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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  • retloc

    Yeah bud I am, obviously at this point the differences in our views are widening, you live in a world where everything is unto itself I live in one where everything is oneness. I don’t have a problem with your viewpoint, nor do I think its wrong, I disagree, but I don’t think its wrong. If that’s your perception that’s your reality. Mines different. You can’t get everyone to think like you, and I can’t get anybody to think like me it seems. I would be insulted if it wasn’t laughablle that we’re having this discussion on a bball website. Oh that and the fact im “super high”

  • http://twitter.com/sooperfadeaway nbk

    Are you fucking with me?
    .You get more benefits to live in a remote place like Alaska in real life, while in the NBA you get more benefits to do a job in a bigger market.
    -(Hence, you make more money in Alaska, then you do in Pennsylvania, coupled with your company paying for everything)
    .When in the NBA, you live in a big market, you get paid typically, a higher average salary, while also benefitting from increased revenue related opportunities. The Cost of Living not being as much of a factor, because again, you are in the NBA.
    .When in the Real World, you make more money doing the same job in a bigger city, but it is directly related to cost of living,
    - Rather than being paid more (like the NBA) being related to the Market, and your company making a higher profit because of it.
    .
    .Competition dictates pay, in the NBA the better the player the more they get paid, and the more likely they are to get paid the better money in a bigger market, because that market makes MORE MONEY.
    .Competition dictates pay, in the Real World (or America i should say) in the exact opposite way. In a bigger market there is more competition, so there is a person willing to do the same labor for less money (in relation to cost of living), while in contrast, you are offered more money (in relation to cost of living) in a small market (Alaska) to do the same job that you would be doing in a place of higher competition (Pennsylvania).
    -Now ofcourse there are jobs that require the very best, that offer an extreme amount of money compared to a smaller market (like a Marketing company for example) – like Marketing. But this is an extremely small portion of the population. You can’t compare a job & pay that one in 1,000,000 people may have to the majority of the job market, that’s a logical fallacy.
    .
    And I asked you if you were high, because this concept is very easy to understand.

  • retloc

    Yes I am ignorant as to the financial aspects of nba teams. However I can keep things civil, which is something you appear to lack. I get that you know everything and im pretty much subhuman beating my head against a wall, give it a rest. If you can’t engage in a discussion without caling people names it makes you look ignorant. Funny how that works

  • http://twitter.com/sooperfadeaway nbk

    calling someone ignorant is not an insult. It’s an observation. I mean I understand how you can take it as an insult, but it is really no different than me saying “you don’t know what you’re talking about” – obviously, you are sensitive to that, so i apologize for offending you.

  • retloc

    That and thhe fact that I live in montana and would rather be in alaska than pennsylvania because its more similar. Which goes for most the guys I work with. The rea mroney is in the canada work though so who knows. Obviously im ignorant and have no common sense so my opinion is meaningless. Which it is in the greater schheme of things I guess.

  • retloc

    Nbks arguing that he knows my life better than I do. As well as anything else. It drives hhim crazy that everyone here doesn’t acknowledge his superior intellect. I’ve never been called ignorant in my life actuallly, who knew it only took one conversation with a pseudo-intellectual for me to finally realize that I may have a learning disability. Who knew, besides nbk of course

  • retloc

    And for the record alaska and north dakota are the best markets for oil and gas nbk. Just thought id toss that out there. Where the work is creates the market.

  • Chronicle

    but NBK retloc’s was only one example,in the NBA,a lot of top free agents get to to be offered a lot of money from various(including smaller market) teams. Only the players logically would choose the bigger market teams but not the case in point for lebron,bosh and even wade when they decided to join forces right last 2010 right..?its a better location(Miami), but the bigger perks being offered that they didnt take lied elsewhere.

  • retloc

    Yes it is an insult, I however am not realy sensitive to it, I have no idea who you are and never will. In my experience resorting to caling people names shows an inability to control. I mean you are making my weather day go by way faster, I just think it takes away from your arguement when you feel the need to put me down. Are you high? He’s obviously ignorant, and he has no common sense are all most definitely meant to demean me. We’re all one putting me down to lift yourself up doesn’t get you anywhere. Its just negativity and its not needed. I try to reside on the positive side.

  • retloc

    How many people have you called ignorant to their face, compared to online?

  • retloc

    And we obviously differ on preferred lifestyle.

  • Brutus

    it’s not always the case for both NBA and the real world. Scottie Pippen and MJ werent paid big money earlier in their careers.Even when they started to win chips. MJ earned his through endorsements. ANd Chicago didnt have too much to do with that. Scottie though is now broke just like some other retirees.And thier location in real life after NBA didnt have to do much of anything for that. Also,in the real world,esp.after global recession started by America, a lot of jobs has shifted overseas. Mostly to China. I woulndt say its that a bad location..but i woulnt give my balls to relocate their if offered a job and i dont think they’d offer much anyway since them being ultra cheap is the only reason labor has shifted there. And yet they have now surpassed US in economy.its an unfavorable location with its population problem and low wages and yet it’s business is thriving. I wonder why is that

  • retloc

    We hire new guys at the same pay in either location. And my job is one in a million, currently there are less than three hundred people in north america doing what I do, so I guess I don’t get it. There are very few people in my parents hometown looking for work, not a saturated job market. The starting wages there are less than 10 an hour for almost everything. I see your point you just can’t seem to see mine

  • Chronicle

    Why what’s the difference? Can you put that in bullets so it would be easier for you to discuss.

  • Brutus

    Your most certainly right about being in a good location in the NBA helps a team more to earn but you can’t say this is the main factor by stressing it 3 times and saying its the main difference between the real world. I think it has more to do with those on top governing like Stern and his machinations feeding that fact when he awarded Gasol and making it not happen when he vetoed that Paul trade just because it was a conflict of his interest. It’s not just all about location, i think it is because Stern WANTS it to happen. Look at knicks. They suck.There’s not too much report going about for the past decade about thier losses by the media? Why do you think this is? Just location? Capitalism works as long as there are capitalists and there are willing victims.

  • Brutus

    Very true. best example is the team that shares thier own turf. Why has it not reached the same succes as it’s sister team? is it still all about location. let’s see how Brooklyn will fare since the Knicks being in a good location, has sucked for the better part of the decade.

  • http://twitter.com/sooperfadeaway nbk

    seeing your point, and it being relevant to the discussion we are having, are different.

  • Brutus

    And since you claim to be good at research, why don’t you support that claim by just putting the link here to where that information about the Clippers being profitable. Because I can’t seem to fathom that a team that Sucked that much is still being watched by a majority of LA fans rather than the Lakers. I think it says a lot about the fans being ignorant then rather than most people commenting here. I mean thats atleast 18,000 people for 41 games.

  • http://twitter.com/sooperfadeaway nbk

    when we are talking about a “market” as a blanket statement, we aren’t talking about a city with a job market here or there. A “big/good market” in this discussion, which should still revolve around the original topic that started the conversation, (comparing the NBA to real life), a big/good market is a place with a big population + multiple job markets + urban areas + media opportunities.
    .
    - Alaska is a good market for Oil, and Fishing. Which is nice to about .005% of the population.
    - So, In turn, Alaska as a whole, is a “small/bad” market in the grand scheme.
    - You are offered more money/benefits in Alaska because, it is a “small/bad” market and your job has little to no competition.
    .
    - Just because something applies to you personally, doesn’t mean it applies to the majority of people. And when you are talking about population and market, the majority are who matter.
    .

  • http://twitter.com/sooperfadeaway nbk

    LeBron, Dwyane, & Bosh came together for winning. Not money. = Unrelated.
    .
    If a player chooses a small market over a big market that is a personal choice, if they are offered the same* money from both, it is plainly obvious they will personally make more money in the bigger market. As they will have more external revenue opportunities.

  • http://twitter.com/sooperfadeaway nbk

    Ofcourse Stern wants the big markets to be the most successful. The big markets make the most money.
    .
    Each team is a business, if their management is bad, their team will be bad. Teams in big markets do however, have an advantage, as they attract more players, because of the increased marketability (in other words, money making opportunities).
    .
    The Knicks don’t get bad press because the majority of media is located in New York. Where they have New York Knicks fans. Talking shit about the Knicks is no way to get readers in the Knicks city. Direct correlation.

  • http://twitter.com/sooperfadeaway nbk

    if my honesty is demeaning then sure. I mean you can take my statements out of context and act like i just said them to insult you, that’s fine with me. That doesn’t mean it’s true though.
    - I said you were ignorant because you didn’t know what you were talking about. It’s not an insult, it’s an adjective, meaning, simply, “lacking knowledge or awareness”
    -I asked if you were high because you seemed like you couldn’t to stay on topic.
    -I said you lacked common sense because i literally (still) think it is common sense to understand the difference between a good/big market and bad/small when the discussion is related to the NBA.
    . Sorry that you took offense. I am just honest.

  • http://twitter.com/sooperfadeaway nbk

    a lot.

  • 3@R!>!<N0KL1f3E@+Dr!c#

    i agree in the considerable amount of time i have frequent this site and i have ID’ed nbk as that kind of person who resorts to calling names or labelling people. He also seems to get off by correcting people first and baiting them into arguements. His last card will always be allegedly stating facts to back up his point but for the most part has not given an exact link to it. He has even done that to AllenP a lot of times.He just simply states if off to you as “it is just easy as googling it”.Which most of the time,half the people may never do since I’d think they won’t care for the most part. I will give an example later on but i like this guy to comment first. He usually starts off by picking his arguements(this nbk guy) He comments by correcting something of your opinion and gets/baits you to respond. He only chooses the one he finds easier to defend. Every time you reply he’s focuses his response on a narrowing point leading to support his arguement, the one which he has chose easier to defend. Also if you provide an example, in which case more people here are to lazy to check, he will use that against you in the most close-minded way in which he will make sure you would think there’s no other possible means to exemplify it further. Amazing this guy. Its like he’s a frustated debater dropped out from his college team. He always want to argue and call you ignorant,crazy,delusioned and other mentally-demeaning words. Its like this site was made only for him or he wants to run for congress here.I wonder what this guy really looks like and what he does or done to him in the real world in a consistent basis. I wonder what his boss,college prof,his own father,mother,girlfriend,buddy did to him to make him come off as trying hard to be supreme in this site.

  • #@R!>!<N0KL1f3E@+Dr!c#

    Can you prove that.

  • http://twitter.com/sooperfadeaway nbk

    I never said the majority of LA fans/residents watch the Clippers. But LA is a HUGE market, they don’t need even close to the % of the population that a normal team in an average market needs – http://www.forbes.com/lists/2010/32/basketball-valuations-11_Los-Angeles-Clippers_322952.html
    http://www.forbes.com/lists/2009/32/basketball-values-09_Los-Angeles-Clippers_322952.html

    http://www.forbes.com/lists/2008/32/nba08_Los-Angeles-Clippers_322952.html

    - if you have trouble reading that let me know. don’t confuse team value with profits.
    - You can read the Skinny on each page if you need a recap.
    .
    The team profits, regularly. And more than most teams. Their owner is just cheap. So they don’t do it like a normal competitive franchise would.

  • http://twitter.com/sooperfadeaway nbk

    ofcourse. but then again, you’d have to talk to people that know me. so no, i can’t prove it to you. but yes, i can prove it in general.

  • Lugo

    What’s classissism? No jokes, just want to know.

  • http://twitter.com/sooperfadeaway nbk

    you know ignorant isn’t a state of being right? ignorant describes what you know about the one subject we were talking about.
    .
    it is not an insult. the fact that you keep on typing that i called you ignorant like it explains your state of being at all times tells me you are ignorant about what ignorant even is.
    .
    To clarify, you aren’t an ignorant person, as i obviously don’t know you. But you are ignorant about (at least) the Clippers and how their revenue/profits shake up and you are also ignorant about what it means when someone says you are ignorant. Nothing more.

  • retloc

    I didn’t take offense I was entertained, the reason I can’t stay on topic is because my mind is always racing from one tangent to the next. I do have a hard time staying focused, whether its because im naturally hyperactive or bipolar manicdepressive is neither here nor there. I was merely trying to communicate to you that insulting to win is an insult to yourself. If you were honest you would own your actions for what they were, meant to demean me and validate you. That’s fine by me, am not offended in the slightest, im secure in my self percepption for the most part and understand that me allowing someone else to do anything to me is ridicuous. What you said reflected on you poorly and didn’t hep make your point. I was ignorant about the clippers, point taken.

  • Dagger

    Evidently you needed some clarification. You’re the one who said those words. There are also revenue sharing systems in the “real world.” They’re called taxes. Governments (and some other organizations) are the middle men between the most exploitative structures of capitalism and the public. Governmental oversight is increasingly broken in today’s increasingly globalized, hyper-capitalist economies. In a similar way, the mechanisms the NBA uses to dampen the inequalities of its league are simply not working. The Lakers are a great example of that.

    Not sure where your anger is coming from. The beauty of Slam is that there aren’t many trolls and people can have a decent debate without resorting to that kind of immaturity.

  • http://twitter.com/sooperfadeaway nbk

    LOL whatever you want to believe. If i wanted to insult you i would have called you an idiot and been done with it. but i didn’t. Because i wasn’t insulting you.

  • Chronicle

    So you saying all that doesnt apply to NBA economics wise? Why is it that Nba is different from capitalism in the real world. How does it not apply the same to the dynamics between the relationship of owner to employee from the nba to into the real world? What are the aspects involved that you say it’s totally different?

  • Dagger

    Location . . . and the strength of your brand. And the ability/willingness of your owner to exceed the salary cap. Which requires wealth. Welcome back to the real world.

  • http://twitter.com/sooperfadeaway nbk

    Capitalism in the real word doesn’t involve a cap on your max salary. It doesn’t include a blanket draft that gives you no say in where you work. It doesn’t include any guarantees incase you are injured. There are a myriad of differences between the NBA and our Capitalistic economy. That’s the whole entire purpose of the Collective Bargaining Agreement.

  • Dagger

    There’s a huge difference between saying that someone is ignorant – period – and saying that someone is ignorant about something.

  • http://twitter.com/sooperfadeaway nbk

    i am aware. i never said he was an ignorant person.

  • retloc

    The idea that people beong to different classes, ie the way the world is set up

  • http://twitter.com/sooperfadeaway nbk

    4. What is the Collective Bargaining Agreement?
    It’s the legal contract between the league and the players association that sets up the rules by which the league operates. (It’s commonly abbreviated as “CBA,” which is not to be confused with either the Chinese Basketball Association or the Continental Basketball Association. The abbreviation CBA will be used in the remainder of this document.)
    The CBA defines the salary cap, the procedures for determining how it is set, the minimum and maximum salaries, the rules for trades, the procedures for the NBA draft, and hundreds of other things that need to be defined in order for a league like the NBA to function.
    The CBA also prevents the NBA from being in violation of federal antitrust laws. Many of the league’s practices (such as the salary cap and draft) would violate antitrust laws were they not agreed to via collective bargaining (see question number

  • Chronicle

    Did you just say on this website that you are mentally-ill?
    other than that im seeing your point clearly except that part that indeed you trail off about your emotions or thoughts. lot of people here dont have to listen to that dude.=) this is still a bball site u know. if you’re the better guy than nbk then you should just try to stay on point regardless if he’s demeaning. again, you personal issues..should just remain personal imo.

  • http://twitter.com/sooperfadeaway nbk

    oh and i’m not angry. just blunt.

  • Dagger

    Are you serious? So cost of living is the only variable here? You realize wages aren’t just magically set, right? They’re a product of negotiation and profit-making economic structures. For example: you can have an especially strong union in one place, and the wages will be higher than they are in another place despite the cost of living being lower. Another example: you can have a shortage of labour in one place and an abundance of labour in another place, so not only will capital in that first location want to offer higher wages to attract new workers, but labour will be in a better position to negotiate higher wages (or leave). I could go on.

  • hardknocklifeeatdrich

    in the place where i came from if you call people names regularly to thier faces then you’d most of the time get one too. I presume your that kind of guy that has no problem getting on with other dudes most of time then..? that is if people that do know you are mostly true men most of the time,eh?

  • http://twitter.com/sooperfadeaway nbk

    calling a person ignorant is not calling them a name like calling someone stupid is. if someone gets offended when i say they are ignorant about something i simply explain what i’m saying. just like i am doing here. really no difference.

  • http://twitter.com/sooperfadeaway nbk

    Dagger, i realize there are situations that differ from the norm. We aren’t speaking on a case by case basis. This started as a conversation about general wages & circumstances. “retloc” admittedly can’t stay on subject enough to keep things consistent. this shit is muddled. i am perfectly aware that there are various situations that change circumstances, but in general, you are going to make the same amount in relation to the cost of living in one place as you are in another assuming an average job – as we are comparing it to playing basketball in the NBA, which is obviously, the average job.

  • Dagger

    You’re missing the point. Which is: there is no such thing as unbridled capitalism in our world. It’s always mediated by something. That mediation is always imperfect. So capitalist structures will continue to breed inequality. In the NBA, and in your “real world.” Now my dicking around on a basketball website is bleeding into my work, so I’ll call it quits on this debate.

  • Brutus

    i dont have a problem understanding it.but still the point that other guy made that you argued with still made a lot sense for me that NBA still a captalist world and it’s frame is no way different than in the real world. Billionaires enter an agreement if they know they would lose money,they are not that crazy,even sterling who sucks still stays in this business since its profitable for him. compared to toher onwers he just got the better end of the deal as he said,keeping his fixed cost low know he’s in a big market.But it’s still capitalism. I didnt find anything wrong about what retloc said except where he veered off a bit. in case boht of you have good pints so i dont understand why you wanna argue with him?

  • http://twitter.com/sooperfadeaway nbk

    i’m missing my own point? you realize you are responding TOO ME right? MY POINT was and is, it’s not because the Lakers have money that they are able to continually be successful as retloc originally hypothesized (guessed/said/thinks/whatever). It’s because of their location and smart business decisions. If I was the poorest person on earth and was just handed the Lakers and got to keep their front office, I would make a profit. It would have absolutely nothing to do with “The illusion of money will always be on their side at the end of the day. If we understand that the wholle concept of money was invented in order to place people in a caste, we know that their tax bill is irrelevant. Classissism at its finest in a convoluted fashion.” – if the Lakers were run poorly by the richest man ever, they would lose money. As he was arguing that just because they are the Lakers, they will make money, no matter how much they spend — because “money is an illusion”
    .
    My point that the NBA is “outside the normal world” meant, plainly, having something doesn’t mean you will continue to have it. as there are rules in place (the collective bargaining agreement) that, in the “normal world” would be illegal, that enable teams to overtake others that are “haves” rather than keeping the “have nots” down.

  • Brutus

    my friend nbk,you are an exact definition of a cyber bully. You’re not trying to be honest. You’re trying to be superior…And you know what they say about bullies at school..they’re the ones getting bullied outside of it so they do the same to those they can do it to.

  • http://twitter.com/sooperfadeaway nbk

    LOL, ok buddy. If me explaining everything i said completely logically tells you that, then what else is there to do? Demand your cyber lunch money?

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