As Eric Freeman of Ball Don’t Lie reports, the Lakers are in for some huge luxury tax bills in the near future. He also states that the Lakers are one team that can afford it, and have figured these taxes into their budget. Nonetheless, here’s the breakdown of the taxes by Larry Coon, who e-mailed Henry Abbott of TrueHoop the particulars:
The Lakers will have a tax bill of around $30 million next July, and in retrospect, will view this season as their salad days — it’s the last one where the tax rate is dollar-for-dollar. Starting in 2013-14 the new “incremental” tax takes over, where being $30 million above the tax line will mean paying a whopping $85 million tax bill.
And it gets worse. Starting in 2014-15 teams will pay an even higher rate for being repeat offenders — defined as paying tax in at least three of the four previous seasons. A team $30 million over the tax line will pay — brace yourself — an additional $115 million in luxury tax.After adding up their payroll, luxury tax bill and revenue sharing contribution (projected to be $49.4 million in 2013-14), even the Lakers have to stop to consider whether this simply can be written off as the cost of doing business — and that’s the future if they’re paying players with salaries like Bryant, Howard, Gasol and Nash.
Now I’m no expert on the way the new Collective Bargaining Agreement (CBA) works, or even too savvy on how the league’s finances work, but assuming the Lakers keep their core roster featuring the four aforementioned salaries in tact, the Lakers will be taking some serious financial hits in the upcoming years.
Those estimates are assuming the Lakers maintain a total payroll of $30 million over the salary cap. Should Dwight Howard re-sign for a maximum contract, however, those taxes could be even higher.
As for whether the Lakers plan on making any budget cuts in the near future to lighten up on their expenses, don’t count on it. If they manage to win championships (yes, multiple), I see it as highly unlikely that Dr. Buss will order a roster shakeup in the name of saving money.
If they fail to win, however, players such as Pau Gasol and/or Metta World Peace may be the first to be shipped off for trade exceptions or other measures that may lower the total payroll. Gasol is set to earn $19 million next season, and slightly more in the 2013-2014 season before his contract is up while World Peace will make approximately $7.2 million next season, and $7.7 million in the season after that before his contract expires.
Should everything go as hoped and the Lakers win championships during those seasons, I wouldn’t be surprised if Kobe Bryant decides to sign a one-year deal for the 2014-2015 season. The Lakers then would then have to hope the Black Mamba is willing to take a significant pay-cut in the name of chasing another championship, as would Pau Gasol, should his services be requested as well at age 34 in 2014.
In either event, the Lakers face steep taxes in the near future that could equal their total payroll, or potentially even exceed it.
However, by striking a 20-year, $3 billion deal with Time Warner Cable, the Lakers remain one of the few–if not the only–teams able to afford such high expenses. Throw in the added marketability of a super-team in one of the largest sports markets, and the Lakers will definitely have to pay up, but aren’t going broke any time soon, either.
Next Page: Jerry Buss’ Vision
The point I am trying to make here, though, is that as Lakers fans, we must thank Dr. Jerry Buss once again. There is no doubt that Mitch Kupchak and Buss’ son, Jim Buss, are now running basketball operations of the Lakers, but Dr. Buss is still the one signing the checks.
Sure, as fans we may have to pay a bit more to see the games in person, and may even have to pay more to watch it on television, but that’s the price of winning in Los Angeles–hopefully.
Dr. Buss could have easily sat back and let the Kobe Bryant era fizzle out, but he found a way to recharge it and give the top Lakers scorer of all time one more legitimate crack at a ring (or two). On top of that, he also managed to (potentially) provide the Lakers with a new franchise player once Bryant is long gone. Buss could have simply cut costs and still collected checks because the Lakers will always be the hot ticket in town, but he couldn’t let himself do that. He’s a winner and expects to win every year, perhaps even more than any “die hard” Lakers fan could.
To flash back, Buss provided L.A. with three championships via Shaquille O’Neal, a young Kobe Bryant, and refreshed Phil Jackson during the 2000-2002 seasons. Then after shipping away an aging O’Neal in 2004, he provided Bryant–then in his prime–with another legitimate team during the 2007-2008 campaign; in which the Lakers eventually lost to the Boston Celtics in the 2008 NBA Finals. However, the Lakers bounced back and won back-to-back championships in 2009 and 2010.
As soon as it appeared that Bryant was no longer in his prime and needed some help as he approaches his twilight years, Buss found yet another way to possibly milk a championship (or hopefully even more) out of his team.
In the meantime, the Lakers will face extremely strict expenditures for at least the next two-to-three years, but they will also provide their fans with yet another star-studded super-team to enjoy.
You’ve got to hand it to Jerry Buss. The man loves his team, and loves to see his team win–at any cost; which is very similar to the mentality his superstar player–Kobe Bryant–possesses as well.
One thing about the Lakers is that they perpetually manage to somehow script the history of basketball, and attempt to write storybook endings–whether they succeed and end happily ever after or not. This appears to be yet another attempt. If all goes well for the Lakers, this chapter will end with Kobe Bryant finishing his career on top, and Jerry Buss and his Lakers overtaking the Celtics for ownership of the most Larry O’Brien trophies.
And if it doesn’t, all should still be well as long as the Lakers still have Dwight Howard to then rebuild around in the summer of 2014.