View Full Version : Luxury tax article:

07-16-2007, 04:16 PM
You all probably already knew this, but I thought it was interesting:


The 25 non-tax-paying teams, meanwhile, will each receive 1/30 of the cumulative tax amount, which computes to nearly $1.9 million per team.So not only do luxury tax teams have to pay out, but they also don't get the perks accrued to being under the tax: namely $2mil this year. :)

07-16-2007, 04:33 PM
Gotta love Isiah....He's paying the rest of the league almost $2 Mil Each to suck as bad as the Pacers!

07-16-2007, 05:13 PM
Shouldn't the 25 teams get 1/25th of the tax amount? Is Napoleon keeping the other sixth?

07-16-2007, 06:24 PM
Every organization in the NBA must be Knick fans.

07-17-2007, 12:31 AM
Shouldn't the 25 teams get 1/25th of the tax amount? Is Napoleon keeping the other sixth?

actually that's pretty close.

according to larry coon:

Tax money:
* Teams under the tax level receive a full share (1/30) of the tax money. (Note that if the league expands, the fraction changes.)

* Some or all of the remaining money may be reserved by the league for "league purposes."

* Any remaining tax money that is distributed to teams must go to all teams in equal shares.

"League purposes" may include investing in some venture, or it may include distributing money back to teams. If money goes to teams, the distribution must not be based on the teams' team salaries (see question number 14) or whether the teams are taxpayers. In other words, it cannot become a disincentive for teams to spend money on players, which would constitute a secondary form of salary restraint. An example of an acceptable "league purpose" in which money goes to teams would be a revenue assistance plan designed to subsidize teams that lose money, provided that a team's entitlement is based on a profit/loss/expenses computation that assumes all teams have the same team salary, and the assistance payment is limited to the team's actual losses.

in practice, the league used the money for revenue assistance

In 2005-06, the league used all of the undistributed tax funds and none of its escrow funds to fund their revenue assistance plan. In 2006-07 it used all of the undistributed tax funds and about $20.7 million of the escrow funds for this purpose.

07-17-2007, 12:18 PM
They should use what's left to help us and the other ABA teams pay off St. Louis.


07-18-2007, 08:52 AM
What a deal that was.