2013-2014 NBA Salary Cap/Luxury Tax

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2013-2014 NBA Salary Cap/Luxury Tax

Post by tjmakz on Tue Nov 27, 2012 10:13 pm


Two weeks ago David Stern mentioned that he expects NBA revenue to increase to $5b for the year that ends on 6/30/13.
This would be approximately a 20% increase in revenue over the year that ended on 6/30/12.
If this turns out to be true, there are significant ramifications that this would have for the league, their franchises and the Salary Cap/Luxury Tax thresholds.

The Salary Cap would increase from $58.04m to $69.65m and the Luxury Tax threshold would increase from $70.3m to $84.4m.
This would effect many teams as I will describe below, but the first I think of is OKC.
OKC traded Harden because they knew they couldn't pay him $15m/year and pay the Luxury Tax which becomes a "Super Tax" starting next season. I was one that felt that OKC made a big mistake and should have held onto Harden for this season and could trade him next summer if needed. If the Luxury Tax numbers increase dramatically, OKC will really kick themselves for jumping the gun. If OKC signed Harden to a max or almost max contract, they were looking at a team salary of about $88m which would have resulted in a luxury tax payment for the 2013-14 season of $57.53m. Under the possible new Luxury Tax threshold, OKC would only have to pay $5.4m in Luxury Tax with a team salary of $88m.

This could also have huge implications on the finances of the Lakers and possibly their decision to keep Gasol for the 2013-14 season. If the Lakers had a team salary of $98m next season, they would have been looking at a luxury tax payment of $145.43m since they are in the Luxury Tax Repeater category. If the Luxury Tax threshhold is increased to $84.4m, the Lakers Luxury Tax payment would decrease to $47.6m from $145.43m.

A 20% increase in the Salary Cap would also have a big impact as far as minimum team salaries.
Starting with the 2013-14 season, team salaries have to be at least 90% of the Salary Cap, which would mean teams would have to spend $62.69m in salaries. As of right now there are 10 teams that are $20m or more away from the $62.69m minimum salary. What this means is that for the 2013-14 season, free agent players will be in demand just to get to the league mandated minimum salary or teams will be willing to take on a player with a large contract, because they will need to dramatically increase their team salary.

As of today, these increases shouldn't have a big impact for the Celtics. If Boston picks up Pierce's contract for next year, which we all expect they will, Boston will already be over the projected increased salary cap line.

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