No Luxury tax afterall...

["Jaims" <jaims@xxxxxxxxxxx>]

No payroll tax, but NBA salary cap down for next season

NEW YORK (TICKER) -- The good news is NBA teams over the salary cap will not
be subject to a luxury tax. The bad news is that for the first time in
history, the salary cap is going down.

The NBA announced Wednesday that the luxury tax -- a 100 percent tariff on
teams payrolls over the salary cap -- would not be assessed.

Player salaries and benefits constituted 60.2 percent of league revenues,
reported to be nearly $2.7 billion. That was less than 1 percent below the
61.1 percent threshold that would have triggered the luxury tax.

Many believe the return of Michael Jordan may have prevented the luxury tax
from being implemented. Returning to the court for the first time in three
years to play for the Washington Wizards, the popular superstar generated
sellouts for nearly every Wizards game this season, impacting
basketball-related income (BRI) enough to withstand the tax threshold.

Most teams have been careful not to exceed the tax threshold, estimated to be
at $55 million in salaries. Had the tax been assessed, teams such as the
Portland Trail Blazers and New York Knicks, may have paid as much as $30
million each in tariffs.

Unless they curtail their spending, teams may encounter the luxury tax at this
time next year due to the lower salary cap, which dropped more than $2.2
million to $42.5 million per team.

The cap is determined by a percentage of BRI using a formula that is defined
by the collective bargaining agreement. It is a "soft" cap, which means there
are ways to exceed it through exceptions and creative management.

Instituted in 1984, the salary cap has grown from $3.6 million to $42.5
million last season. During the current collective bargaining agreement which
began four years ago, it has increased 58 percent.

However, drop in the overall BRI brought an end to that growth and will have
teams watching their payrolls even more closely. The drop may have been
brought about by the transition from the last year of an escalating TV deal
with NBC, TNT and TBS to the first year of an escalating TV deal with ESPN,
ABC and TNT.

The salary floor, or the minimum teams must devote to player salaries, is
$30.2 million.

Although the salary cap is down, the average salary is expected to rise from
$4.53 million due to scheduled increases in long-term guaranteed contracts,
anticipated free agent signings and the use of salary cap exceptions.