Tuesday, September 18th, 2012 at 11:00 am  |  176 responses

The Los Angeles Lakers’ Tax Bill Could Reach $94.5 Million in 2014


by Marcel Mutoni / @marcel_mutoni

It takes quite a bit for an NBA franchise to remain on top and contend for titles on a regular basis – front-office smarts, good trades, solid draft picks, etc. – but above all, it takes money. Lots of it.

The Los Angeles Lakers generate more revenue than most (if not all) of their rivals, but their operation is getting more costly to run than ever before. Thanks to the newly agreed upon Collective Bargaining Agreement, the Lakers could end up facing a tax bill of some $95 million after this season if they want to keep their core of players together.

In other words, to keep the team intact, the Lakers could be looking at a payroll of nearly $200 million.

Per the LA Times:

“My feeling is that we’ll continue to pursue the top players in the league,” Lakers General Manager Mitch Kupchak said. “There will always be an emphasis on having the franchise be able to survive and prosper.”

This is the last season the Lakers will pay a dollar-for-dollar penalty for exceeding the luxury-tax threshold, meaning that their league-high payroll of $99.2 million will cost them an additional $28.9 million in taxes, because that’s how far they are above the $70.3-million tax level. The tax will raise the tab for their player costs to $128 million. Starting next season, the tax burden gets significantly heavier. NBA teams must pay a $1.50-to-$1 ratio for the first $4.99 million they are over the luxury-tax threshold, a $1.75-to-$1 ratio for being $5 million to $9.99 million above the threshold, a $2.50 ratio for $10 million to $14.99 million over, and a $3.25 ratio for $15 million to $19.99 million beyond the threshold. Teams that are $20 million or more over the tax level accrue additional penalties, increasing by 50 cents per dollar for every $5 million. Those extra pennies can add up to millions, particularly for teams with multiple all-stars.

The Lakers already have $79.6 million committed to eight players for the 2013-14 season. Assuming they re-sign [Dwight] Howard next summer to a maximum contract that calls for him to make $20.5 million in the first year, that bumps the Lakers payroll over $100 million. If their final payroll was $105 million, that would put them $32 million over the league’s projected tax threshold of $73 million, triggering a tax of $94.5 million and putting the team on the hook for a staggering total of $199.5 million — a 55.9% increase over the total for this season with essentially the same group of core players.

There’s no need to feel sorry for the Lakers, of course. They’re certainly not lacking in funds.

The question going forward becomes, Will they be willing to bite the bullet and continue hoarding some of the NBA’s best talent?

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  • Drig

    Well…….that escalated pretty quickly……

  • majenkins

    Lobcity: The TV deal nbk is talking about and the TV deal the article is talking about are 2 different TV deals. The one in the article is the Lakers private deal for local broadcasts and nbk is talking about the NBA’s national TV deal.

  • majenkins

    Sorry but where did that “the wholle concept of money was invented in order to place people in a caste” come from? Money was invented to make trade easier not to place people in a caste, sheesh. In societies that have/had castes, people that had lots of possessions were always in a caste above those that had few or no possessions, long before they started using coins to facilitate trade.

  • Ugh

    Wikipedia says it decreased $2.2 million in ’02-’02, by $1million in ’09-’10 and has been at $58 million since ’10. The years it has increased there have been raises of as little as $100 thousand and several of only half a million, which are irrelevant in terms of the Lakers tax bill.

  • pposse

    NBA players are the most selfish athletes of them all..for the most part they will always go to the bigger market for the opportunity to get more money. NFL athletes have character values that are unheard of in the modern day NBA athlete.

  • LobCity

    Thanks for the clarification. Although that deal won’t affect the salary cap until the next CBA.

  • Conor

    The ’87 Lakers are the greatest team in the N.B.A.’s history.

  • sickkaluffa24

    F*ck the price on the tag. Just throw it in the bag. GOWarriors.

  • http://twitter.com/sooperfadeaway nbk

    yes it will. the salary cap is directly set based on revenue. if the league revenue goes up, so does the salary cap.

  • http://twitter.com/sooperfadeaway nbk

    that is just completely false. the salary cap is set on a year by year basis, based solely on revenue.

  • http://twitter.com/sooperfadeaway nbk

    typically the growth is smaller. i forgot about 02, as that was after the first lockout and the league had to do correcting. What has gone up every year is average player salary. My bad.

  • http://twitter.com/sooperfadeaway nbk
  • Lugo

    I believe you meant classism then?

  • roscoe

    I thought it was called a cast system.

  • roscoe

    that is “basketball related” revenue if we are crossing the “T’s” & dotting the “I’s”

  • roscoe

    Did you know the owner of the clippers has a higher net worth than the owner of the lakers? this has been stated mutliple times in the LA media, I believe the LA times reporters beat this drum.
    Most LA NBA fans have no idea. Not that it necessarily matters, but is interesting if true.

  • Teddy-the-Bear

    Are you my comrade?

  • Redd

    Lol.

  • Redd

    They went 73-9? Didn’t know that. THANKS!

  • LobCity

    ok, by how much? Not much of that projected 94 mil

  • http://twitter.com/sooperfadeaway nbk

    What do you mean, “by how much” – I just said its based on revenue. To be more exact, projected basketball related revenue.

  • iceman

    actually they are the lakeshow and the yank’s because of Buss and Steinbrener, the yanks were a dog team when Stienbrener first took ownership and the clips live in the same dam city played in the same arena yet they use to suck for years and even though they were in La nobody wanted to play for them, not saying local and market don’t play a role, they absolutely do,i’m just saying the lakeshow and the yanks aren’t who we know them to be without the business acumen of a Dr. Buss or Mr. Steinbrener, imagine now for a moment if Dr. Buss bought the Clippers and Sterling the Lakers the clips would have fought for chips while the Lakers fought for an above .500 season, a name means nothing until you have someone or someone’s to make it have meaning, and only then do u have a brand.

  • Drig

    The majority owner of the Clips has a higher net worth than the majority owner of the Lakers. Net worth of all the LAL owners combined vs those of the Clips: LAL blows LAC off the map. Infact, one of those LAL owners is planning to buy Staples Center………Does anyone know if that would void any previous contract the Clips have to play at Staples??? Because that would mean there’s a chance of the Clips not having a stadium to play in Los Angeles….

  • pposse

    never in a million trillion years is that true

  • http://twitter.com/sooperfadeaway nbk

    i mean if you continue to read you can see that i said the Clippers aren’t after winning. Players like to play there, when they are trying to win. – Hence them signing free agents. — I wasn’t at all saying only location matters in the NBA, just that location is the biggest factor in success. — If you need me to prove that too you, then fine, count the number of NBA team’s who have won a title, and count how many come from a small market & big market. — The glaring difference should be proof enough that location is the first and foremost important thing for an NBA team to be consistently successful. – ALL TEAMS, need good management. ALL of them.

  • msrita

    Why is this news Lakers have always did this so they can win Championships

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