The NBA’s luxury tax aims to create a level playing field. I don’t want to teach a granny how to suck balls, but that’s the point of the system. Instead of introducing a hard salary cap, The NBA has embarked on the path of allowing owners to spend what they want but taxing any money spent above the threshold to distribute it around the less financially strong franchises in the league.
The Golden State Warriors went all in to spend big. They went from a $450 million team to a $5.6 billion team in just over a decade, mostly through championship spending.
But through being constantly over the thresholdthe Warriors fall into the ranks of repeat offenders, pushing their tax into a higher class. Everything said, The league charges them about $7 for every dollar spent on salaries.
The Warriors are expected to pay around $141 million in luxury taxes for 2022, which they set in combination with last year’s $170 million bill in addition to the lifetime tax of every other team in the NBA.
Owner Joe Lacob says that’s inherently unfair. “The truth is we only pay $40 million more than the luxury tax. Well, that’s not small, but it’s not a huge number. We have a total of $200 million overage because Most of it is this incredibly high luxury tax. And what I think is unfair, and I’m going to say it on this podcast, and I hope it comes back to everyone who’s listening. Of course it’s self-serving to say that, but I think it’s a very unfair system because our team is made up of… all the top 8 players, all of whom are drafted by that team.”
You’ll have to ride along with that train of thought to follow it here, but the main takeaway is that the tax is meant being an “incredibly punishable luxury tax” and his complaining about it shows that it is working as it should. I’m sorry Joe, but that’s you target to feel the pinch. This drives you to stay within the limits of the salary cap.
But before you pity Lacob’s cries of poverty too much, consider that the League has nine years, $24 billion TV deal that will bring in $800 million for every team in the region, and that’s expected triple if renegotiated in 2025. He can afford the tax.
Or he can play fair, stay within the cap, and watch all those tax issues just go away.
When billionaires complain about taxes, it means the system works exactly as it was designed. The fact that they can rake in nine figures and have the gall to ask for a bailout is insulting.