Skip to content

Stricter luxury tax penalties in new CBA could actually help big market teams

Aug 18, 2013, 3:30 PM EDT

Boston Celtics v Los Angeles Lakers Getty Images

The NBA’s lockout prior to the 2011-12 season was certainly all about money, and how the owners could channel more of the league’s revenue into their pockets instead of those of the players.

But it was also about putting a system in place that would, in theory, make it more difficult for the teams in the largest markets to simply spend their way to a title.

While the new, harsher luxury tax penalties put into place make it severely punitive financially to go out and exceed the tax threshold season after season, there is a loophole that exists which works to the advantage of the large market teams in the long run, while working against their small-market counterparts.

From Larry Coon at HoopsWorld:

The first year of the repeater tax (2015) will only apply to teams that were also taxpayers in the three previous seasons — 2011-12 through 2013-14. So right now, only Boston and the Lakers are candidates. The Celtics will probably stay out of the tax this season, and the Lakers are clearing the books next summer. So I don’t think any team will be a repeater in 2015.

Starting in 2016 a team is a repeater if they were taxpayers in any three of the previous four seasons (for 2016 that’d be 2011-12 through 2014-15). That means any team that was a taxpayer in either 2012 or 2013 would be a repeater if they are a taxpayer in both 2014 and 2015. Most teams will be able to avoid the repeater penalty. A few teams like Brooklyn probably won’t care.

The system is set up — well, “set up” is probably a bad way to put it. I don’t think they did it intentionally — so that two years out of the tax buys you three years IN the tax without being a repeater. I think many teams will adopt this strategy.

That last part is the key.

Take a team like the Celtics, for instance, who had no problem committing to payroll that would put them over the tax threshold when they were trying to contend for a title over the last few seasons. They’re rebuilding this year and next at minimum, but after those two years out of the tax, they could add free agents and load up for another run at a title by spending whatever it costs for the next three seasons, all the while avoiding the dreaded repeater tax.

There are very few teams that won’t try to implement this strategy. This summer, we saw the Heat use the amnesty provision to waive Mike Miller, even after he was a part of winning back-to-back titles, because the move saved them a total of $17 million in salary and luxury tax costs. And we saw the Lakers make a similar move to cut costs when they waived Metta World Peace.

The Nets are one club that doesn’t seem to care about dollars, but they’re certainly in the minority. Most large market teams will use payroll to chase championships when the talent on the roster dictates it. Small market teams, wary of even the more basic tax threshold, still won’t be able to meet that standard.

Latest Posts
  1. Report: Greg Oden’s drinking an issue during season, alleged domestic assault

    Sep 15, 2014, 10:40 PM EDT

    New details about incident in which he allegedly punched ex-girlfriend in the face

  2. Cavaliers work out Lou Amundson

    Sep 15, 2014, 9:45 PM EDT

    Cleveland Cavaliers v New Orleans Hornets Cleveland Cavaliers v New Orleans Hornets

    Amundson’s best days are behind him, but maybe he can find a niche in Cleveland

  3. Report: Wizards close to signing Damion James

    Sep 15, 2014, 7:55 PM EDT

    New Jersey Nets v Washington Wizards New Jersey Nets v Washington Wizards

    Washington building up competition for open 15th spot

  4. Wizards sign shooting guard Xavier Silas

    Sep 15, 2014, 5:10 PM EDT

    Xavier Silas Xavier Silas

    Silas appears to have real chance of making the team

  5. PBT Extra: What players looked good at World Cup?

    Sep 15, 2014, 4:26 PM EDT

    Derrick Rose stayed healthy but never shook the rust fully off his shot.

  6. Time for FIBA/NBA to adopt soccer model: Only one major tournament every four years

    Sep 15, 2014, 3:35 PM EDT

    James Harden James Harden

    Soccer already has the right model, it’s just going to be hard to get FIBA on board.

  7. Tobias Harris, eligible for contract extension, wants to stay with Magic

    Sep 15, 2014, 2:04 PM EDT

    David Lee, Tobias Harris David Lee, Tobias Harris

    Harris unsure whether Orlando will let him hit restricted free agency

  8. Blake Griffin doing slam poetry about tearaway pants? We got that. (VIDEO)

    Sep 15, 2014, 1:25 PM EDT

    Take Flight Media Event 2013 Getty Images

    Blake Griffin has done some brilliant marketing campaigns.

  9. Mavericks sign Dominican guard Victor Liz

    Sep 15, 2014, 12:48 PM EDT

    Victor Liz Victor Liz

    Liz shot 49 percent on 3-points in World Cup

  10. Knicks owner James Dolan insists he’s done meddling

    Sep 15, 2014, 12:08 PM EDT

    Phil Jackson, James Dolan Phil Jackson, James Dolan

    Dolan said he’s let Phil Jackson run the team, and Jackson affirms Dolan has so far

  11. Does anyone win from Team USA more than Mike Krzyzewski?

    Sep 15, 2014, 11:24 AM EDT

    Duke coach benefits big time in recruiting from World Cup, Olympic coaching

  12. Mario Chalmers: ‘We all just took too much of a back seat in the Finals’

    Sep 15, 2014, 9:00 AM EDT

    2014 NBA Finals - Game Three Getty Images

    Chalmers thought Heat wouldn’t re-sign him after disastrous NBA Finals

  13. Quote of the day: Serbia’s Miroslav Raduljica says he won beard game with James Harden

    Sep 15, 2014, 8:30 AM EDT

    Serbia's Miroslav Raduljica AP

    It’s close… well, not the shaves but the quality of beard.

Featured video

What players stood out at World Cup?
Top 10 NBA Player Searches
  1. D. Rose (3359)
  2. D. Ferry (3206)
  3. L. James (2737)
  4. J. Valanciunas (2558)
  5. K. Bryant (2391)
  1. K. Irving (2237)
  2. P. George (2064)
  3. G. Monroe (1935)
  4. C. Billups (1773)
  5. C. Anthony (1732)