Minutes before the Oklahoma City Thunder tipped off what is expected to be a promising 2011-12 campaign, NBA commissioner David Stern conceded that if the franchise wants to win big with its current core, it eventually would have to be a luxury tax payer.
And the commissioner considered that a good thing.
“That means you've arrived and you're out there being competitive,” Stern said as he both addressed and stood behind several topics in the league's ratified collective bargaining agreement.
The NBA opened its regular season on Christmas after a five-month lockout pushed back the start of the season and shortened the customary 82-game schedule to 66 contests. Stern traveled to Oklahoma City for the Thunder's opener against Orlando after attending the Dallas-Miami game earlier in the day as the defending champion Mavericks raised their championship banner.
The labor dispute, the second in 14 years to cause the league to forfeit regular season games, made sweeping changes to such things as the league's revenue sharing model, the overall split in total revenues between owners and players, the luxury tax, and player contract lengths.
“The way this deal was constructed, everyone knows that teams are going to be tax payers for a given period of time, when it's time to “Go for it,” Stern said. “The teams that are not going to be considered smart are going to be the Knicks when they were a taxpayer and had nothing to show for it, and Portland that had a $57 million tax bill with nothing to show for it. So you're going to have to decide as a team, ‘Do we have the roster that's ready to go for it?'”
After building through the draft and developing from within, Oklahoma City now has a stable of young talent with which it will chase a championship. But there has long been a fear that the Thunder would not be able to retain its core, which includes Kevin Durant, Russell Westbrook, James Harden Serge Ibaka and Kendrick Perkins, all of whom are projected to be highly paid players in the near future.
A more punitive luxury tax, which is set to take effect in two seasons, could soon become the demise of the Thunder. The new rules in the ratified collective bargaining agreement allows players like Durant, who outperform their rookie contracts, to be paid 5 percent more on their extensions under the so-called “Derrick Rose rule.” Westbrook could qualify for the same bump Durant already has, which could put pressure on the franchise to pay top-dollar salaries to retain its stars — and surround them with a competitive cast — or lose them out of fear of potentially falling into luxury tax hell.
Stern shot down the notion that the tax system, even in the face of rising costs, hurts small markets.
“That's ludicrous,” Stern said. “The idea that the luxury tax hurts small markets is ludicrous. It may impact a small market that is a great team and has to raise payroll. But at bottom, it's designed to eliminate the ability of teams to use their economic resources to distort competition.
“It does have a bite if you have any team that's well assembled and you want to keep it together. So if you have the Thunder over here and the Heat over there, they're both going to have to deal with luxury tax issues. That's not a small market (issue).”
Stern added that the Thunder, like any loaded team, would someday potentially have to surrender one of its stars.
“People are saying to Miami, ‘Well, you're going to have a decision to make with respect to one of your big three.' And they may say the same thing to Oklahoma City, and that's a good thing."
Under the new agreement, teams also were allowed a one-time chance to waive a player without his salary counting on the team's payroll (although the players would still receive their compensation). The addition is referred to as the amnesty clause and is another point of contention for teams like the Thunder that don't have a bad contract to use it on.
“In fairness, see me in a couple of years,” Stern said when asked about the amnesty clause. “Because at the behest of many teams, every team is given an amnesty with respect to players currently on their rosters for the next five years. So we're going to see how that plays out as teams try to clear up some cap space or some tax space.”
When asked whether Oklahoma City would be considered as a potential site for a future All-Star Weekend, Stern reiterated his stance that hotel space and adequate facilities would be the deciding factors.
“If you tell me you've got 6,000 rooms that are more or less close in and the kind of facilities that we need, we'd absolutely consider it,” Stern said.