Luxury Tax

["j.hironaka" <j.hironaka@unesco.org>]

At 06:49 29/06/01 -0400, you wrote:
>Ps. Great observation below, Alex
>             *************
>
>As a side note, I think the reason why the luxury tax is so feared is
>because it is a discontinuous cutoff: once you're $1 over the cutoff, you 
>don't get
>to share in the pot that's generated by the over-the-tax teams. I doubt that
>payoff is more than around $4-5M per team, but think about it this way. Say
>you are right at the threshold and an opportunity comes up to use your 
>exception
>for $4.5M. Then you get taxed another $4.5M and you lose $4M in additional
>tax payouts. So that player is costing you $13M per year - the equivalent of a
>maximum contract. It's a pretty effective deterrent for all but the
>wealthiest
>owners.
>
>Alex

I'd like to stress that last year only two teams (Clippers and Bulls) 
competed below the official $35.5 million salary cap, if Patricia Bender's 
numbers are accurate. I understand the cap figure is going up substantially 
before the new luxury tax. Does anyone know what that figure is?

According to Bender's site, six current Boston free agents or released 
players counted a total of $13,325,000 on Boston's cap last year. That 
could all clear the book (although Herren's cap figure is really chump 
change if he'll re-sign at that rate).

Bryant Stith ............... $5,920,000
Chris Herren ............... $316,969
Chris Carr ................. $1,200,000
Greg Minor ................. $3,240,000 [released]
John Williams .............. $2,100,000 [released]
Doug Overton ............... $548,500 [released]

That leaves a returning payroll of around $38 million based on last year's 
salaries. The actual figure for 2001-2002 might be say 10% higher (say 
around 41 million) plus the cost of the three rookies (maybe 4 million). So 
let's call it around 45 million. That would have ranked Boston 23rd in 
payroll last year. I should hope that keeps us under the luxury tax ceiling.

Antoine Walker ............. $10,130,000
Vitaly Potapenko ........... $4,290,000
Tony Battie ................ $3,200,000
Paul Pierce ................ $1,608,840
Jerome Moiso ............... $1,461,960
Mark Blount ................ $316,969
Milt Palacio ............... $316,969
Adrian Griffin ............. $498,500
Kenny Anderson ............. $7,520,000
Eric Williams .............. $3,890,000
Walter McCarty ............. $2,670,000
Randy Brown ................ $2,250,000

The big question is whether Boston can add $4.5 million to go after a 
rebounder (Jerome Williams) or shot blocker/rebounder (Nazr) without paying 
luxury tax?

In this sense a sign-and-trade player exchange up to quite a bloated salary 
would still be "cheaper", according to Alex' excellent analysis of luxury 
tax implications. You might see a lot of that happening this summer, if not 
necessarily by the Celtics. Veteran free agents might actually do well, via 
sign-and-trade more than the new $4.5 million exception.

A Boston scenario might have say Battie-McCarty or Williams-McCarty for a 6 
million dollar free agent (maybe a bit high for Nazr but what the hell it's 
an improvement). If only we can get someone to bite on our offerings. 
That's the hard part.

My math and analysis could be all screwy though. Please chime in if that's 
the case.

I'm hoping for one more move this summer. I think Walker (or the more trade 
popular Pierce) for Jason Kidd would have been a realistic scenario. It is 
really getting quite wierd seeing so many "best player in a franchise's 
history" changing addresses this week. I hope its not Pierce, but if any of 
these two rookies steal the show at Shaw and Gaston balks at another 71 
million contract... I'm getting way ahead of myself. As I say, and for the 
record, I hope we keep Paul Pierce for a long time.

***