NBA Commissioner David Stern is stepping down February 1st and NBA deputy commissioner Adam Silver is slated to take over. Silver was one of the main architects of the current collective bargaining agreement. The NBA wasn’t able to get a hard salary cap installed in the new agreement but they did manage to make the luxury tax system more demanding financially.
It has been listed as a reason by Dallas Mavericks owner Mark Cuban when explaining why they cleared off their books and dismantled the 2011 NBA Championship team to do business in a more cap-friendly manner. It hasn’t prevented other teams from avoiding luxury tax territory. Brooklyn Nets owner Mikhail Prokhorov has traded for Paul Pierce and Kevin Garnett as well as signing Andrei Kirilenko, Shaun Livingston and Alan Anderson.
That has pushed the Nets potential luxury tax figure over initial $75 million estimates to $87 million next year. That is almost as much as their $100 million payroll.
“I would say it’s no secret that we went into collective bargaining seeking a hard cap,” Silver told the New York Post. “So, for the long-term health of the league, we would rather do more to level the playing field among our teams, so the teams that have disparate resources are all competing with roughly the same number of chips so to speak.”
“What I’ll add is that what we’ve seen with the Nets, ultimately there’s no prohibition if you’re willing to pay a very substantial tax — there’s no prohibition on signing the players they did, but the new rules also dramatically limit those players that are available to sign, especially once you move into the tax. So we’ll see [what happens].”
The Post also points out that the Nets will pay more in luxury tax than any team is paying in salary. The New York Knicks, who have the second highest payroll, is paying $86 million in salaries.
The luxury tax gets split into two, half divided amongst non-tax teams and half going into the league’s revenue sharing program.
The Mavericks weren’t the only championship caliber team that buckled under the threat of luxury tax. The Oklahoma City Thunder made it all the way to the NBA Finals and traded James Harden to Houston to avoid the luxury tax territory.
“I think before, even as someone who was and is a proponent of a harder tax, I don’t want to declare the sky is falling yet because they are doing what is permissible under the rules,” Silver said. “There were only certain players they were able to spend that money on. “Does it give a team a competitive advantage when they have the ability to spend far more than other teams?” Silver said. “Absolutely.” … And it’s something we pointed out to the union in bargaining,
“There’s a correlation between the ability to spend and success on the court,” he continued. “It’s far from a perfect correlation, however, so we’ll see how it plays out.
“But, so far, they are playing by the rules, and we’ll see whether that brings them the success they are hoping for.”