Additional Lux Tax Incentive

[AFBlue]

Don't know if it deserves it's own thread, but I ran across this little factoid in a larger article on the trade deadline. The link to the full article is posted below and is a good read.

http://myespn.go.com/blogs/truehoop/0-29-51/Trade-Talk--Ten-Teams-to-Watch.html



Teams that are near the luxury tax line might mike some small moves and save themselves big money.

Let me explain that last one a little. The luxury tax line this season will be $67,685,000. Teams with salary under this amount will receive something in the neighborhood of $2.5 million from the league (essentially as a "thank you" for staunching the upward motion of salaries).

Teams with salaries over $67,685,000 will not get the $2.5 million, and in addition will pay one dollar for every dollar they are over. So if, for instance, the Lakers (who are $1.2 million over) could make a trade to lose $1.5 million in salary, they would save $1.5 million in salary and $1.2 million in tax payments, all while qualifying for additional income of $2.5 million. Bottom line: $5.2 million in cash.


In light of the Webber thread and the Spurs sort of flirting with mediocrity lately, I thought I would point out that any decision they make to go above the lux tax via FA signing or trade will actually have them missing out on an additional $2.5M of cold cash.

Hopefully this doesn't kill anyone's creative juices and prevent wild ideas about trade ideas....in fact, I think in some ways it might encourage them.

I was just caught by suprise because I hadn't heard this before.

[101A]

The Spurs are over $69 million; would take a player with a decent-sized paycheck retiring to save the $$$$.

[ss1986v2]

I was just caught by suprise because I hadn't heard this before.
really? because it came up during the scola/butler/vspan threads, again during the beno threads, and during all the wash/williams/dj/langford threads. its essentially one of the core reason all of these things went down. in fact, its the sole motivation behind the dleague revolving door of signings: if the spurs were to keep, say dj, it would end up costing them ~3 mil in total losses (salary+tax+reimbursements). and dj isnt worth that.

[AFBlue]

really? because it came up during the scola/butler/vspan threads, again during the beno threads, and during all the wash/williams/dj/langford threads. its essentially one of the core reason all of these things went down. in fact, its the sole motivation behind the dleague revolving door of signings: if the spurs were to keep, say dj, it would end up costing them ~3 mil in total losses (salary+tax+reimbursements). and dj isnt worth that.

I knew about paying the dollar-for-dollar tax penalty, but I didn't know about the $2.5M cash incentive for staying under...

[Bruno]

I should be on PHAT TONY ignore list. :depressed

[AFBlue]

The Spurs are over $69 million; would take a player with a decent-sized paycheck retiring to save the $$$$.

So the Spurs are gonna pay a lux tax?

I thought all the d-league shuffling (previously mentioned) was done to prevent going over...

[AFBlue]

I should be on PHAT TONY ignore list. :depressed

I was just gonna ask...where's Bruno when you need him :lol

[fyatuk]

The Spurs are over $69 million; would take a player with a decent-sized paycheck retiring to save the $$$$.

Everything I can find says the Spurs are below, but right at the Luxory Tax threshhold. The most recent numbers I found were from mid-december claiming they were about $25k under.

The next most recent, 11-30-07 listed $67,493,962 as the Spurs payroll.

[101A]

Everything I can find says the Spurs are below, but right at the Luxory Tax threshhold. The most recent numbers I found were from mid-december claiming they were about $25k under.

The next most recent, 11-30-07 listed $67,493,962 as the Spurs payroll.I double checked; your numbers look better; mine older. Thanks

[Dave McNulla]

I knew about paying the dollar-for-dollar tax penalty, but I didn't know about the $2.5M cash incentive for staying under...all the teams that are above the lux tax pay it into a pool, and that pool is split by all the teams that don't pay it. the knicks pay most of the lux tax penalty, but it turned otu the spurs lost about 2-3 million for being over 100k last season.

[exstatic]

There's always been a bonus for staying under the tax threshold, in addition to the two for one tax for being over. Sort of like the carrot AND the stick.

[m33p0]

that money could (and most definitely) be put to good use in next summer's free agency fiesta.

[Please_dont_ban_me]

that money could (and most definitely) be put to good use in next summer's free agency fiesta.

Huh?

What money. The 2.5 mill? I think that will be 'put to good use' on Peter Holt's next business venture.

[SAGambler]

Huh?

What money. The 2.5 mill? I think that will be 'put to good use' on Peter Holt's next business venture.

I would suppose if Holt Cat needs money for a business venture he could just put the Spurs on the auction block. After all they are worth somewhere in the neighborhood of $400,000,000, (Forbes) which is a pretty nice neighborhood to be in.

For all the bitching about the cheapness of Holt, actually 2.5 million is chicken feed. Aside from holding Holt Cat which is worth about 80 mil or so, he also holds ownership in the Silver Stars, the Rampage, and the Toros. So I really doubt 2.5 mil is going to make him or break him.

[fyatuk]

I would suppose if Holt Cat needs money for a business venture he could just put the Spurs on the auction block. After all they are worth somewhere in the neighborhood of $400,000,000, (Forbes) which is a pretty nice neighborhood to be in.

For all the bitching about the cheapness of Holt, actually 2.5 million is chicken feed. Aside from holding Holt Cat which is worth about 80 mil or so, he also holds ownership in the Silver Stars, the Rampage, and the Toros. So I really doubt 2.5 mil is going to make him or break him.

Actually it could if he's low on liquid assets. The teams' values are certainly not liquid, and would take a year or two to cash out in all likelihood. Holt Cat's value is probably tied up in inventory and other hard assets as well, though inventory is soft, if not liquid.

A company's worth can be completely meaningless to its financial well-being. It's the financial well-being that would determine whether the 2.5 million would "make or break him".

[T Park]

The notion Holt Cat is cheap is an overstated one.

The management has never been told "You can't make that trade cause I don't want to pay the salary"

[Please_dont_ban_me]

The notion Holt Cat is cheap is an overstated one.

The management has never been told "You can't make that trade cause I don't want to pay the salary"

Really?

I don't know if I would call them "cheap", but I'm sure management has been told to stay under the cap. That's probably why they're doing it. They seem to make a concerted effort every year (and they even plan ahead) to ensure they don't go over.



That said, money awarded from staying under the cap isn't something that would be used for future players anyways.

1) The money paid to players comes from the cap...not Holt's pockets.
2) The only time that money would be used towards a player is if the Spurs would go OVER the luxury cap and Holt had to pay out of his pocket. Which defeats the whole purpose of earning the 2.5 mill reward in the first place.


Side note...have the Spurs EVER paid a luxury tax?

[anjlbitz]

Side note...have the Spurs EVER paid a luxury tax?

I think they have paid the lux tax for 2-3 seasons now.

[ChumpDumper]

1) The money paid to players comes from the cap...not Holt's pockets. :wtf

[Please_dont_ban_me]

:wtf

Where does the salary cap money come from? Up to the limit.

The owner of the team, or the league? I was under the impression it wasn't the owner of each team. Otherwise more teams would try to be as far below it as possible so the owners could pocket millions (the difference between there team salary and the salary cap).

[exstatic]

Where does the salary cap money come from? Up to the limit.

The owner of the team, or the league? I was under the impression it wasn't the owner of each team. Otherwise more teams would try to be as far below it as possible so the owners could pocket millions (the difference between there team salary and the salary cap).
Just stop. Your ignorance is astounding. The Spurs paid the tax as recently as LAST SEASON. More teams than the Spurs DO try to stay under. SA is like 10th highest in payroll out of 30 teams, so that means 2/3s of the ownership groups spend less than the Spurs and pocket that cash.

[ChumpDumper]

Where does the salary cap money come from? Up to the limit.

The owner of the team, or the league?Team owners pay all the players salaries with the exception of a portion of veterans' minimum deals.

[Please_dont_ban_me]

Just stop. Your ignorance is astounding. The Spurs paid the tax as recently as LAST SEASON. More teams than the Spurs DO try to stay under. SA is like 10th highest in payroll out of 30 teams, so that means 2/3s of the ownership groups spend less than the Spurs and pocket that cash.

How much over did they go? When was the last time before that they had to pay a luxury tax?

I'll admit I don't keep with every single detail that has to do with sports or the Spurs, but that doesn't make me 'ignorant'. Basically what I'm trying to say is, fuck off.

[Please_dont_ban_me]

Team owners pay all the players salaries with the exception of a portion of veterans' minimum deals.

Ah, alright. My mistake.