Lux Tax at $69.9mm. League says prepare for $61mm next year

[old skool]

I think that the NBA has to be extremely careful about how they word any such memos forecasting the salary cap and luxury tax.

Those two items are indexes that are part of a negotiated labor agreement. If the NBA was to cry wolf and exaggerate the realistic possibility of what those numbers could be for 2010-111, they could expose themselves to legal action for an unfair labor practice. An inflated forecast not based on fact could cause teams to scale back their long term salary spending and could cause players to accept less favorable contracts. All is fair in love and war, but not under a negotiated labor agreement. The players association could sue and would probably win easily if the NBA could not demonstrate that they were forecasting based on factual information. That could, among other things, cause the court to award financial damages to the players (both actual and punitive damages) and could cause the court to force the NBA to fully open all of their books to the player's association. Not just the financials of the NBA in aggregate, but the financials of each individual franchise. This is something that the NBA has resisted for decades, as it would significantly erode their negotiating position in situations like the Sonics-City of Seattle divorce of two years ago.

Because of the steep legal implications of not being factual when forecasting future salary caps or luxury tax limits, I would expect that any such warnings would be thoroughly vetted by both CPAs and attorneys in the NBA office to insure that the NBA can prove that their forecasts were based on solid facts. If challenged in court, the NBA would be required to show that their forecasts were factually based. And once challenged in court, the NBA would essentially be guilty until they could prove their innocence. Such is the nature of formal labor agreements.

Any expert legal opinions on this would be appreciated.

oLd sKool

[GrandAdmiralDan]

The two prior posts (by PP25 and old skool) were both quite excellent.

old skool, what you say is very true.

To answer one of your questions, the CBA provides the NBPA with necessary access to all data used by the NBA. A large portion of the CBA is actually devoted to detailing all of the various audit processes available to the NBPA. It also outlines the process of arbitration to resolve any disputes over data.

So it wouldn't exactly be a court challenge, but the NBPA could indeed take the NBA to arbitration. It is fairly complicated when it comes to specified remedies, but the ultimate remedy is the NBPA being allowed to terminate the CBA.

[GrandAdmiralDan]

One problem with that, however, is that I can foresee many different ways the NBA could attempt to justify its forecasts, and in my opinion it would be difficult to prove malfeasance there, unless there was circumstantial evidence that indicated such malfeasance (such as secret internal memos, testimony of NBA employees, etc.)

[Nebula1]

One problem with that, however, is that I can foresee many different ways the NBA could attempt to justify its forecasts, and in my opinion it would be difficult to prove malfeasance there, unless there was circumstantial evidence that indicated such malfeasance (such as secret internal memos, testimony of NBA employees, etc.)

GAD, appreciate all the insightful posts.

How much do you think of the cap is affected by the coming CBA negotiations? I think there is some real interesting positioning happening, with all the big names coming free soon. All those guys are friends and they will be able to change the League by themselves if they so choose.

Part of me thinks some of this loading up is due to a potential strike/stoppage and they're going for it while the window is open. The next Finals could be it for awhile, potentially.

[MilBucksBackOnTop06]

How many days until we read that Hammond couldn't afford Sessions because the Luxury Tax number was lower than he expected?

Hopefully.... 1.

Tommorrow at the outset of a two minute Sessions' agent requested meeting.

Then in the next breathe be on the phone to Rodney Carney's agent after you dismiss Sessions.

[MilBucksBackOnTop06]

Teams are still spending money it seems. Raps just extended Bargnani

5/$50M. Boguts' contract just keeps looking better and better.

Yes and if his back does not hold up....very tradeable.

[old skool]

Thanks for the followup Dan.

Yes, most labor issues would be decided via arbitration, as opposed to a lawsuit. The standard for filing a claim of an unfair labor practice is pretty minimal. There is no burden of proof on the players association. The league would have to prove that they were not doing something unfair. Such shots across the bow might not result in a judgement against the NBA, but could cost them significantly if they, in fact, purposely exaggerated financial data. At minimum, the NBA spends a lot of legal dollars and time responding to the unfair labor practice complaint. The system is skewed heavily in favor of labor, which typically operates with fewer resources than management.

Good discussion.

old sKool

[kirkando]

If you can make more money in Europe why would you come to the NBA. To play against the best? The only reason the best players play in the NBA is because of the money. Think I'd choose Spain or Greece over Milwaukee. Especially if I was getting paid more.

Soccer players in Europe will often accept less money to play in a higher-profile league or a better team. I think moving to the NBA could be seen as a similar situation. Sort of like how smaller market teams in the US often need to pay more than a NY/LA-ish team for the same player, but in this case, we're actually the larger club.

Yeah, according to the article...
Herb gets a check for at least $9.7M, so maybe he would use it towards possible lux tax this year? I doubt it, but who knows.

With the slightly lower than expected tax this year, combined with the number of teams over the theshold, would that mean there's a good chance we could see an even bigger check next summer? If so, that's a pretty nice incentive to try and stay under the tax for this season.

[blueedwards]

Looking at Fam's breakdown, for 2010-11 we're at $49.4M committed (including the 2010 first rounder) for 9 roster spots. Looking at the projections for next year, if we did sign all three of Sessions/Childress/Ersan, we're probably going to be very close to the lux tax level for 12 guys signed.

Sure would be nice to clear Redd for expirings this year. Get us down to $31.1M committed for 8 guys, which would be quite a bit of wiggle room.

Redd for Garcia and Kenny Thomas works. Other wise if Kings dont want Redd maybe have the Mavs get in on the deal.

[midranger]

The league is obviously doing an extreme prediction because of the number of teams basing the future of their franchises on free agency next year. The NBA doesn't want them shell shocked when it turns out they have 11 million in cap space rather than 18 million.

Anyway, I agree with PP. By the time the economy fell to shambles last yearin Oct., roughly 100% of season ticket packages were sold, and by the time it bottomed in March, damn near all of the single game seats were sold. Now the NBA faces this economy for the first time for a full year. Could get ugly.

[Treebeard]

This has all been discussed above at length, but I'm a little slow on the draw....

If the salary tax limit goes down anywhere close to the $61 million line next year, in general, a team well below the tax line would likely be in a strong position to:
1. Steal a big time free agent out of next years strong class for below "normal" FA cost, AND
2. Stay below the tax line.

So many teams seem to be seriously pushing/crossing the financal limits this year AND for years to come, I don't see how a lot of those teams have a shot at getting below next years bar. What am I missing?

If the Buck's could trade Redd, or Ridnour, or Bell, etc for expirings, they could eat their cake and have too? In those circumstances, 2009-10 season would likely suck = shot at higher draft pick (in a strong expected class), plus the potential for signing a pretty high quality FA for a more reasonable rate, and also avoid next years tax. Doesn't the CBA come up for renewal in 2011, with high likehood of coming back more in the owners favor? That's several pretty good long run reasons to move Redd, et al this year....