Luxury Tax idea

[CFAN38]

I am by no means a cap expert but I had a thought after reading this article.

https://www.nbcbayarea.com/news/sports/nbcsports/joe-lacob-nba-luxury-tax/2947801/#:~:text=All%20that%20spending%20led%20to,NBA%20title%20in%20eight%20seasons.

While I am in No way a fan of the warriors I appreciate the amazing job their front office has done. They hit 3 home runs in the draft with Steph, Klay, and Green. They had a nice pick that they had to let leave in Barnes in order to land Durant. In general they have done a nice job developing players.

The luxury tax hits them really hard given their big 3 combines to make over 114 million this season.

I wonder if the league would ever adopt a "tenured player Luxury tax exception". Lower the over all luxury tax threshold but allow up to 3 players who either have 5 years of tenure with the team they signed their first contract with (drafted by, traded for on draft day, or signed out with as a UDFA) or 8 consecutive season with their current team.

For the players association this could raise the salaries of tenured players and help get veterans get min bench roles rather then cheaper younger players. It would also put more pressure on teams to develop their young talent and not cut loose failed draft picks as quickly.

For the owners it will allow winning teams to be developed not just bought. Hitting on 2-3 draft picks would mean a foundation could be built that keeps a team in contention without the fear of the tax. This could also slow down the league star movement. When a super star leaves their tenured team for a new destination the new team will be handicapped by the tax. 

[Roy H.]

It think it's an interesting idea.  But, does it serve the goal of why the NBA has a luxury tax in the first place?  I think the NBA is trying to achieve some level of parity, by keeping spending down.  With your idea, wouldn't this plan simply aid the Warriors even more?  It's hard to fathom how much more they'd spend if they didn't have to pay tax on Curry, Klay and Draymond.

The same would benefit the Celtics substantially, as well.  No tax on Tatum, Brown or Smart.  That means that we could have utilized the TPE without being worried about the mammoth tax cost attached.  That's great for the Celtics, but isn't it bad for the league if the two league finalists can spend like drunken soldiers?

It rewards good management, which I like.  But, it could lead to a "rich get richer" situation.

[Csfan1984]

if they want to level playing field set tax line lower for high grossing team. Set higher for low grossing teams.

Example;
Warriors tax line starts at 100 million,
Magic tax line starts at 150 million,

That way big market teams that can ignore the tax don't have such an advantage anymore.

This means teams are spending based on their gross. Sure players union would be for this. Maybe only half the ownership.

[Vermont Green]

The NBA structure is extremely complicated but if they did something that mitigated the penalty on the teams with the highest salaries, then the rich would get richer and the poor would get poorer.  I understand you are saying that this would only apply to "tenured" players, but this might lead to more tanking as the only way to construct a top team would be if you draft players that in the future would be tenured superstars.  Top 3 picks would become even more essential to building a top team.

[slamtheking]

this would seem to help the rich get richer.  perhaps to reward teams that draft well or develop talent well, something like a 'hard cap' that applies to total salary on the team but will allow a team to go over that to resign a player they've drafted or were the original team that signed the player.

something like a hard cap of $140 mill (just throwing out a number for an example).  Team has salary structure that is at $132 mill.  They have a player they drafted that they need to resign that will eat up more than that $8 mill gap.  This idea would allow them to sign a FA up to that 8 mill gap while postponing resigning their drafted player until afterwards to retain that 8 mill.  they could then resign their player going over that 140 mill hard cap with a penalty applied to what they've exceeded.  if they instead resign their player and go over the $140 before signing a FA, they have no $ for a free agent other than a vet min player.  not a final proposal by any means but an alternative to reward teams that are run well and draft well.

[bdm860]

Since this proposed change would help limit/reduce player movement, we have to ask is player movement good or bad for the league?

Obviously players leaving who you want to keep is bad for their individual teams/fans, but does the NBA as a whole benefit when players switch teams?

I personally usually enjoy player movement (when it doesn't directly negatively impact the C's), makes the off season and trade deadlines exciting.  If Damian Lillard or Bradley Beal got traded, I'd likely be much more interested in their new teams than I am their current teams.  I don't think I want to give Portland/Washington more reason to hold onto those guys.

[Moranis]

I don't think the rich need to get richer by giving them this break. 

I think the main thing that would help would be the elimination of individual player maximums.  If a team has cap room and wants to pay Giannis 70 million a year, so be it.  Teams also wouldn't feel like they have to give a player like Beal 5 years, 250 million.  The max sets the market and sometimes does so on the high end.  Without the max, does Beal get that contract, probably not (still paid well, but not some arbitrarily drawn max). 

[PAOBoston]

What if they just went to a hard cap like other salary cap leagues? Seems like it would fix most of the spending/competition problems. You can spend up to $140 mil. Fill out your roster.

[slamtheking]

I don't think the rich need to get richer by giving them this break. 

I think the main thing that would help would be the elimination of individual player maximums.  If a team has cap room and wants to pay Giannis 70 million a year, so be it.  Teams also wouldn't feel like they have to give a player like Beal 5 years, 250 million.  The max sets the market and sometimes does so on the high end.  Without the max, does Beal get that contract, probably not (still paid well, but not some arbitrarily drawn max).

that's a thought that's been kicked around a lot - particularly when Lebron was in his prime.  using him as an example, considering he was the biggest draw in the league (more so than Giannis is or will be) he could theoretically tell teams he wants 50% or more of their cap room.  from a player perspective, he'd certainly be worth it but what's left over wouldn't be able to realistically put together a championship team (ignoring the fact that just having Lebron on your team makes you a contender).

the super talented probably don't get what they're truly worth because the team signing them will have little money left to add good talent.  The middling/bottom guys probably don't get much improvement in their pay because it's now going to the top end players (who would still be underpaid theoretically)

[Vermont Green]

I don't think the rich need to get richer by giving them this break. 

I think the main thing that would help would be the elimination of individual player maximums.  If a team has cap room and wants to pay Giannis 70 million a year, so be it.  Teams also wouldn't feel like they have to give a player like Beal 5 years, 250 million.  The max sets the market and sometimes does so on the high end.  Without the max, does Beal get that contract, probably not (still paid well, but not some arbitrarily drawn max).

I have in general been OK with the Max contract structure.  They have it so that there is a max and a super max.  It also changes based on the time the player has been in the league.  Maybe they could add some other tiers.

But how about if they allowed larger values in the contracts but only if they were not guaranteed beyond 1 year.  So you could sign a player to a 5 years $500M contract if you want but only if the player accepts any year beyond the first as team option.  If a player keeps playing well, they keep making a ton of money.  If they fall off, the team would have some leverage to either renegotiate or allow the player to become a UFA.  You can still get a fully guaranteed contract if you want, but only up to the max contract limits.  Basically, similar to football.

[slamtheking]

I don't think the rich need to get richer by giving them this break. 

I think the main thing that would help would be the elimination of individual player maximums.  If a team has cap room and wants to pay Giannis 70 million a year, so be it.  Teams also wouldn't feel like they have to give a player like Beal 5 years, 250 million.  The max sets the market and sometimes does so on the high end.  Without the max, does Beal get that contract, probably not (still paid well, but not some arbitrarily drawn max).

I have in general been OK with the Max contract structure.  They have it so that there is a max and a super max.  It also changes based on the time the player has been in the league.  Maybe they could add some other tiers.

But how about if they allowed larger values in the contracts but only if they were not guaranteed beyond 1 year.  So you could sign a player to a 5 years $500M contract if you want but only if the player accepts any year beyond the first as team option.  If a player keeps playing well, they keep making a ton of money.  If they fall off, the team would have some leverage to either renegotiate or allow the player to become a UFA.  You can still get a fully guaranteed contract if you want, but only up to the max contract limits.  Basically, similar to football.

no other players union other than the weak football union would go for that.

an idea I put out in a thread a few years ago was to have throw the responsibility for contract 'max' and incremental financial eligibility back on the players union to develop.  Have them determine what would be a fair 'max' deal or if there should be a max deal.  also have them responsible for determining vet minimums and fair rookie deals BUT keeping within the restraints of capped team payrolls and keeping drafted rookies under a fair control by their drafting teams.  something that could even be determined at end of season --> rosters are determined based on payroll under a cap based on players' existing contracts or their prior contracts if the deal has expired.  Let the players on the team determine which player gets paid how much based on their contribution to the team that year --> the amount to be divvied up would be a set cap amount per team such that no team could underspend that amount and no team could exceed that amount.  imagine the player infighting on that scenario

I doubt the union would take on that onus of figuring out what's fair to the superstars vs players hanging on for dear life in the league but it'd hopefully make them more amenable to reasonable suggestions for contracts, free agency and player control by teams.

[wdleehi]

How about having a max that a home grown player (or a bird's right player) on a max  deal can be taxed?

Like how they do the taxes on vet min deals.

So any player resigned to a max (or super maxed) is counted towards the tax at the non-super max price at the 6 year or less value (unless the player is then  traded at which point the whole contract value is now taxable)

This would also increase the value  of a player who will earn the max on the last year of his contract in terms of trades.

[Moranis]

I don't think the rich need to get richer by giving them this break. 

I think the main thing that would help would be the elimination of individual player maximums.  If a team has cap room and wants to pay Giannis 70 million a year, so be it.  Teams also wouldn't feel like they have to give a player like Beal 5 years, 250 million.  The max sets the market and sometimes does so on the high end.  Without the max, does Beal get that contract, probably not (still paid well, but not some arbitrarily drawn max).

I have in general been OK with the Max contract structure.  They have it so that there is a max and a super max.  It also changes based on the time the player has been in the league.  Maybe they could add some other tiers.

But how about if they allowed larger values in the contracts but only if they were not guaranteed beyond 1 year.  So you could sign a player to a 5 years $500M contract if you want but only if the player accepts any year beyond the first as team option.  If a player keeps playing well, they keep making a ton of money.  If they fall off, the team would have some leverage to either renegotiate or allow the player to become a UFA.  You can still get a fully guaranteed contract if you want, but only up to the max contract limits.  Basically, similar to football.

There isn't a supermax.  It just allows the really good players to have the max contract amount elevated to 1 tier up.  No player can sign a contract more than 35% of the cap for the 1st year.  And if you are really good player, like Beal, you expect to get the max (which in his case is that 35%).  But if there wasn't an individual max, I suspect Beal isn't signing for 35%.  he is probably signing more like 25-30%, while a guy like Giannis would probably get 40-50%. 

There are two other things they could do.

1 - they could just count all max contracts the exact same for the tax i.e. 30%.  Years of service and actual percentage doesn't matter, the contract counts as 30% (and you'd have to have some oversight from the league so a team doesn't sign a guy to 24.9% instead of the 25% max). 

2 - they could make the contract adjust based on the cap.  So if you sign for 25%, every year you make exactly 25% of the cap.  So if there is a big cap jump, the contract goes up a large amount, or if a year like 2020 happens, your 25% actually goes down.  Frankly, they could do that with all contracts, such that if you sign for 5% of the cap, the next year of the contract you still make 5% of the cap. 

[slamtheking]

I don't think the rich need to get richer by giving them this break. 

I think the main thing that would help would be the elimination of individual player maximums.  If a team has cap room and wants to pay Giannis 70 million a year, so be it.  Teams also wouldn't feel like they have to give a player like Beal 5 years, 250 million.  The max sets the market and sometimes does so on the high end.  Without the max, does Beal get that contract, probably not (still paid well, but not some arbitrarily drawn max).

I have in general been OK with the Max contract structure.  They have it so that there is a max and a super max.  It also changes based on the time the player has been in the league.  Maybe they could add some other tiers.

But how about if they allowed larger values in the contracts but only if they were not guaranteed beyond 1 year.  So you could sign a player to a 5 years $500M contract if you want but only if the player accepts any year beyond the first as team option.  If a player keeps playing well, they keep making a ton of money.  If they fall off, the team would have some leverage to either renegotiate or allow the player to become a UFA.  You can still get a fully guaranteed contract if you want, but only up to the max contract limits.  Basically, similar to football.

There isn't a supermax.  It just allows the really good players to have the max contract amount elevated to 1 tier up.  No player can sign a contract more than 35% of the cap for the 1st year.  And if you are really good player, like Beal, you expect to get the max (which in his case is that 35%).  But if there wasn't an individual max, I suspect Beal isn't signing for 35%.  he is probably signing more like 25-30%, while a guy like Giannis would probably get 40-50%. 

There are two other things they could do.

1 - they could just count all max contracts the exact same for the tax i.e. 30%.  Years of service and actual percentage doesn't matter, the contract counts as 30% (and you'd have to have some oversight from the league so a team doesn't sign a guy to 24.9% instead of the 25% max). 

2 - they could make the contract adjust based on the cap.  So if you sign for 25%, every year you make exactly 25% of the cap.  So if there is a big cap jump, the contract goes up a large amount, or if a year like 2020 happens, your 25% actually goes down.  Frankly, they could do that with all contracts, such that if you sign for 5% of the cap, the next year of the contract you still make 5% of the cap.

that is a very interesting option.  teams bidding on FAs would be able to offer a % of their cap space.  would require a hard cap to be imposed but that would tie player salaries to the success of the league. 

[CFAN38]

I don't think the rich need to get richer by giving them this break. 

I think the main thing that would help would be the elimination of individual player maximums.  If a team has cap room and wants to pay Giannis 70 million a year, so be it.  Teams also wouldn't feel like they have to give a player like Beal 5 years, 250 million.  The max sets the market and sometimes does so on the high end.  Without the max, does Beal get that contract, probably not (still paid well, but not some arbitrarily drawn max).

Eliminating the ceiling on a max deal would make things interesting but it would create problems of its own. If I remember correctly KG signed such a huge deal with the T-Wolves that he crippled the teams ability to add talent and in effect wasted years of his prime.


My initial thought with the tenured play cap exception would be to place a hard cap or a severely taxed limit on the non tenured players. Make it difficult for team like the Warriors to afford Wiggins on top of their big 3 without punishing them for hitting on Klay, Steph and Green.