Berry Tramel

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Oklahoma City Thunder: Luxury tax will hurt the Heat?

by Berry Tramel Modified: July 17, 2013 at 3:45 pm •  Published: July 16, 2013

during practice before Game 5 of the NBA Finals between the Oklahoma City Thunder and the Miami Heat at American Airlines Arena, Wednesday, June 20, 2012. Photo by Bryan Terry, The Oklahoman
during practice before Game 5 of the NBA Finals between the Oklahoma City Thunder and the Miami Heat at American Airlines Arena, Wednesday, June 20, 2012. Photo by Bryan Terry, The Oklahoman

The Thunder has made some stiff decisions concerning the luxury tax. Trading James Harden. Not re-signing Kevin Martin. Going with young players who have yet to prove themselves.

But the Thunder can take some solace in that the luxury tax figures to make every franchise give pause, with the likely exception of the Nets and Knickerbockers. Even the Lakers are sweating the luxury tax. And most certainly the Miami Heat is.

Heat president Pat Riley said the luxury tax will have a profound effect on Miami’s future makeup. “I think we’re getting to the point where we’re seeing the new CBA (collective bargaining agreement), as punitive as the tax ramifications can become, that teams will manage their payrolls I think based on that. And I think, probably, we’re going to be one of those teams, too. There comes economic decisions and basketball decisions, that’s what this is all about right now. I make basketball decisions, but I am more aware now than I’ve ever been because of the new CBA and what that brings to my desk every day.”

The South Florida Sun-Sentinel reported Riley’s comments. You can read the story here. Does that mean Miami will break up its big three of LeBron James, Dwyane Wade and Chris Bosh? Perhaps. LeBron and Bosh are scheduled to make $19.067 million next season; Wade is set for $18.673. Miami is committed to $86.56 million next season, some $15 million into the luxury tax. The Heat was about $13 million into the luxury tax in 2012-13. Heat owner Micky Arison is facing a $33 million tax bill this coming season, and that figure will rise significantly if Miami stays above the tax threshold.

Riley said he thought the new labor contract should have had a provision to allow existing contracts to expire before the stiff tax penalty went into effect. But the amnesty clause — which allows a team to cut a contract that was signed before the collective bargaining agreement was signed, and while the player is still paid, that money does not count against the payroll cap or luxury tax — addressed that very issue. Miami could have amnestied Bosh for next season and gotten under the luxury tax. Instead, Miami amnestied Mike Miller and his $6.2 million salary, which dropped the Heat’s taxable payroll to $80.36 million, which should slice about $8 million off the tax bill, depending on who Miami signs.

 


by Berry Tramel
Columnist
Berry Tramel, a lifelong Oklahoman, sports fan and newspaper reader, joined The Oklahoman in 1991 and has served as beat writer, assistant sports editor, sports editor and columnist. Tramel grew up reading four daily newspapers — The...
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