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?

  • Add a Comment
  • Share
  • RSS

Tags: , , , , , , , , ,

  • http://twitter.com/sooperfadeaway nbk

    The Collective Bargaining Agreement is the System the NBA business operates under. It resembles Capatilism (
    An economic and political system in which a country’s trade and industry are controlled by private owners for profit ), but that doesn’t mean that’s what it is – as Owner’s have an equal say in profit and trade as it’s employees do. I mean the whole damn purpose of the CBA is to expunge the NBA from our normal economic system.

  • http://twitter.com/sooperfadeaway nbk

    i am not calling people names. if i tell someone they are ignorant, it is related to a subject. the majority of the time, the people i’m describing as ignorant are my friends, who are talking to me about a subject they don’t understand.
    .
    i describe MYSELF as ignorant regularly. I’ve done it on this website. If I don’t understand something, and need someone to explain it to me, I will say, ” I am ignorant as to (whatever the subject matter) can you please explain” – and I am sure not insulting myself by saying that, I’m being honest.

  • retloc

    I just thought it came off as an insult. Like I say our perceptions definitely differ I don’t agree with yours, but didn’t feel like it would have helped make my point about location and pay to say it was an ignorant one, which I happen to think it does. And the point you’re trying to make is as ever evolving as mine.

  • Chronicle

    It is related,because in the real world. you just don’t make employment and even business decisions on money alone. In the NBA that example was made recently by Steve Nash. He could have chosen NY, how is that market different from LA..? in terms of money? You’re the one who tried correcting retloc on his opinion and try to force YOUR OWN opinion. Why does your opinion only matter? Your premise only the fact? Do you have delusions of grandeur over this site. Now you’re trying to be Tony Stark. Why do you have to think for retloc? Why is he wrong? ANd you’re right? Your pathetic. Go back to your work now or NBA may not rescue you from your real world. hehe

  • http://twitter.com/sooperfadeaway nbk

    what i said you were ignorant about was the Clippers. That is it. (well and then later about what being called Ignorant about a subject means)

  • Brutus

    ah very well said. finally, a clear mind that does not mean to discord but intends, honestly, to enlighten.

  • http://twitter.com/sooperfadeaway nbk

    it’s unrelated because it has nothing to do with this conversation. we aren’t talking about why players choose one place over another. We are talking about why big markets in the NBA yield more money, compared to in the real world.
    .
    But it’s cute that you want to defend @retloc:disqus is he not doing a good enough job responding to me? talk about delusions of grandeur, does you defending him set me straight or something? are you batman, ridding the world of the joker? (see how asking stupid questions does nothing?)
    .
    I never told Retloc how to think, and I only argued about factual information (in the context of our conversation). is your issue with my argumentative nature? or are you just mad because i said one of your points is irrelevant?
    .
    oh and how does you telling me about my own comments and defining them yourself, and then calling me “pathetic” make you any better than me? that seems a little hypocritical. just a little.

  • Chronicle

    the fact is, have yoo tried your best to resolve where your “disagreement” lied. You didnt agree to his so you tried to stress your own which you mean only for you to understand because it was written with so much mal intent as to ‘”try” to intellectually” demean the other person so you “seem” to come out as the “superior” when you just build entirely on your own premise. You just try to expand your arguement by trying to solidify your points. You had no point to reconcile. How is it that you expect people to want to understand you? it was very clear from the start you just wanted to teach a lesson your way. Your ways are not enlightening. Yours incite aggression and hate.

  • http://twitter.com/sooperfadeaway nbk

    Why do you keep responding to me in different locations? You don’t like my response in one place, so you jump to another and try and incite a different retort? is that how this works?
    .
    I explained what I said to retloc, to retloc. If you are confused about any of it, you can find an explanation somewhere in these comments.
    .
    And again, you judging me and telling me your opinion of my comments doesn’t prove your point, it just makes what your saying look very hypocritical. that’s the fact.

  • Brutus

    the problem with you nbk is that your opinion seems to be the only thing that is a fact, for you. when you are not even in the position that retloc is in. Presumably,you are not in the same background in terrms of (total and varied)work experience, industry and the various skills that you have learned along the way. So when you say generally, you speak of your own experiences and background which is obviously i must say, general business,while the other guy might be an engineering grad and is an oil driller and thinks of as more of an employee while you have the ambitions of becoming a Buffett,Stern or Sterling someday.So you think, differently, your “in general” would based where your interests lie..money and fame.

  • http://twitter.com/sooperfadeaway nbk

    HA! Is that your opinion or is that a fact?

  • Chronicle

    Do you realize NBk that the market that retloc is talking about differs from the market you are currently oriented in and that has been what he’s trying to say etc. while you go off with your rant about your own knowledge of what a market is? when you drill for oil or sell or whatever you dont consider the media or it may not be dependent that much on job market size or population as it has other distribution networks for it’s intended market. All the while i understand retloc was trying to connect HIS real world which maybe totally different from yours with NBA the same way as a guy who lives in africa in the middle of the savannah gets a dish and sees nba regularly may relate his own life with the dynamics of nba.Meanwhile, I do understand that your also correct in your own part of the world of how the NBA is shit etc..

  • waffles

    lol

  • roscoe

    it is only money

  • Chronicle

    the thing is this arguement bet you 2 started or shuold i say 1 is because retloc more of like laid out a complain about capitalism being the prevalent in the NBA and how by in his own realization, think, how he feels it pathetically connects with his own situation. remeber, the saying that said,” a man’s view on his world reflects more on himself rather than..”etc. then nbk being all technical,swoop down on his prey and stood to correct him that he was wrong on his views that NBA actually works differently in which case he has a strong point (as he laid out)only he didnt get why retloc made that comment in the 1st place. I hope im right but i think retloc misses his family now that i read more and blames capitalism for his current plight.

  • http://twitter.com/sooperfadeaway nbk

    As my very first response said, his comment would hVe been completely relevant had it not been about the financial obligations of an MBA team.

  • retloc

    So boston is the greatest location ever?

  • Brutus

    whoa,man, you are something. are you a lawyer? you should be. and im sure there’s more space in that head for an economist or financial analyst. your good at your job, only you’re not a people person. My advise, if you ever needed one. to get to the top. most impt. is attitude and PR. You cant climb the mountain top by stepping on people. if they move you gonna fall. so you should refine that ego and learn to ride the waves of people. Only then you get your desired goal.

  • retloc

    This is why I typically don’t comment im a ranter, and im not mentally ill, I have focus issues. I still function fine in the greater scheme of things. Very prone to rants though

  • retloc

    I did own the ignorance, I just pointed out howw I fellt you were using it as a tool to aid you’re arguement. And at first it did seem to imply overall ignorance not just about the clippers. That’s how it read anyway.

  • retloc

    Only you just said you are ignorant. Not you are ignorant about this. Im really just killing my day on here is all though. Like I say weather day sitting in camp we have no tv and I’ve got my fill of reading books in the last few days. You made my day go by way quickker. Probably the best weather day in camp since I text battled a heroin dealing sexual deviant who ended up with my buddies phone. Not much in the way of entertainment in camp the same dudes for forty or fifty days straight those conversations get a little stale. I’ve completely enjoyed our interaction.

  • Chronicles

    “- 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” -nbk
    I believe you also stated in the next succeeding entries that LA Cippers was still profitable despite being run poorly by a rich man in Donald Sterling not based on marketsize/location which is not of Sterling’s creation.That contradicts the point you prev. stated above. If based on running the franchise alone or as the forbes link you gave,indicates brand management alone was used as gauge.You expcet losing games would translate to lsong money.Sterling did fail.But he didnt..!!! So, this premise was indeed right,”
    “The illusion of money will always be on their side at the end of the day. ” -retloc
    Capitalism is prevalent in NBA no matter how you try to mediate it.
    Just the same in the “real world”.

  • Brutus

    No,demand that you are the only one who understands everything that is said in here and others whom you have argued with does not have plain common sense in understanding and differentiating stated facts by you, which would as any grown man would think, might translate into the real world. It would suggest your stated facts, that since everyone which you have corrected does not understand your point which is too easy,then we are imbeciles then and might not function normally in the “real world” that you call? because the way you have gone about your being blunt is something that readily implies your the only one who understands anything in here.As you argue with everyone. Anyone who states a point that you don’t agree with easily becomes your debate partner.And if he can not follow,becomes a lesser being to you. That is an intellectual bully to me.Mind you english is not my first language but i can almost see through you and in our culture,Respect in the thoughts,words and deeds is very highly regarded. If it is lost in America. I am sorry.

  • Chronicle

    Same here. ive been often told. at work. by my superior. that sometimes my imagination is too much. and i rarely listen to what they’re blabbing about and instead focus on the next idea i may invent or even just innovate from an existing one. I dont understand where you put your rants. is it just online? cause those kind of things are food to nbk. lol

  • http://twitter.com/sooperfadeaway nbk

    Actually I said the Clippers make money because Sterling is cheap and not interested in winning. I even said they are a successful franchise financially despite going about it in an untraditional way. I never once said they are run poorly from a business’s perspective. Donald Sterling is a piece of shit, but he makes money at just about everything he does from what I know. Good try tho.

  • http://twitter.com/sooperfadeaway nbk

    I have enjoyed this conversation as well. I have no hard feelings or anything like that, I just disagreed with a few things you said, and tried to correct some stuff I got wrong. Giving article related commentary, arguing and conversing are what the comment section is for anyway, idk why so many people are surprised by the interaction
    Sent from right behind you.

  • retloc

    This is actually only the fourth time I belie e I’ve taken the rant online. I rant to coworkers friends and family mostly. Write a lot to try to put the chaos in order, but it mostly comes out as abstract poetry that is anything but ordered. I definitely don’t give posting on a bball forum enough importance to justify organizing my thoughts. Save that for when I really need it

  • http://twitter.com/sooperfadeaway nbk

    I hope you don’t honestly believe you are accurately judging me based on what you’ve read here. But I do appreciate what you said

  • retloc

    Il definitely assume the responsibility for this going way off topic, in camp my mind is always racing, especially in regards to money jobs etc. Finding myself a country away from my wife and son for money is a stressor, so the whole structure that I’ve willingly sold myself to seems to always be on my mind. I hope I don’t become that guy who always rants about the govt power money etc. I just have trouble not seeing how its not all related.

  • http://twitter.com/sooperfadeaway nbk

    It’s all good much of this has been my fault. I do see how I came off as insulting, I apologize for that. As you can hopefully tell by now that was not my intent. Don’t let this encounter deter you from coming back, things are about to get even more entertaining in the next week or so

  • retloc

    If I would have read this at the time it was posted it may have saved some time. Like I said it originallly seemed to be in the context of overall. I responded with heavy sarcasm which didn’t clarify the issue at all.

  • retloc

    I always read slam pretty steadily, unless im in camp with no internet, which has happened entirelly too many times, and at home my schedule is all watching the kid, so I always read at night and the conversations usually dead by then. If you think my thoughts are scattered now you can’t imagine what a comment would look like as I drop everything every twenty seconds to chase him all over the house or yard.

  • retloc

    It is not lost, however, our society has respect issues in general. I tried to remain respectful,but human nature is to denigrate others to elevate self. All of us fall into it some time or another. And I wasn’t really trying to have a bball conversation at all, which is why I chose the topic regarding finances. In my mind I know I believe everyone is equal, but its hard to live that every day.

  • retloc

    And yes ignorance is a state of being. Well so yeah technically ignorantt is not but ignorance is

  • retloc

    Inin chronicles defense I have no idea how these comments are arranged. If you read this in a linear fashion there’s a whole different discussion taking place, at least on my phone.

  • retloc

    Someone who understands my point better than me right here. Perception plays a prominent role in what we define to be a good or bad market. I made reference to this earlier in regards to preferred lifestyle. Los angeles in no way shape or form could help me achieve my preferred lifestyle,, montana can{not so much on the job side of things}do I think that people who find that lifestyle fulfilling are wrong? No, its just not my cup of tea

  • retloc

    Imim inot blaming capitalism for my current plight,if anything im bllaming the illusion of money power and the class system of the world. But im not into the blame game im where I am because of decisions I’ve made. Made a lot of bad ones that I’ve now got to deal with. But its all on me. But my intent was to take this to a human level

  • retloc

    But but yeah missing my family is definitely playing a part in my comments. Its tough to leave them to go work for money,when your basic belief is that money is fictional. It was created to control. That was my original point. To separate the people. I bought into this though, so unless I want to lose my house and not provide the most stable environment for my son to grow up in im in it for a minute. Ii don’t feel like my job is truly helping humanity achieve harmony,actually the exact opposite, so im dumping that on all of you.. honestly, when anyone says they llove their job it blows my mind,but maybe that’s only because I cantsee myself loving any job I could imagine, outside of pro athlete or poet/musician. The ship sailed on the pro athlete and poetry doesn’t pay, music is good therapy,but im not in a situation where I can devote all my energy to it.. I have bills,and unless the montana pot laws change im going to continue doing whate er I can to provide for the fam

  • retloc

    I think of myself in terms of being a person. I don’t want to be an employee, but am. I’ve had, and currently have my own business as well, but it can be a long road to see profit. In the end I just want to be connected to people, because being open honest and having good relationships is more important than all the money in the world.

  • retloc

    Since I started the discussion I kkind of assumed most the things were relevant to what I was saying. That’s just me though.

  • Dacre

    and they all lived happily ever after. . . . ?

    For the record… the adventures of nbk make for great reading.

  • shutup

    So how does winning in a small market play in to your equation, say someone like Aaron Rodgers, or Peyton Manning to a degree, or if you just want to consider NBA players, how about a Tim Duncan or Kevin Garnett in Minnesotta, both had numerous endorsement deals in “small markets”. It seems winning is the biggest factor or revenue would be the same in NY and LA. I think the use of blanket terms also leads to some discord, bigger does not always mean more populous, there is a bigger fishing market in Hawaii compared to say California. One could contend that the NBA is a direct example of capitalism, because even small market teams pay for premium talent, ie Tim Duncans 25mil or Lebron before the decision, however there is also the middle and low class players in the nba, more talented players can pick where they want to play but lesser valuable players have to get in where they fit in, how is that different from say a lawyer with a Harvard degree as to someone with a law degree from say some lil community college in Arkansas?

  • shutup

    The Knicks get blasted on the regular in the press, they also celebrate their victories but failures are just as magnified. Go back and look up the Daily News headline when Patrick Ewing missed that finger roll.

  • Caboose

    What the hell happened here??

  • http://twitter.com/sooperfadeaway nbk

    - first of all the NFL system is totally different and completely promotes parity. The revenue sharing system in that league is completely even. The sport is insanely popular and the players where helmets, “marketability” within the sport is far less important. -Tim Duncan, Kevin Durant are what we like to call exceptions. Their priorities are purely about winning, when that happens with stars, it changes the game. But those are exceptions. -in terms of “middle class” and “lower class” players, the middle class still typically choose a big market over a small one, and a lot of times for less money (Ronnie Brewer signed in New York for the minimum for example). Lower class is not much different than the normal economy except the competition for a job is even higher. – there are obvious similarities to our normal economy, there are obvious similarities between any economy if you want to look for them. The league still operates under the CBA, the intent of which is to circumvent business laws that would otherwise be illegal. – I do agree about blanket terms, that misunderstanding was my fault. – and I never said small markets don’t pay a premium for talent, it’s that they can’t pay a more than double the premium for multiple talents. Typically.

  • Caboose

    The wording on that petition sounds like its from a middle schooler.

  • shutup

    Thank you now I understand your position a lot better. I still see OKC though being profitable with two max contracts and if the re-sign Harden several other large contracts, with Perkins and Ibaka.Don’t know if that applies to your aforementioned Kevin Durant exception, but I think winning has to come first for any franchise to rise to prominence, the Lakers were able to grow the way they did because they were winners before they had the big market. Granted the reason they decided to move to LA was to corner an untapped market (which at the time was unheard of), they were the NBA’s first West Coast team and the NBA’s first dynasty, they also had arguably 3 of the first NBA super stars in Mikan, Baylor and West all of whom were drafted by the team (Mikan was awarded to the team when the the PBL was disbanded and the players were distributed by make shift lottery; so hence a draft). So winning predated the big market. Now once they were established major name players got traded there (ie, Wilt and Kareem) but they still did really well in the draft (Magic, Worthy, and Kobe)(in Kobe’s case draft day trades still have ambiguity to if they were going to trade him or he stated he wouldn’t play for Charlotte first). My point being winning is paramount, the money follows the wins it doesnt matter the market. The Yankees are the Yankees because they win thats how they got to the level of being able to afford that payroll.

  • LobCity

    They actually did mention the tv deal by saying “They’re certainly not lacking in funds” and providing the link to the story on the tv deal. They’re also talking about 2014, so how much will the cap increase in 2 years? Maybe 2-3 mil? Still sounds like a big bill.
    My opinion: The money won’t change, but the players might. As long as the Lakers win championships this team will stay together, regardless of that tax bill. If they don’t, so long Pau and or Nash. You won’t be anywhere near getting under the cap, Kobe has a no-trade clause, and they ain’t trading D12. So that leaves Pau and Nash as trading chips.

  • LobCity

    Not necessarily. The collective bargaining agreement is what determines the salary cap for ___ amount of years, usually 10 if I recall correctly. So the more money the team makes over the life of that agreement, the more leverage the players have when it comes to negotiating their future pay. So since team lost money, the players are getting screwed under this new contract regardless of how much the league grows. However, if the league continuos to grow under the CBA then players will be allowed to make more under the next CBA.

  • Dacre

    I would like to add to the overall flavour of the conversation: if your coming along as an NBA fan and thinking about the clippers and their woeful history as a ball club don’t make the mistake that a lack of wins on the board season after season immediately means the team is struggling financially.position definitely has a bearing. . . Considering clippers and knicks as location and financial viability versus overall performance helps to identify this.

Advertisement