"Nobody wants to be a taxpayer."

[CeltsSteve@AOL.com]

NBA Owners Getting Money Back
    Monday, July 2, 2001    
    
    
BY MIKE TULUMELLO
THE EAST VALLEY TRIBUNE 

    PHOENIX -- Everybody who owns an NBA team will have a fatter wallet at 
the end of the upcoming season -- thanks to the players they employ. 
    All 29 teams are expected to receive between $5 million to $8 million 
from the players, who would cough up 10 percent of their paychecks because 
their salaries have crossed a threshold put in place by the latest Collective 
Bargaining Agreement, league officials have confirmed. 
    "This is just about a sure thing," said Suns president Bryan Colangelo. 
    In addition, owners will pocket millions more (the exact amount is 
unknown) from a separate levy on big-spending owners. This is known as the 
"luxury tax." 
    This is why teams are scrambling to get under the tax threshold. It was 
the key reason for the Phoenix Suns' trade of Clifford Robinson, a former 
All-Star, to the Detroit Pistons for two journeymen forwards. 
    The tax threshold will be calculated precisely at the end of the season. 
Right now, it's estimated to be somewhere between $53.5 and $55.2 million. 
    Because the number is inexact, the NBA -- for the first year of the tax 
only -- has called this a "safe range." 
    Any team in this range, even though they might have to pay a small tax, 
will receive a tax payment. The main funding source will be the big-spending 
owners. 
    For example, the Suns expect their payroll to end up about $54.5 million. 
    If the tax threshold is set at the end of the season at $54.0 million, 
the Suns would pay a $500,000 tax. 
    But they also would share in the tax payments, though not quite a full 
share, that go to teams under the threshold. 
    The amount per team is unclear, but it is expected to be substantial. 
    "That's why it's so critical to be in the safe range," Colangelo said. 
"You get the tax money back." 
    The Suns calculated that the absolute maximum they could receive under 
both levies -- the 10 percent withholding from players and the luxury tax on 
owners -- would be about $14 million. The trade of Robinson may have ensured 
the Suns fall in this safe range. 
    Robinson was set to make about $7.6 million in the upcoming season. The 
two players they got in return, Jud Buechler and John Wallace will make about 
$6.2. The $1.4 in savings figures to be enough for the Suns to get a luxury 
tax payment. 
    That's why Pistons president Joe Dumars called the Robinson trade "the 
first luxury tax you've seen in the NBA." 
    Dumars also predicted, "I think you'll see more deals like this," where 
teams are willing to take a hit in terms of talent in exchange for lower 
contractual burdens. 
    He said another four such deals are now being offered on NBA tables. 
    The trade will save the Suns even more money next season. That's when 
they'll have a $4.0 million obligation for Buechler instead of an $8.4 
million contract for Robinson. 
    In the future, there are no plans for a "safe range." Teams under the 
threshold will be tax recipients and those over the line will be taxpayers. 
    As Suns chairman Jerry Colangelo said at a news conference announcing the 
Robinson trade, "Nobody wants to be a taxpayer." 
    He said virtually every team, including the champion Los Angeles Lakers, 
are trying to get, or stay, under the threshold. 
    Because of these considerations, the Suns will not use the $4.2 million 
middle-class exception available to them, Jerry Colangelo said. Whether the 
Suns will use a $1.3 million available exception is unclear. 
    Two teams, the Portland Trail Blazers and New York Knicks, are expected 
to be major taxpayers in the upcoming season. 
    If their payrolls end up at about $80 million, they would be paying about 
$25 million each. 
    The tax on the players is clearer. 
    Players will have 10 percent of their paychecks withheld and sent to an 
escrow account now that total salaries will exceed 55 percent of what the NBA 
calls "basketball-related income." 
    If the salaries exceed 60.5 percent of this figure, which is likely, they 
will lose the entire 10 percent. 
    The money goes to the 29 franchises, who would each get an estimated $5 
million to $8 million at the end of the upcoming season. 
    An exception is made for players who are signing contracts for the 
"veteran's minimum" salary, a scale that tops out at $1 million, based on a 
player's experience. 
    These two taxes were put into effect in the settlement that ended the 
lockout of players in 1999. The goals: to restrain spending and keep a level 
playing field among clubs. 
    Owners believed that, "This was the only way to protect the system," 
Jerry Colangelo said. But the players, naturally, see things more 
skeptically, particularly the 10-percent withholding. 
    The Suns' Tony Delk, who will make $2.5 million in the upcoming season, 
says, "It will make a dent for everybody. But it's an agreement that the 
players made, and they'll suffer for it for the next few years." 
    Calling it a "bad deal," Delk thinks the players eventually will try to 
get rid of the withholding. 
    Players salaries "look good on paper, but Uncle Sam takes a lot of it," 
and after all other taxes and the withholding is deducted, a player might 
make only 40 to 50 percent of his listed salary, he said. 
   
    (c) 2001, East Valley Tribune (Mesa, Arizona) 
    Distributed by Knight Ridder/Tribune Information Services.