NewsOK Contributor You have a story to tell, and others want to hear it. What is this?
A line in the financial sand is drawn roughly $12 million to $13 million above the salary cap. Teams are subject to a luxury tax if their payroll exceeds it. For the 2013-14 NBA season, the luxury tax line is $71.748 million. The luxury tax line is projected to rise to $77 million next season.
Prior to this season, the Luxury Tax was simple $1 for every $1 over the tax line. Starting this season, the tax rates are much stiffer, starting at $1.50 for every $1 over the tax line and increasing incrementally for every $5 million over the tax line. Starting next season, a team that has been a taxpayer in three out of the previous four seasons faces even higher rates thanks to a concept known as the Repeater Tax. Teams in a “repeat offender” situation would be hit with tax rates starting at $2.50 for every $1 over the luxury tax.
The Brooklyn Nets ran up a luxury tax bill of over $80 million this season. A handful of teams, including the Sonics/Thunder, have never paid luxury tax since the rule’s inception prior to the 2002-03 season. The New York Knicks have paid the most luxury tax in the league, forking over $205 million in tax bills. That has bought the team only five playoff series over the past 11 seasons.
In 2011 the NBA introduced another level above the luxury tax line known as the “apron”. This is a line $4 million above the luxury tax line. If a team’s payroll is above this level, they essentially lose access to several salary cap exceptions. If a team is under the apron but uses certain salary cap exceptions, they will be hard-capped at the apron until the following June 30. And by hard-capped, I’m referring to the NFL-style hard cap. If a team is subject to the hard cap, has 10 players under contract and a payroll at the apron, they don’t get exceptions to sign more players.
For example, Brooklyn worked its payroll into and above the apron with the trades and re-signings they’ve made over the past few seasons, but they have not triggered a hard cap. On the other hand, the Minnesota Timberwolves are hard capped for this season. They acquired Kevin Martin from Oklahoma City in a sign-and-trade transaction and used other exceptions that trigger the hard cap. The T’Wolves aren’t in a crunch, however, since their team payroll is about $6 million under the apron.
The rest of the rules surrounding signing, trading and waiving players work around these three concepts. I will elaborate on some of these convoluted rules, and how the Thunder used them to their advantage, in subsequent writings.
MORE FROM NEWSOK
We're looking for
Are you passionate about a topic, an expert, a writer, a photographer, a story teller or maybe an artist looking for an audience? Do you want to make a difference?
We can help connect you to the topics, sources, coaching and community to help you publish in major media outlets like NewsOK and The Oklahoman. You provide trusted content, and Contributor Connect will help you get traffic.