NBA Owners Agree To Try Luxury Tax

[Way Of The Ray <wayray@ix.netcom.com>]

The lockout will be over by the second week of November, if not sooner.
Ray

                         NBA Players, Owners Make Progress

                         By CHRIS SHERIDAN AP Basketball Writer

                         NEW YORK (AP) -- In one of the first signs of
                         possible progress in the NBA lockout, the owners
                         agreed Friday to accept the union's concept of a
                         luxury tax on some contracts to see if such a
                         system will slow salary growth.

                         "We are willing to try it the union's way, but
                         they have to agree that if it doesn't work, we
                         then have to try it our way," deputy
                         commissioner Russ Granik said.
  
                         The league asked for a two-year trial, with
                         higher tax rates and a lower threshold than the
                         union had proposed. A hard salary cap would kick
                         in for the 2000-01 season if the percentage of
                         league revenue devoted to salaries failed to
                         drop from 57 percent to 52 percent.

                         The union did not immediately respond.

                         According to the league's projections, the tax
                         would have no impact on 85 percent of the
                         league's future contracts.

                         The league also included an exemption for any
                         player who accepts a so-called Larry Bird
                         contract with a 5 percent raise. Such a rule
                         would allow the Chicago Bulls to re-sign Michael
                         Jordan for about $36 million next season without
                         having to pay any tax.

                         Although the sides may have found a mechanism
                         that will get them to the middle ground on the
                         main economic issue, a host of other topics
                         still have to be resolved before a collective
                         bargaining agreement could be put up for a
                         ratification vote.

                         Granik said it will take about a week to settle
                         the rest of the issues after the sides agree to
                         a new economic system.

                         The NBA has already canceled the first two weeks
                         of the season, or a total of 99 games. More
                         games will be lost if the sides can't reach
                         agreement soon.

                         There was no decision Friday from arbitrator
                         John Feerick on the issue of whether players
                         with guaranteed contracts must be paid during
                         the lockout. Feerick's decision is due Sunday.

                         The league's proposal calls for a tax to be
                         levied on any contract signed under the Bird
                         exception for more than $2.6 million, which was
                         the average salary in the 1997-98 season.

                         The tax would be paid by owners, with the
                         revenue redistributed to low-revenue teams. In
                         theory, it would deter teams from signing overly
                         lucrative contracts.

                         The tax rate would be 50 percent of the amount
                         over $2.6 million for all contracts worth up to
                         $10 million annually. For contracts worth
                         between $10 million and $15 million, the tax
                         would be 100 percent, between $15 and $20
                         million it would be 150 percent, and for
                         contracts worth more than $20 million the rate
                         would be 200 percent, Granik said.

                         Under the union's tax proposal, which was
                         presented to the owners Tuesday, a 50 percent
                         tax would be levied on any Bird contract worth
                         more than $18 million annually. (The Bird rule
                         allows teams to exceed the salary cap to retain
                         their own free agents.)

                         "The proposal made by the union would have
                         resulted in a tax on only two of the
                         approximately 400 contracts in effect last
                         season," Granik said. "We analyzed it every
                         which way, and like the union's other proposals,
                         it would have increased -- not decreased -- the
                         percentage of league revenue paid to players.

                         "However, in the spirit of compromise we have
                         attempted to fashion a system that uses a tax,
                         instead of a hard salary cap, even though we're
                         skeptical about the ability of any tax system to
                         keep player salaries at a set percentage of
                         league revenue," Granik said.

                         AP-NY-10-16-98 1740EDT<