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Authored by Alex Kennedy - 25th August, 2009 - 1:52 pm
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When Von Wafer and Linas Kleiza signed with Olympiakos during this offseason, many people looked at their departure to Greece as two role players signing with the highest bidder.
But what if the trend of professional players going to Europe for greater financial prosperity isn't what it seems on the surface?
When Wafer signed with Olympiakos, the deal was reported as being worth approximately $10 million. But when you factor in Greece's tax rate, which is approximately twenty percent for an individual with Wafer's income, his actual earnings decrease significantly.
Upon returning to the United States, which has a tax rate of nearly forty percent for a citizen with Wafer's salary, he will be expected to pay the twenty percent difference in rates out of his own pocket assuming he does his taxes correctly. So while it may seem as if Wafer is making much more money with Olympiakos, after paying that difference his deal is actually equivalent to a two-year, $5.6 million contract or $2.8 million per season.
In a recent interview, Wafer said that the offers he received from NBA teams were “not even close” to his deal with Olympiakos and that being able to “help [his] family out a lot more was pretty important.”
While his new contract is a significant raise from the $800,000 he was making last season with the Houston Rockets , it’s still not the large contract that was being reported and possibly less than Wafer expected when he signed the deal.
How could Von or a player in his situation not know all of the details before signing overseas? Because agents with their own agendas sometimes choose to leave out such crucial information as losing a significant chunk of his contract upon paying his taxes in the United States in order to secure a raise of their own.
When a player signs for a minimum contract in the NBA, an agent makes two percent of the deal. For all contracts above the minimum, an agent makes four percent.
But for contracts signed overseas, the player’s agent makes an astounding ten percent of the deal. If a player signs a two-year, $10 million contract with an NBA team, his agent will make $400,000 before taxes. But by persuading their client to sign the exact same contract in Greece, the agent now makes $1,000,000.
While most agents have their clients in mind and want what is best for them, there are some who may direct a player overseas just to help themselves. Some agents are paid hourly so sending a client overseas brings in the bulk of their income.
“I just hope that these players understand all of the motivations for the deal," one agent told RealGM. “Does [Josh] Childress know, for instance, what his agent made from that deal? Do they know exactly what their salary will be and that they’ll have to pay the difference in taxes between Greece and Amercia? If they do and everyone understands, it’s a great deal. If they do not, then I feel bad for the players involved.”
Kleiza is another example of a player who signed with Olympiakos this summer for a deal smaller than reported. The two-year, $12.2 million contract that the forward signed is actually the equivalent to a two-year, $9 million NBA deal after paying the difference in taxes. While this is still a very nice paycheck, it’s not the huge deal that has been repeatedly reported.
Players aren’t making the large amounts of money that are being reported and that’s important to address in order to stop the recent trend of players ditching the NBA for the cash.
Questions or comments? Alex Kennedy can be reached at swishkennedy@yahoo.com. |
