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Oklahoma City Thunder: Lakers prove that big markets will remain big spenders

Addition of Dwight Howard and Steve Nash to an already strong lineup suddenly makes the Lakers a big time challenge for Western Conference champion Thunder.
by Darnell Mayberry Published: August 12, 2012
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The more punitive tax system in theory should help continue to slow spending. This coming season will be the last in which teams must pay a $1 penalty for each $1 of team salary spent above the tax threshold (roughly $70 million). A new incremental tax system will be implemented before the 2013-14 season, with penalty rates starting at $1.50 per $1 above the tax line up to $5 million and increasing to as much as $3.75 for surpassing the tax by $20 million.

What will be known as the repeater tax is designed to further scare teams from spending. Those rates start at $2.50 for every $1 above the tax line up to $5 million and rise to $4.25 for every $1 between $15 million and $20 million above the tax.

But the repeater tax doesn't kick in until the start of the 2014-15 season. Even then, a team will have had to be a taxpayer in all of the previous three seasons. For the 2015-16 season and beyond, the repeater rate applies to only teams that were taxpayers in at least three of the four previous seasons. That gives the big spenders time to bloat the books now and clean it up later.

Additionally, the tax system almost becomes laughable when you compare resources.

The Lakers recently signed a new television contract with Time Warner Cable reportedly worth up to $5 billion over 25 years, a $200 million a year profit — or roughly $70 million less than what Forbes lists the values of franchises to be in Atlanta, Milwaukee, Minnesota and Memphis. The Heat, meanwhile, is on the verge of netting a new television contract estimated to be worth up to $100 million a year, and the Knicks are owned by cable giant Cablevision and its $10 billion worth of backing.

The Thunder's television contract is believed to net the franchise less than $15 million annually.

It's a part of reality that always will prevent the Thunder from being able to do what its big-market competitors are able to — throw money at problems. A revamped revenue-sharing system is supposed to help buoy small market teams, but NBA commissioner David Stern told The Oklahoman in December that the Thunder was a “net contributor” in league revenue sharing because of its success.

“It's far from a perfect agreement,” NBA deputy commissioner Adam Silver said before Game 1 of the Finals, “and it's difficult to predict owner behavior in every league. And I think we won't know until we see the tax provision, until the tax provision becomes fully implemented and we see how, in fact, teams respond to the new provisions of the collective bargaining agreement.”

Unfortunately for the Thunder, a lot of good can go bad in three years while waiting for the new system to level the playing field.

by Darnell Mayberry
OKC Thunder Senior Reporter
Darnell Mayberry grew up in Langston, Okla. and is now in his third stint in the Sooner state. After a year and a half at Bishop McGuinness High, he finished his prep years in Falls Church, Va., before graduating from Norfolk State University in...
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