Re: Gaston ("All you had to do was the math from Day One,")

[Jim Metz <james.metz@xxxxxxxxxxx>]

On Wednesday, July 17, 2002, at 01:37 PM, Michael Gooen wrote:

Read somewhere this morning that some owners are proposing scrapping the
luxury tax in exchange for extending the current CBA for a few more
years.
  How uncool would it be if the Cs end up having given away last year's
first round pick AND let Rogers and Strickland go to avoid a tax that is
never imposed?
Michael
****************

Michael;
I read the same article, (see below). what was most interesting to me,
was Marc Cuban's quote; that the lack of tax in 2001-2002, was
predictable.
JB
*****************
From: JB <JimMetz@mac.com>
Date: Fri Jul 19, 2002  07:10:16 AM US/Eastern
To: Celtics Stuff <Celticsstuffgroup@Yahoogroups.com>
Subject: [Celtics' Stuff -Cuban: "All you had to do was the math from
Day One," -ESPN
Reply-To: Celticsstuffgroup@Yahoogroups.com

Tuesday, July 16
Updated: July 18, 5:41 AM ET
 
Player salaries don't trigger full escrow, luxury taxes

By Darren Rovell
ESPN.com

Minnesota Timberwolves forward Kevin Garnett was told he would have to
give back to the NBA about $2.24 million -- 10 percent of his 2002
salary -- because of the tax the players agreed to as part of the
Collective Bargaining Agreement that settled the 1998-99 NBA lockout.

The NBA's highest-paid player might want to go on a vacation or shopping
spree after he finds out that, in part due to the fact that salaries and
benefits did not exceed 61.1 percent calculated gross league revenues,
he will only have to give back $1.12 million, or 5 percent of his yearly
salary.

Approximately $153 million was automatically deducted from all players'
bi-monthly paychecks this past year and put into an escrow account. If
salaries and benefits made up more than 61.1 percent of basketball
related income (BRI) -- which includes revenue generated from national
and international television deals, regular season and playoff gate
receipts, team in-arena revenues, such as sponsorships and concessions,
as well as revenues from merchandising and licensing fees -- the players
would have to give back the full 10 percent. But players salaries and
benefits only made up 60.2 percent of the BRI, which totaled about $2.67
billion for last season.

	Salary cap progression
	Season 	Cap amount
	2002-03 	$40.271 million
	2001-02 	$42.5 million
	2000-01 	$35.5 million
	1999-00 	$34 million
	1998-99 	$30 million
	1997-98 	$26.9 million
	1996-97 	$24.4 million
	1995-96 	$23 million
	1994-95 	$15.9 million
	1993-94 	$15.1 million
	1992-93 	$14.0 million
	1991-92 	$12.5 million
	1990-91 	$11.9 million
	1989-90 	$9.8 million
	1988-89 	$7.2 million
	1987-88 	$6.2 million
	1986-87 	$4.9 million
	1985-86 	$4.2 million
	1984-85 	$3.6 million

Half the money is coming back to the players because not only was the
threshold not exceeded, but other guarantees of the Collective
Bargaining Agreement are kicking in. The players are getting back a
total of about $77 million, according to an official with the NBA
Players Association.

The fact that players salaries and benefits didn't exceed 61.1 percent
of basketball related income also means that the highest spending teams
will not be charged a luxury tax, which was to take effect this year.
But many teams didn't spend in fear of the tax, so the threshold was
never reached.

"All you had to do was the math from Day One," said Dallas Mavericks
owner Mark Cuban. "It was not hard to determine in advance. Attendance
had to fall off a cliff and teams had to spend more than they had in
order for the tax to take hold for this just completed season."

There is expected to be a luxury tax next season at around $50 million,
sources said. That's because salaries are expected to rise due to
already determined salary increases in long-term guaranteed contracts
and the use of cap exceptions while revenues are expected to remain
static.

With about half the teams over the amount, it has been suggested by a
couple owners that the league propose that to get rid of the luxury tax
in exchange for three or four more years of the same Collective
Bargaining Agreement. The agreement runs through the 2003-04 season and
the owners have the option to extend it one more year.

The thinking is that the tax wouldn't stop teams from spending and would
continue to create an imbalance between teams in the East and West,
which has more teams that are willing to pay the tax. While salaries
could go up, they will also be held in check by the escrow payments,
should the extension keep that parameter in the agreement.

For the first time since the salary cap was implemented in the 1984-85
season, the salary cap dropped -- to $40.271 million, or 5.2 percent
decrease -- just one year after the salary cap experienced its second
largest year-to-year jump since its advent. Sources with knowledge of
the calculated numbers told ESPN.com that the decline is directly
attributable to the more than $100 million drop in revenues expected
from the first year of the new television deal with ABC/ESPN and Turner.

The salary cap is determined by taking 48.04 percent of the projected
basketball related income expected in the following season.

The minimum team payroll will be $30,203,250, and the mid-level
exception will be $4,546,000. Each team was refunded $3.037 million from
player escrow tax funds.

Darren Rovell, who covers sports business for ESPN.com, can be reached
at darren.rovell@espnpub.com.


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