NBA has a problem with luxury tax

by   |  VIEW 207

NBA has a problem with luxury tax

The financial crisis caused by the corona virus pandemic does not seem to worry ten NBA teams that will together pay more than $ 500,000,000 for luxury taxes this season, write the American media The NBA applies the luxury tax if the player's budget exceeds the threshold above the "soft" salary limit set at the beginning of each preseason.

From 2002 to 2013, teams paid a tax of one dollar for every dollar over the limit. But starting in the 2013-14 season, teams are burdened with an additional rate that, depending on the amount and recurrence of overdrafts, can reach as much as 4,750,000 for every dollar if the budget for at least 20,000,000 is broken at least three times in the last four seasons with an increase of 50 cents for every 5,000,000 over 20,000,000.

According to that calculation, the tax debtors will be Golden State (184,000,000 dollars), Brooklyn (131,000,000), LA Clippers (92,000,000), Milwaukee (52,000,000), Utah (39,000,000), LA Lakers (33,000,000). ), Philadelphia (13,000,000), Toronto (13,000,000), Boston (10,000,000) and Portland (550,000).

Half of this money will be evenly distributed to the other 20, most of whom have no real chances for the title next season, but will at least get a check for more than $ 10,000,000 for consolation. However, these obligations should not be too much of a burden for teams that have exceeded the budget.

On the one hand, they hope that they will not pay that much in the coming seasons, even though they have signed strong long-term contracts, because they expect the rate of jump of the upper limit of the budget to be higher.

Team value

The limit increased by 21% between the seasons 2012-2013 and 2015-2016, and then by 45% between the seasons 2015-2016 and 2018-2019. As recent revenues have declined due to the pandemic, the cap has increased by only 10% in the last three years.

On the other hand, they believe that the huge growth in the value of teams - Bucks worth 1,625,000,000 dollars will be bought for 550,000,000 dollars, and Warriors worth 5,500,000,000, were bought for 450,000,000 - as well as permits to sell a minority stake to private funds.

Provide owners with more ways to access working capital. The fact that the NBA league could triple the value of current contracts on TV rights from the current 24 billion dollars, which end in 2005, gives the owners even greater optimism because, despite the decline in the ratings of classic televisions, nothing surpasses live sports.

In 2019, 89 of the 100 most-watched shows were sports events. Although most of them are football games (NFL), the NBA is increasingly making its way to a more diverse and much younger audience. Of course, NBA teams are not the only ones who spend money on summer days.

It is estimated that between July 27 and August 9, the NBA, NFL, NHL, and MLB teams agreed to cooperate with players in the amount of 5,200,000,000 dollars, which is a record 14-day amount. While NBA contracts accounted for about 60% of that total, the NHL also set a league record for money spent in two weeks.