Does the NBA need some sort of hard cap?

[Roy H.]

The answer is obviously yes, right?

Golden State is talking about giving big money extensions to Jordan Poole and Andrew Wiggins.  Their payroll (not counting coaches) was $346 million after luxury tax.  For perspective, the Celtics paid $138 million.  In other words, the Warriors paid 2.5x more than us. 

At some point the NBA is going to have to get serious and implement a hard cap, even if it's a very high one. 

For instance, the salary "cap" last year was $112.4 million.  Limiting total salary (including tax) expenditures to double that -- $224.8 million -- isn't unreasonable, is it?

[libermaniac]

Wow!  How does that $346 break down?  That is nuts.

I think the NBA would be super interesting if they did things like the NFL.  Hard cap, no exceptions, and no single-player max.  Talk about parity!  This would be fantastic for competition every year, but you would never have continuity with teams developing AND KEEPING their young stars.

[Moranis]

Nope

[SHAQATTACK]

The answer is obviously yes, right?

Golden State is talking about giving big money extensions to Jordan Poole and Andrew Wiggins.  Their payroll (not counting coaches) was $346 million after luxury tax.  For perspective, the Celtics paid $138 million.  In other words, the Warriors paid 2.5x more than us. 

At some point the NBA is going to have to get serious and implement a hard cap, even if it's a very high one. 

For instance, the salary "cap" last year was $112.4 million.  Limiting total salary (including tax) expenditures to double that -- $224.8 million -- isn't unreasonable, is it?

Parity demands it ….but life is never about what is right it seems
But fans love a dominant winner and I think money wise pumping up a CA team every year to win is a money cow the NBA .  A system that rewards the largest fan bases is going to be difficult to rework .

[Moranis]

To further clarify, obviously Golden State is paying a massive penalty, but that is a rarity and don't we want teams to be able to keep players they drafted?

I do think most people would be surprised at the largest tax paying teams on a yearly basis.  I mean the 4 years Lebron was back in Cleveland, the Cavs had the 2nd highest tax the first season and were the highest paying tax team the next 3.  Most years only a few teams even pay the tax.

In 14/15 these 5 teams paid tax (highest to lowest) - Brooklyn, Cleveland, New York, LAC, OKC

in 15/16, 7 teams paid the tax: Cleveland, LAC, Golden St, OKC, Houston, San An, Chicago

in 16/17 only the Cavs and Clippers were tax teams

in 17/18, 4 teams paid it: Cleveland, Golden St., OKC, Washington

in 18/19 it was again 5 teams: OKC, Golden St., Toronto, Portland, Boston

in 19/20 it was back to 4 teams: Miami, Minnesota, OKC, and Portland (those are alphabetical but all small figures)

If you look at the teams paying the tax, it is a pretty wide gamut of teams and before the Warriors of the last couple of years, the Cavs had BY FAR paid the most tax. 

There is absolutely no reason to do a hard cap.  The trading rules make it difficult for a team to do what Golden State did, unless they draft very well (which they have).  So why punish a team that drafts well if it wants to pay an astronomical sum. 

[bdm860]

Golden State only had payroll of ~$176m.  That's not as outrageous when compared to the Celtics.

I think GS getting hit with a $170m luxury tax bill is the system working pretty much as intended.   If you want a big payroll, you're going to be taxed extremely hard on it.

So Golden State, at $40m over the luxury tax threshold paid a tax bill of $170m.  If they go over say another $20m due to a big Poole extension and keeping all the other guys (Steph/Klay/Draymond/Wiggins) their tax bill jumps to $317m, and that's just the tax!

If Golden State wants to pay $300m in tax to put together a team of $200m in salaries (making total payroll $500m), I don't have a problem with it.

[celticsclay]

The answer is obviously yes, right?

Golden State is talking about giving big money extensions to Jordan Poole and Andrew Wiggins.  Their payroll (not counting coaches) was $346 million after luxury tax.  For perspective, the Celtics paid $138 million.  In other words, the Warriors paid 2.5x more than us. 

At some point the NBA is going to have to get serious and implement a hard cap, even if it's a very high one. 

For instance, the salary "cap" last year was $112.4 million.  Limiting total salary (including tax) expenditures to double that -- $224.8 million -- isn't unreasonable, is it?

Yes. I think this could very much become a bigger problem especially if you look at what is happening with golf right now. Some trillionaire could come in and ruin the NBA if they wanted to.

[Phantom255x]

The answer is obviously yes, right?

Golden State is talking about giving big money extensions to Jordan Poole and Andrew Wiggins.  Their payroll (not counting coaches) was $346 million after luxury tax.  For perspective, the Celtics paid $138 million.  In other words, the Warriors paid 2.5x more than us. 

At some point the NBA is going to have to get serious and implement a hard cap, even if it's a very high one. 

For instance, the salary "cap" last year was $112.4 million.  Limiting total salary (including tax) expenditures to double that -- $224.8 million -- isn't unreasonable, is it?

Yes. I think this could very much become a bigger problem especially if you look at what is happening with golf right now. Some trillionaire could come in and ruin the NBA if they wanted to.

Dang you ruined my master plan

 

[Csfan1984]

Wish they used tax to help under tax teams put out better product and not fatten owners pockets.

As in if teams pay the tax the under the tax teams only get that money in terms of player exemption options. It is like free money that doesn't count on your tax bill to improve your club for what ever new contract you sign that offseason.

___________

Example 14 teams pay a total of 300 million in tax in 2022. The 16 teams under the cap get to use that as tax free money (18.75 million). It would be added to any exemption or the team's capspace so long as the money exemption is stretched to under 3 years or less.

This in theory would give $18.75 million to use however they want on new contract over a three year span.

-Say you have $14 million in space you add the full exemption to then sign a $32.75 million per year player and that first year only $14 million is on your cap.
-Or that same team splits the $18.75 million over the full three years and sign a guy to less than $20.25 million for three years, allowing them to stay under the tax and double dip the next year on the taxpayers pockets.

-A different team decides to split the $18.75 over two years and not change their cap/budget number, gets a free player for two years.
______


Tax money should be used to improve clubs not make owners $. Unfortunately the NBA is business first before competition.

[CFAN38]

I don't know that a hard cap is the answer but it does feel like the Luxury tax isn't working.

Its a great mechanism for profit sharing but seems like it handy caps middle tier or perceived middle tier teams. We have seen it with the Celtics where the roster wasn't perceived to be at a championship level and ownership didn't give the green light to go into the tax. This is perfectly sound logic given the compounded nature of the Lux tax penalty and the fact that entering the tax also eliminates the team from the shared revenue gathered from the tax.

If ownership views their team as sub-champion level team it just isn't a good business decision to pay the tax. For a team like the Warriors they have a limited window of time with a prime Curry so paying big money makes total sense economically and on the court.

Looking at some changes..

I have been a fan for a long time of the idea of working some sort of tenure based luxury tax exemption into the CBA. An example would be if a player has been with a team for 5 consecutive season and resigns only a % of his contract counts vs the Luxury tax. Make this % increase with years of tenure on one team, this would promote players staying with teams long term.

Maybe implement a pick penalty for multiple years drastically over the luxury tax? Three consecutive years at x% over the cap and you lose the rights to your next first round pick? Then auction the pick off to all non tax payer teams, highest bidder gets the pick and proceeds go to non tax teams.

Maybe tier the penalty so that teams slightly over still get a % of the profit sharing while teams way over do not?   

While they are at it, implement a two year no trade clause on all super max contracts. If a player signs for more then the standard max deal they are not eligible to be traded for two season. This could help stop stars from signing large deals then pushing their way into trades.

[Roy H.]

Golden State only had payroll of ~$176m.  That's not as outrageous when compared to the Celtics.

I think GS getting hit with a $170m luxury tax bill is the system working pretty much as intended.   If you want a big payroll, you're going to be taxed extremely hard on it.

So Golden State, at $40m over the luxury tax threshold paid a tax bill of $170m.  If they go over say another $20m due to a big Poole extension and keeping all the other guys (Steph/Klay/Draymond/Wiggins) their tax bill jumps to $317m, and that's just the tax!

If Golden State wants to pay $300m in tax to put together a team of $200m in salaries (making total payroll $500m), I don't have a problem with it.

How do small markets compete, though, when certain teams literally double the spending of others? 

[bdm860]

Golden State only had payroll of ~$176m.  That's not as outrageous when compared to the Celtics.

I think GS getting hit with a $170m luxury tax bill is the system working pretty much as intended.   If you want a big payroll, you're going to be taxed extremely hard on it.

So Golden State, at $40m over the luxury tax threshold paid a tax bill of $170m.  If they go over say another $20m due to a big Poole extension and keeping all the other guys (Steph/Klay/Draymond/Wiggins) their tax bill jumps to $317m, and that's just the tax!

If Golden State wants to pay $300m in tax to put together a team of $200m in salaries (making total payroll $500m), I don't have a problem with it.

How do small markets compete, though, when certain teams literally double the spending of others?

The same way they've been competing.  Good management and luck. 

Do you think there's been a shortage of small market championships/success in the NBA?  I don't.  Not only have several won championships in the last 20 years, but many more have been contenders.

This isn't the 73-win Warriors adding max free agents.  They've won 1 championship in the last 4 years, and I wouldn't be surprised if they don't win another one with their current core (unless Steph ages like LeBron).  They're great, but also aging and beatable.

And this is all largely a carry over from that one time cap spike and Durant signing.  They got Durant which allowed them to get DLo which allowed them to get Wiggins, keeping that extra max salary slot the whole time.  That's not really a repeatable event.

[SHAQATTACK]

Golden State only had payroll of ~$176m.  That's not as outrageous when compared to the Celtics.

I think GS getting hit with a $170m luxury tax bill is the system working pretty much as intended.   If you want a big payroll, you're going to be taxed extremely hard on it.

So Golden State, at $40m over the luxury tax threshold paid a tax bill of $170m.  If they go over say another $20m due to a big Poole extension and keeping all the other guys (Steph/Klay/Draymond/Wiggins) their tax bill jumps to $317m, and that's just the tax!

If Golden State wants to pay $300m in tax to put together a team of $200m in salaries (making total payroll $500m), I don't have a problem with it.

How do small markets compete, though, when certain teams literally double the spending of others?

They draft well and send their players to LA to win more Championships. 

[colincb]

Golden State only had payroll of ~$176m.  That's not as outrageous when compared to the Celtics.

I think GS getting hit with a $170m luxury tax bill is the system working pretty much as intended.   If you want a big payroll, you're going to be taxed extremely hard on it.

So Golden State, at $40m over the luxury tax threshold paid a tax bill of $170m.  If they go over say another $20m due to a big Poole extension and keeping all the other guys (Steph/Klay/Draymond/Wiggins) their tax bill jumps to $317m, and that's just the tax!

If Golden State wants to pay $300m in tax to put together a team of $200m in salaries (making total payroll $500m), I don't have a problem with it.

How do small markets compete, though, when certain teams literally double the spending of others?

1) Spending a lot of money doesn't guarantee anything. Knicks paid the tax 10 times as of 2018:

Total amount: $248.5 million
Record in tax seasons: 324-496 (39.5 percent)
Playoffs in tax seasons: Two appearances, one series won

2) Teams under the cap teams get the luxury taxes paid out to them evenly. They're not suffering,

3) Some teams don't really compete.

4) Teams like the Cs, Spurs, Heat, etc, have been very savvy in paying the tax when it makes a difference even though that upsets some of their fans.

5) The Warriors had an unusual situation when they had built a new forum and did not have a contending team. They spent the money to get the tickets sold in the new stadium and now have to pay guys like Wiggins and Poole to contend going forward even as they pay guys like Green for 2 more years and KT for three who are not the same players they use to be. When they crash, it's going to be a mess.

6) The tax was set up to allow teams to keep their talent. As already pointed out, the tax can be extreme. The Warriors are far from a shoo-in next year.

[gouki88]

I don't think the luxury tax is working as intended, so I do think reform is needed. Whether that's a hard cap, changing the CBA itself (no max contracts, for example) or something else, who knows.