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SBD/Issue 204/Leagues & Governing Bodies
NBA Salary Cap Nearly $2M Higher Than Anticipated At $58.044M
Published July 8, 2010
The NBA yesterday announced that the salary cap for the '10-11 season will be $58.044M, up from $57.7M for the '09-10 season. The tax level for the season has been set at $70.307M, up from $69.92M this past season. Any team whose team salary exceeds that figure will pay a $1 tax for each $1 by which it exceeds the figure. The new salary cap and tax level went into effect at 12:01am ET today. Meanwhile, the mid-level exception next season is $5.765M, and the minimum team salary, which is set at 75% of the salary cap, is $43.533M (NBA). ESPN.com's Marc Stein notes the salary cap is "nearly $2 million higher than anticipated," which means teams like the Heat, Knicks, Nets, Bulls and Clippers "have more spending room than anticipated to accommodate free-agent signings." Meanwhile, 11 teams "officially were notified of their luxury-tax obligations for the 2009-10 season," with the Lakers "easily topping the list of taxpayers." The Lakers are "required to cut a tax check" of $21.4M to the league office by July 23. The 19 teams that do not owe any tax "will each receive a rebate" of $3.7M (ESPN.com, 7/8).
BROKEN ECONOMIC SYSTEM: In DC, Amy Shipley writes NBA officials in the last week "have criss-crossed the country in private jets and luxury automobiles, passing out whopping contract offers like business cards and begging" F LeBron James and other free agents to "accept their $100 million deals instead of those from other teams." But many who have observed the "frenzied courting that has infected entire cities" said that the "free-flowing funds and mad grab for stars belie a league in financial distress, its owners engaging in economic recklessness that is all but encouraged by a broken economic system." Sources said that 25 of the 30 NBA teams "lost money last season," and NBA Commissioner David Stern has publicly claimed the league would sustain $380-400M in losses in '09-10. The NBPA "disputes those figures and contends the league is in far better shape than its accounting indicates." But "even the union acknowledges that more than a half-dozen franchises are in financial trouble." NBA figures reveal that the average NBA franchise ended last season $13M "in the red," indicating that "many owners are gambling, perhaps foolishly, that the expensive addition of a star player from a historically talented free agent class will generate interest in their franchises and ignite a significant payoff in the box office" (WASHINGTON POST, 7/8). In Detroit, Vincent Goodwill writes "there's no way" Stern's claim that teams would suffer a net loss of around $400M this past season "could be accurate ... with the way owners have thrown money at free agents since July 1." Goodwill: "To the players' credit, they've been the ones to exercise restraint, for whatever reason" (DETROIT NEWS, 7/8).
LOCKOUT LOOMING? In N.Y., Mitch Lawrence writes the "entire process we've seen over the last week will come back to haunt the 400-member rank-and-file when the owners stop the game on July 1, 2011." The owners "are the ones who claim they're suffering and losing their starched shirts in the process," but they are the "same guys who are throwing around all these max-salary deals, as if they're all printing money" (N.Y. DAILY NEWS, 7/8). In DC, Mike Wise writes of the NBA, "The league right now reminds me of the mortgage crisis -- big-splash signings and prime-time announcements giving a veneer of glitz to a system crumbling under the weight of its own irresponsibility. ... Desperate to hold on to their meal tickets before a looming lockout next summer, an owner-driven spending spree ... makes no sense." Nearly $1B in salaries will be "signed away" today. Wise added, "Whomever Bron-Bron gives the last rose to, that franchise should hold a parade on Friday, because it might be its only chance. And the NBA better hope the announcement gets good ratings, because no one tunes in to a lockout" (WASHINGTON POST, 7/8).