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NBA Superteams To Break the Bank

December 29th, 2011 No comments

The 2011-12 NBA season is finally? underway. Last month I wrote about the new collective bargaining agreement, highlighting the progressiveness of the luxury tax.

This is the first time we’ve seen a progressive luxury tax. One thing seems clear: An owner will need to dig very deep into his pockets in order to maintain a “superteam.”

As discussed in this piece from SportingNews, Miami Heat owner Mickey Arison will likely be the first put to the test:

In 2013-14, Arison will be paying his Big Three [Dwyane Wade, LeBron James, and Chris Bosh], essentially, $57 million. Assuming that, by that time, the salary cap and tax threshold—$58.4 million and $70 million, respectively—are about the same as they are now (which is probable, because the usual increase in the cap will be offset by the players’ lower share of basketball-related income), Arison’s problem becomes pretty clear: He has a likely total of about $77 million in commitments that year, for nine players.

Currently, the tax threshold is $70 million. The article projects a possible 2013-14 Miami Heat total team salary of $113.75 million, which would trigger a $28.75 million luxury tax.

It’s going to be increasingly difficult to build a quality team around three superstars. One need not look further to discover why Mr. Arison was one of five NBA owners who voted against the new CBA.

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