Do you think the Celtics will spend deep into the luxury tax?

[footey]

Count me in Roy's corner here.

The Celtics owners are making gobs of revenue cash(close to $100 million a year) and simultaneously increasing their franchise value at close to $150 million a year.

If they spend and the team makes a deep run, how much money does the team make because of 7 to 10 home playoff games? How much do they make because as a contender they get more national exposure? How much more money can they make on future television and radio deals because they are a contender? How much more can they make by jacking up ticket costs because they are contenders?

All this, in time, can offset some of those extra tax costs. If the team spends and are contenders due to the money spent, they will make that money back. Being a contender opens up ways to making more money. If they win it all, even more ways.

I want to see another title before I die. The Celtics have the parts and money in place to make an excellent run at multiple titles over the next 7-10 years. They'll need to spend to do it. No more stepping back, getting younger, saving money so the owners continue to make beaucoup bucks. Spend and add vet guys that will move the team forward now. They can afford it

$100 mm a year in revenue. Is that gross or net? 

[Celtics2021]

Count me in Roy's corner here.

The Celtics owners are making gobs of revenue cash(close to $100 million a year) and simultaneously increasing their franchise value at close to $150 million a year.

If they spend and the team makes a deep run, how much money does the team make because of 7 to 10 home playoff games? How much do they make because as a contender they get more national exposure? How much more money can they make on future television and radio deals because they are a contender? How much more can they make by jacking up ticket costs because they are contenders?

All this, in time, can offset some of those extra tax costs. If the team spends and are contenders due to the money spent, they will make that money back. Being a contender opens up ways to making more money. If they win it all, even more ways.

I want to see another title before I die. The Celtics have the parts and money in place to make an excellent run at multiple titles over the next 7-10 years. They'll need to spend to do it. No more stepping back, getting younger, saving money so the owners continue to make beaucoup bucks. Spend and add vet guys that will move the team forward now. They can afford it

$100 mm a year in revenue. Is that gross or net?

Roy thinks it’s net from Forbes.  I’m not convinced it’s that high, but I’m sure it’s not gross.

The C’s probably got around $150 million from media rights this year alone.

[td450]

I think they would be willing, but what is complicated is how to apply money in an effective way that gets them into contention. Committing money and failing to do that is worse than not committing the money.

They are in a dangerous place. Fournier is a classic case of a player who can be a strong contributor, but only in the right situation, and there are multiple factors to consider that we don't see as fans. It would be easy to commit money to him and fail. He could ask for too much, or the C's could use him the wrong way or surround him with the wrong teammates. He may have some hidden flaws. It may not be a good idea to resign him if they don't fully accept the parameters to make it work.

Likewise, spending money on other players takes the right opportunities. I think they need to be pretty conservative and only spend when they are confident. That may disappoint some fans but they can't afford any more mistakes.

[Rosco917]

You don't spend deep into the luxury tax unless you have an indication that the team is close to being a firm contender.

It's easy to spend OPM.

[Roy H.]

Count me in Roy's corner here.

The Celtics owners are making gobs of revenue cash(close to $100 million a year) and simultaneously increasing their franchise value at close to $150 million a year.

If they spend and the team makes a deep run, how much money does the team make because of 7 to 10 home playoff games? How much do they make because as a contender they get more national exposure? How much more money can they make on future television and radio deals because they are a contender? How much more can they make by jacking up ticket costs because they are contenders?

All this, in time, can offset some of those extra tax costs. If the team spends and are contenders due to the money spent, they will make that money back. Being a contender opens up ways to making more money. If they win it all, even more ways.

I want to see another title before I die. The Celtics have the parts and money in place to make an excellent run at multiple titles over the next 7-10 years. They'll need to spend to do it. No more stepping back, getting younger, saving money so the owners continue to make beaucoup bucks. Spend and add vet guys that will move the team forward now. They can afford it

$100 mm a year in revenue. Is that gross or net?

Roy thinks it’s net from Forbes.  I’m not convinced it’s that high, but I’m sure it’s not gross.

The C’s probably got around $150 million from media rights this year alone.

It’s operating income. 

https://www.investopedia.com/terms/o/operatingincome.asp

Basically, profits before taxes.

[nickagneta]

Count me in Roy's corner here.

The Celtics owners are making gobs of revenue cash(close to $100 million a year) and simultaneously increasing their franchise value at close to $150 million a year.

If they spend and the team makes a deep run, how much money does the team make because of 7 to 10 home playoff games? How much do they make because as a contender they get more national exposure? How much more money can they make on future television and radio deals because they are a contender? How much more can they make by jacking up ticket costs because they are contenders?

All this, in time, can offset some of those extra tax costs. If the team spends and are contenders due to the money spent, they will make that money back. Being a contender opens up ways to making more money. If they win it all, even more ways.

I want to see another title before I die. The Celtics have the parts and money in place to make an excellent run at multiple titles over the next 7-10 years. They'll need to spend to do it. No more stepping back, getting younger, saving money so the owners continue to make beaucoup bucks. Spend and add vet guys that will move the team forward now. They can afford it

$100 mm a year in revenue. Is that gross or net?

Roy thinks it’s net from Forbes.  I’m not convinced it’s that high, but I’m sure it’s not gross.

The C’s probably got around $150 million from media rights this year alone.

It’s operating income. 

https://www.investopedia.com/terms/o/operatingincome.asp

Basically, profits before taxes.

From Forbes:

https://www.forbes.com/teams/boston-celtics/?sh=45af09b0767b

Also notice the attendance and average cost of ticket. It's $2 million generated per game not counting parking, concessions, etc. $2.5 million made per playoff game is probably pretty easy. Get 8 home playoffs games and you are talking $20 million to offset some of those luxury tax costs. Minimum.

So there are ways that the team will recoup those luxury tax dollars. We as fans shouldn't worry about the luxury tax because the team can easily afford them and will have paths to making those dollars back.

[PhoSita]

I have a basic understanding of the CBA salary cap and luxury tax, but certainly nothing beyond that.

So, please explain to me how the Nets have been able to acquire three All-NBA superstar players to their team with all these restrictions ?
I understand you can go beyond the cap to re-sign your own players, but I thought there were all sorts of obstacles to adding max level salaries with players from other teams as new additions to your roster ??

The Nets had a ton of cap space two summers ago.  They used that cap space to sign Kyrie and Durant.  I think they also did a sign-and-trade of Russell to Golden State in the course of acquiring Durant.  I think they would have been able to sign Durant outright, though, but that gave them extra room to work with.

This season the Nets traded Caris LeVert, Jarrett Allen, Taurean Prince, and filler for Harden.  LeVert and Prince combined made about $30+ million.  So that was a matching salary trade.

Now the Nets have most of their money tied up in Kyrie, Durant, and Harden.  They also have Harris, who they signed using bird rights, at about $15 million annually.  They have Deandre Jordan making some unreasonable amount of money to not play.  They have Spencer Dinwiddie on an expiring making a decent chunk of money also.

Of course one of the best players on the Nets right now is Blake Griffin, who they got basically for free, because he quit on the Pistons and got them to buy him out, and now he's still making a ton of money but costing the Nets very little.

Great system we've got.

[Celtics2021]

I have a basic understanding of the CBA salary cap and luxury tax, but certainly nothing beyond that.

So, please explain to me how the Nets have been able to acquire three All-NBA superstar players to their team with all these restrictions ?
I understand you can go beyond the cap to re-sign your own players, but I thought there were all sorts of obstacles to adding max level salaries with players from other teams as new additions to your roster ??

The Nets had a ton of cap space two summers ago.  They used that cap space to sign Kyrie and Durant.  I think they also did a sign-and-trade of Russell to Golden State in the course of acquiring Durant.  I think they would have been able to sign Durant outright, though, but that gave them extra room to work with.

This season the Nets traded Caris LeVert, Jarrett Allen, Taurean Prince, and filler for Harden.  LeVert and Prince combined made about $30+ million.  So that was a matching salary trade.

Now the Nets have most of their money tied up in Kyrie, Durant, and Harden.  They also have Harris, who they signed using bird rights, at about $15 million annually.  They have Deandre Jordan making some unreasonable amount of money to not play.  They have Spencer Dinwiddie on an expiring making a decent chunk of money also.

Of course one of the best players on the Nets right now is Blake Griffin, who they got basically for free, because he quit on the Pistons and got them to buy him out, and now he's still making a ton of money but costing the Nets very little.

Great system we've got.

Levert and Prince were the key things that let the Nets’ salary explode.  They made $6 million combined last season, giving the Nets the room to get two max free agents.  But then they signed extensions that kicked in this season, which meant they could be utilized to acquire Harden.

As I said earlier in this thread, the Celtics could have exploded their payroll beginning in 2019-2020 if Kyrie and Horford had stayed, and that was likely the plan (within some bounds of tax limits), because resigning your own free agents is how you increase your salary substantially.  But we’ve lost so many high-priced free agents the last couple seasons that were simply not able to compete on the same payscale as the Nets or Warriors, even if we wanted to.

And then, of course, when players like Blake Griffin tank their performance to get bought out, it’s completely broken.

[CelticSooner]

If you put a gun to my head I’d say the next at least two seasons the C’s will be worried about money more than anything. I don’t see ownership paying anything over what they absolutely have to in luxury tax. All the while the two J’s are becoming disillusioned ultimately leading to one if not both of them bolting.

This waiting around for the right moment should have ended two summers ago. I understand you will pay heavy tax with a super team but don’t act like you expect to win a title by being fiscally conservative. The Celtics have become stagnant always waiting for something to fall into their lap. Fans shouldn’t expect them to go crazy and make trades all the while spending like idiots. They should expect them to cater to their stars a lot more though. It’s the way the NBA is now though so you best admit it if you want banner 18 before it’s another 20+ years in between.

[terra haute]

How much do players get or do they for the playoffs on top of their contract? They get enough but just curious as I have no idea. If they don't wouldn't surprise me that there are players around the league anymore that don't care a lot about playoffs .

[colincb]

Operating income equals earnings before interest and taxes and non-operating income and expense. Non-operating items and interest income are probably irrelevant here. Interest expense may be relevant if the Cs have debt, but taxes are undoubtedly relevant. Sports franchises are pass-through organizations, and their income is taxed at the ownership level. The maximum marginal tax rate would likely be just under 30% for these owners.

Long story short, Forbes estimates that the Cs' operating income for 2020 was $86 million. After-tax, that would be between $60-61 million in net profit if there's no debt or non-operating items, not the numbers being posted here.  No one knows how Forbes comes up with their estimates of operating income or their valuations, but suffice to say, the owners really make their money when they sell the franchise.  It's a long-term investment.

Also, the GSW are the exceptions to the rule as far as going deep into the tax without being a contender because they were opening a new arena and needed to sell the prospect of being a contender to sell out long-term, high-end packages to all the corporations in the Bay Area and Silicon Valley.

Lastly, IMO, the Cs are not in cap hell, nor is their situation hopeless, but that is a post for another day.

[Roy H.]

Operating income equals earnings before interest and taxes and non-operating income and expense. Non-operating items and interest income are probably irrelevant here. Interest expense may be relevant if the Cs have debt, but taxes are undoubtedly relevant. Sports franchises are pass-through organizations, and their income is taxed at the ownership level. The maximum marginal tax rate would likely be just under 30% for these owners.

Long story short, Forbes estimates that the Cs' operating income for 2020 was $86 million. After-tax, that would be between $60-61 million in net profit if there's no debt or non-operating items, not the numbers being posted here.  No one knows how Forbes comes up with their estimates of operating income or their valuations, but suffice to say, the owners really make their money when they sell the franchise.  It's a long-term investment.

Also, the GSW are the exceptions to the rule as far as going deep into the tax without being a contender because they were opening a new arena and needed to sell the prospect of being a contender to sell out long-term, high-end packages to all the corporations in the Bay Area and Silicon Valley.

Lastly, IMO, the Cs are not in cap hell, nor is their situation hopeless, but that is a post for another day.

If Wyc is paying a 30% tax rate, he needs to fire his team of extremely highly paid accountants.

But, clearing $60 million after taxes seems like a pretty good gig.

[Kernewek]

Long story short, Forbes estimates that the Cs' operating income for 2020 was $86 million. After-tax, that would be between $60-61 million in net profit if there's no debt or non-operating items, not the numbers being posted here.  No one knows how Forbes comes up with their estimates of operating income or their valuations, but suffice to say, the owners really make their money when they sell the franchise.  It's a long-term investment.

Last sentence is correct. Forbes's number should be taken with a massive grain of salt though - they're pretty infamous when it comes to, well, let's say leaning very heavily on guesswork when it comes to their estimations.

[Roy H.]

Long story short, Forbes estimates that the Cs' operating income for 2020 was $86 million. After-tax, that would be between $60-61 million in net profit if there's no debt or non-operating items, not the numbers being posted here.  No one knows how Forbes comes up with their estimates of operating income or their valuations, but suffice to say, the owners really make their money when they sell the franchise.  It's a long-term investment.

Last sentence is correct. Forbes's number should be taken with a massive grain of salt though - they're pretty infamous when it comes to, well, let's say leaning very heavily on guesswork when it comes to their estimations.

And yet, haven’t they been pretty accurate in determining franchise valuation?  And when they’re off, aren’t they usually undervaluing a team / the market?

Sports is weird to me.  In most areas of American culture, we criticize corporations making obscene gobs of money while overcharging the consumer for an inferior product.  In professional sports, though, those consumers seem to buy into being screwed, even defending the practice.

[Kernewek]

My point is more that it's very difficult to prove or disprove the accuracy of those numbers. Sports teams come up for sale so rarely at this level that it really doesn't mean one thing or another. And operating income is largely speculation based on "revenue and operating income are for 2019-20 season and net of revenue sharing and arena debt service." *

found a citation:
https://www.forbes.com/teams/boston-celtics/?sh=10799c9c767b


The larger point that ownership is absolutely raking it in is entirely correct though.