, he would do it…especially after what Miller did in the Finals.

    • casualcommenter - Aug 1, 2013 at 11:12 AM

      Agreed. Bill Simmons put it best: His argument is that to own an NBA team, a guy had to earn billions of dollars prior to buying the team. If that’s the case, why are most owners so hung up on making huge profits from NBA teams, when to own the teams, they already had to become hugely wealthy? In other words, can’t the reward of owning an NBA team be the fact that you’re one of very few people on Earth who own an NBA team?

      I understand that small market teams are never going to be able to sustain $87 million-per-year tax bills long-term, even with billionaire owners, but you have owners like Jerry Reinsdorf of the Chicago Bulls (a big market team) who are famously reluctant to pay luxury taxes EVEN when the team is a winning team and the games are all sold out. Guys like Reinsdorf have more money than they could possibly spend in the rest of their lifetimes, and their teams are no doubt very profitable given high attendance in a big TV market, yet a few million in luxury tax payments is considered unacceptable. I just don’t get it.

    • paleihe - Aug 1, 2013 at 1:57 PM

      I don’t care how rich I ever become, paying 87 MILLION in taxes is beyond ridiculous.

  2. andrexdrummondxforxdpoy - Aug 1, 2013 at 10:47 AM

    That’s a lot of money for a second round out

  3. casualcommenter - Aug 1, 2013 at 11:15 AM

    “Luxury tax? More like ‘chump change.'” – Actual quote from Prokhorov.

    I actually really like Prokhorov, even though I’m not a Nets fan, because he makes other owners of big-market teams look bad. I get that very small market teams could never sustain $87 million per year tax payments, but there are teams in big and medium markets that are very reluctant to spend, even with lal their games being sold out, and Prokhorov makes their attempts to cry poverty look insincere.

    The Sacramento Kings, which is one of the worst teams in the NBA over the past 2 seasons and is located in a medium TV market, sold for half a billion dollars after a furious bidding war. Don’t try to tell me NBA teams aren’t profitable when there’s a waiting list of billionaires trying to buy teams.

  4. abchome - Aug 1, 2013 at 11:35 AM

    Wow, $1 million salary costs $4 million tax. Insane!

  5. bucrightoff - Aug 1, 2013 at 12:22 PM

    The only way you will ever see true competitive balance is with a hard cap. Cause yeah, whats $87 million to this guy when he’s worth $13 billion? Whats a $90 million penalty to the Lakers when their TV deal is worth $250 million a season? It still a game of haves and have nots.

    • bougin89 - Aug 1, 2013 at 1:54 PM

      Until they implement a true hard cap it will always be a league of haves and have nots. Think if the Lakers/Nets/Knicks had the OKC Thunder’s roster two seasons ago that they would have even blinked at offering Harden the max to keep that core together?

  6. florida727 - Aug 1, 2013 at 12:47 PM

    $30 million over the tax line and EIGHTY-SEVEN (87) million in a tax penalty?

    Who wrote this freaking rule? Obama?

    So who’s going to pay the bill? Oh. That’s right. The FANS.

    • Kevin S. - Aug 1, 2013 at 1:30 PM

      I love how this guy rails against progressive taxation with a dig at Obama but can’t understand economics well enough to realize fan willingness to pay is what drives salaries, not the other way around.

      • jimeejohnson - Aug 2, 2013 at 9:37 PM

        Another useful pawn idiot who enabled an African-American to become President of the USA not once, but twice in a row.

      • Kevin S. - Aug 3, 2013 at 7:03 AM

        I didn’t vote for Obama either time, genius. He wanted to start talking about economics, but failed a basic Economics 101 concept, and I made fun of him for it. I’m no the one dragging politics into this.

  7. 12444uggg - Aug 1, 2013 at 1:07 PM

    The only NBC news outlet that I’ve seen use “socialism” without saying, “Obama’s not a socialist”
    Anyway, the Nets are investing into their future profitability, and the future is now for them. A few bad seasons of basketball otherwise known as normal seasons for the Nets, would cost the owners more in lost revenue than paying upfront to stay relevant in the most important market in North America. There not losing money here guys.

    • Kurt Helin - Aug 4, 2013 at 11:35 AM

      Obama’s not a socialist, anymore than Bush was a fascist. That’s just all spin.

      • 12444uggg - Aug 4, 2013 at 1:35 PM

        After 8 years of NBC news (MSM) telling us Bush was (is) a fascist (or any of a number of other things), this is all news to me!
        Anyway, we’ll have to agree to disagree.

  8. sillec28 - Aug 1, 2013 at 1:43 PM

    Another example of someone who so obsessed with the Republican party that he can’t eve write a basketball story without working politics into it. Give us a break buddy, most of us come here to read about sports, we don’t come here to learn of your political views.

  9. missthemexpos - Aug 1, 2013 at 1:53 PM

    Refresh my memory, what happens to all the luxury tax collected?

    • asimonetti88 - Aug 1, 2013 at 2:32 PM

      •Up to 50% of the tax money may be given to non-taxpaying teams. Note that there is no requirement that any of the tax money be distributed to teams in this manner.
      •Any tax money not distributed to teams will be used for “league purposes.” In other words, at least 50% of the tax revenue will be used for league purposes each season.

      “League purposes” essentially means for any purpose the league decides, including distributing the money back to teams. The league decided that in 2011-12, 100% of the tax revenue will be used as a funding source for the league’s revenue sharing program. Starting in 2012-13, 50% of the tax revenue will be used as a funding source for the revenue sharing program, and the remaining 50% will be distributed to non-taxpaying teams in equal shares.

      • Anoesis - Aug 2, 2013 at 9:38 AM

        If half is going to non-luxury-tax paying teams and the other half is going to the revenue-sharing program, then luxury-tax paying teams are getting some of their own money back.

        I’d like to see an unedited version of the league’s books because I have a strong suspicion Stern and Co. abuse the “league purposes” clause when passing out the tax take.

  10. spursareold - Aug 1, 2013 at 3:21 PM

    It’s not the money. Ask the Lakers. It’s the penalties that come into play after repeated tax paying. Things like not being able to use your Mid level exception and not being able to take part in sign and trades are designed to force these teams to roll players off and not overpay players coming in.

  11. logicalcomment - Aug 1, 2013 at 4:44 PM

    he can spend that much on the team because he owns a bunch of real estate next to the arena. multi-million condos and stuff.

    better the team/attractions the better the real estate

  12. cmart0907 - Aug 1, 2013 at 6:14 PM

    The owner is a billionaire. He don’t care about a tax bill. So why would we?

  13. drago2012 - Aug 1, 2013 at 8:40 PM

    I am curious as to why they call it a tax in the first place. It does not go into any government coffers at any level to help the society at all. This is just some form of funny money between some very wealthy people. They should really call it the Monopoly money scheme. This is where they defraud the fans by charging them exorbitant season ticket prices. In the long run they will chase the fans away with their schemes. The downfall started with Miami last year during the playoffs. You can see at least 20% of the seats around the court were empty. If you are having trouble filling the stadium with the NBA title team, just think what will happen to small market teams. I own season tickets for Chicago Bulls and i have to pay a hefty price for nose bleed seats. I can afford them, but i am having second thoughts about buying them past next season. The fan base will start eroding very quickly in the next few years. The other side of the problem is with talent of the NBA players. We are getting bunch of gang banger thugs with tattoos all over their bodies celebrating SATAN and his followers. The train will crash very quickly on the elitist , monopolistic NBA. I think their new logo of FANTASTIC will be replaced by SATANISTIC!!!

  14. Anoesis - Aug 2, 2013 at 9:31 AM

    I find it ironically hilarious that a Russian millionaire has taken the wide-open free-market position opposite the NBA’s communist-like wealth redistribution agenda. Everyone’s a partisan until money comes calling.

  15. mcsuave - Aug 2, 2013 at 1:16 PM

    I like what Prokhorov is doing. He is giving up some profit for a chance at a Championship. Other owners are saving money for their profit. Many owners never try to win. I give Prok. His props.

  16. jimeejohnson - Aug 2, 2013 at 9:40 PM

    /Russians drink potato vodka, and vodka with bison grass in it. Just sayin’.

  17. staff2cj - Aug 2, 2013 at 11:32 PM

    Keep going on the threshold idiot!! Your dough will gradually fade away

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