2016 Team Luxury Tax Projections

The NBA league-wide luxury tax “snapshot” occurred April 13th, the final day of the regular season. Pending post-April 13th through June 30th adjustments for official unlikely/likely bonus designations (All-NBA teams etc) once announced and players with trade bonuses received in trades, the following are precise luxury tax projections for each of the 7 taxpayers this year.

1.Chicago Bulls

Tax Position: $3,098,894 over the tax

Tax Adjustments:

Christiano Felicio: Regular Team Salary is $525,093, but counts $947,276 (2 Yr Vet Min) as an undrafted rookie signed as a free agent with less than 2 yrs service. Conversely, Bairstow is taxed at the 1 yr service vet min number as he was signed as a draft pick.

Pending Adjustments:

1.Nikola Mirotic’s Incentives: $2,385,000 over the life of the contract (assumed even distribution). *Not Included

2.Joakim Noah Incentives (Currently Listed as Unlikely)”$500K unlikely bonus for DPOY or  $500K for Finals MVP. *Not Included

3.Taj Gibson Incentives (Currently Listed as Unlikely): $250K 2nd team D, $500k 1st tm D

Tax Payout: Tier 1 $4,648,341 Incremental Payout 

2.Cleveland Cavaliers

Tax Position: $22,399,386 over tax

Tax Adjustments:

Jordan McRae: McRae was signed to a prorated rookie minimum contract for the rest of the season which counts $111,196 as regular salary, but is taxed at the 2 yr vet min amount of $200,600 because McRae was signed as free agent and had accrued no years of service.

Pending Adjustments:

(None Currently Foreseeable)

Tax Payout: Tier 5 $53,997,698 Tax Payment

The Cavs are the only team to eclipse all 4 incremental tiers, and their remaining $2,339,286 was taxed at $3.50 per $1.  Dahntay Jones’ 1 day rest of the season contract which counted $5,572 (2 yr vet min rate) cost $20,895 in tax!

3.Golden State Warriors

Tax Position: $9,339,899 over the tax

Tax Adjustments:

James McAdoo: McAdoo counts $845,059 on regular team salary (1 yr vet min), but is taxed at the 2 yr vet min rate of $947,276 because he was signed last season as a free agent, not a draft pick.

Pending Adjustments

Andrew Bogut Incentives: Bogut currently has $1.8M in “likely” bonuses for playing over 65 games last season and being bestowed 2nd Team All Defense.  His specific clause entails the following incentive structure: 65 games played AND 1)1st, 2nd or 3rd team All-NBA 2)1st or 2nd team All-Defense 3)All-Star or 4)NBA Defensive Player of the Year.  *Given current-year trajectory I am not projecting Bogut to once again finish amongst the top 2 all-defensive teams.

Tax Payout: Tier 2 $15,094,823 payment

4.Houston Rockets

Tax Position: $3,374,631 over the tax

Tax Adjustments:

Ty Lawson & Dwight Howard Suspensions: The Rockets get to deduct half of 1/110 of base salary for each game Ty or Dwight missed due to LEAGUE suspension this year.  For Ty, he was suspended 5 total games: so with a base salary of $12,404,495 the rockets deduct $281,920 from their luxury tax team salary.  Similarly, Dwight was suspended 1 game, and with a base salary of $22,359,364 the Rockets get to deduct $101,634 from their luxury tax team salary under the above formula.  Between the two, the Rockets deducted a league high $383,554 from luxury tax team salary computation.

Pending Adjustments:

(None Currently Foreseeable)

Tax Payout: Tier 1 $5,061,947 Tax Payment

5.Los Angeles Clippers

Tax Position: $11,450,192 Over Tax

Tax Adjustments:

Jeff Green Incentives: Green has a base salary of $9.2M, with an incentive structure based on team wins.  He had incentives of $100K for 52 wins, $250K if LAC won 54 gms, extra $450K for 56 & extra $700K for 58. LAC had 53 wins, thus triggering $100K in incentives earned, rendering Green to count $9.3M against the tax.

*Note: Notice that Blake Griffin’s 4 game suspension was not counted here.  That suspension was afforded by the TEAM electively, not the league, thus it is not reduced from luxury tax team salary based on obvious policy.

Pending Adjustments:

(None Currently Foreseeable)

*There are potential set-off adjustments for international singings accrued by Carlos Delfino, Miroslav Raduljica and Jordan Farmar, but those amounts are unknown and are unlikely to be above the 1 yr vet minimum of $845,059 (to my current knowledge).

Tax Payout: Tier 3 $19,875,480 Tax Payment

6.Oklahoma City Thunder

Tax Position: $9,025,298 Over the Tax

Tax Adjustments:

(None)

Pending Adjustments:

Serge Ibaka Incentives: Ibaka currently has a $100K bonus for making all-defensive first team or winning DPOY which is listed as unlikely.  *I did not include this figure.

Tax Payout: Tier 2 $14,544,272 Tax Payment

7.San Antonio Spurs

Tax Position: $3,277,178 Over the Tax

Tax Adjustments:

Tim Duncan Incentives: Duncan received a $750K incentive for the Spurs winning 62 games, bumping his regular team salary figure and luxury tax team salary figure to $6,000,000.

Jonathan Simmons: Being a player of 0 years of service accrued signed as a free agent (not a draft pick), Simmons counts $947,276 against the tax (2 yr vet min) instead of his normal $525,093 salary figure.

Pending Adjustments:

Boris Diaw Weight Clause: Diaw currently has 1 of the 2 weight clauses I’m aware of in his contract listed as likely (and thus included in team salary) worth $500K total with the following structure: $150,000 weigh less than or equal to 254 pounds on Oct. 25 $150,000 weigh less than or equal to 254 pounds on the first Tuesday after the All-Star Game $200,000 weigh less than or equal to 254 pounds on April 1.  *I’m assuming he met these benchmarks

Patty Mills Weight Clause: Mills similarly has a weight clause in his contract totaling $333,333, currently listed as likely. *I’m also assuming Mills met these benchmarks.

Tax Payout: Tier 1 $4,915,767 Payment

Total Tax Payment Information

Total Tax Collected: $118,138,328

Total Tax Used to Fund Revenue Sharing (50%): $59,069,164

Total Tax Given to Non-Taxpaying Teams (Up to 50%): $59,069,164

Total Non-Taxpaying Teams: 23

Tax Share Per Team: $2,568,225

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