Should the Bulls Pay the Lux Tax Just Because They Can?

[SensiBull]

Come on, tong po. Let's have it.

[Leslie Forman]

No, I think the Chandler trade was awesome.

[NLK]

I'm not tong po, but IMO, for the roster we currently have, NO. Going over the salary cap, I think brings about a wrong impression: Pay whatever and hope we win. Sort of like the Knicks franchise is right now. Then we'll be stuck with bad contracts (i.e. Salary Cap Hell) and unable to move them.

[DuckIII]

The answer is obviously no. Having a high team salary creats more problems than just the tax. It can lead to crippling inflexibility in making serious moves that might need to be made to get under the salary cap for trade or free agency purposes. But I don't think its really a very important question in any event.

The important question is should a team go over the luxury tax when a predictably impactful move will cause a team to go over the tax. Because the answer to that qeustion, given the Bulls' revenue stream, is yes.

And the Bulls have already cited the luxury tax as an obstacle in trade discussions regarding one of the very best players in the NBA who would provide much of what they lack: Kobe Bryant. If the lux tax is an obstacle in acquiring a player of his pedigree, when will it not be an obstacle?

And given the wealth of this team, thats a problem from this fan's perspective.

[sk33]

avoiding the luxury tax has been instrumental to our success. if we had chandler and wilcox or gooden now instead of the force that is ben wallace, we'd probably be in the cellar. I imagine we'd be close to 7 games under .500 instead of the success we're currently experiencing.

But the key to avoiding the luxury tax longterm is not to develop players who might one day demand big contracts if they develop properly. It's hard to do with lottery picks, but we're ensuring some long-term under the luxury cap status with our current path.

[SensiBull]

What's wrong with waiting to see if the formula (adding Kobe to the current/leftover mix of players) actually works, first, and only paying the Lux Tax to retain that success, after the formula has been proven?

Is there no room between total imprudence and absolute miserdom?

[Leslie Forman]

I'm gonna post this here for the people that didn't go into the other thread.

http://www.forbes.com/free_forbes/2004/0216/064tab.html
http://www.forbes.com/lists/results.jhtml?passListId=32&passYear=2004&passListType=Misc&searchParameter1=unset&searchParameter2=unset&resultsStart=1&resultsHowMany=25&resultsSortProperties=-numberfield6%2C%2Bnumberfield1&resultsSortCategoryName=Revenues&category1=category&category2=category&passKeyword=
http://www.forbes.com/lists/2006/32/biz_06nba_NBA-Team-Valuations_Income.html
http://www.forbes.com/lists/2005/32/Income_1.html
http://www.forbes.com/lists/2007/32/biz_07nba_NBA-Team-Valuations_Income.html

For you people who don't like math, that's a grand total over the past five years in profit of $228.3million.

But we have the same budgetary limit as the Memphis Grizzlies.

[SensiBull]

The Ben Wallace signing alone cost more than a quarter of that dollar amount alone.

And now the franchise is supposed to pay Luxury Tax, correct me if I'm wrong, on the whole payroll?

[SensiBull]

Kobe is surrounded by better pieces in L.A. than we would have left after a trade for him, and, now that Shaq's gone, they still don't have anything to show for it.

But we're supposed to go into Lux Tax for him?

[ice9]

And now the franchise is supposed to pay Luxury Tax, correct me if I'm wrong, on the whole payroll?

Not on the whole payroll, just the amount exceeding the threshold.
Example:
Tax at 65M, 66M in salaries, pay 66M+(66M-65M)=67M.

The tax collected is then dispersed equally among teams that don't pay the tax, so that could be another loss of several millions.

[Red Larrivee]

You can't be serious about winning if you don't want to pay the luxury tax. If Paxsons saying "Oh I want to be a Contender" and "Oh we don't want to pay the luxury tax." We might as well get new management and a new owner.

[DuckIII]

Kobe is surrounded by better pieces in L.A. than we would have left after a trade for him, and, now that Shaq's gone, they still don't have anything to show for it.

But we're supposed to go into Lux Tax for him?

That isn't the problem. The organization, through Paxson, cited it as an independent issue. Not "well, we would have had to gut our team in a terrible way and still would have had to pay the luxury tax."

Clearly if the trade independently stinks, then who gives a crap about the luxury tax ramifications? You just don't do the trade.

But if the trade is obviously a good one that would presumably provide a "on the verge" team with what it needs to be an "in the fray" team, luxury tax implications should not prevent it given this team's revenues.

[DuckIII]

You can't be serious about winning if you don't want to pay the luxury tax. If Paxsons saying "Oh I want to be a Contender" and "Oh we don't want to pay the luxury tax." We might as well get new management and a new owner.

Thats not true. Only two teams that could legitimately be called contenders did pay it, and San Antonio, as one of those teams, only paid about $195K in luxuary tax last year.

Dallas paid about $7 million. The other three teams who paid it, Minnesota, New York and Denver, weren't legitimate contenders.

Detroit didn't pay it.

Utah didn't pay it.

Cleveland didn't pay it.

So only one conference finalist paid the tax - the Spurs - and they barely paid any tax at all.

Also, Phoenix didn't pay it and neither did Chicago, New Jersey or Golden State. So only 1 team, of the final 8 teams standing, paid the tax (and barely paid any tax at all).

[Red Larrivee]

Thats not true. Only two teams that could legitimately be called contenders did pay it, and San Antonio, as one of those teams, only paid about $195K in luxuary tax last year.

Dallas paid about $7 million. The other three teams who paid it, Minnesota, New York and Denver, weren't legitimate contenders.

Detroit didn't pay it.

Utah didn't pay it.

Cleveland didn't pay it.

So only one conference finalist paid the tax - the Spurs - and they barely paid any tax at all.

Also, Phoenix didn't pay it.

I'm not saying that it's impossible to be a contender without entering the luxury tax, but I'm saying if you want to be a legit contender you have to be willing to enter luxury tax. I didn't want to believe it either, but the Bulls have shown 100% that they do not want to enter the luxury tax by any means. Thats just really disappointing to hear and it isn't giving me faith in what we have right now.

[waffle]

YES. You take advantage of what is available to you. This team is making money hand over fist... why not put some toward the ONLY GOAL that matters in sports.... winning. We are big market, I see no reason why not to act like it.

If you slow - avoid track and field
if you are short - avoid hoops
if you have no hand to eye coord - baseball? probably not

If you are a big market team - oh yeah! Spend.

[DuckIII]

I'm not saying that it's impossible to be a contender without entering the luxury tax, but I'm saying if you want to be a legit contender you have to be willing to enter luxury tax.

But its not true, as I just showed you. Only 1 of the final 8 teams last year paid the tax. And the one that paid it, paid only a teeny, tiny bit of tax.

Phoenix and Detroit in particular are absolutely adament about not paying the luxury tax. They are firmly on record as holding that spending policy and have made many moves because of that policy. Cleveland has taken a similar stance, which led to the Sideshow Bob/Pavlovic issues this off-season.

I can't speak intelligently about Utah, since I don't know if they have a hard and fast rule or not.

Its not at all uncommon for NBA teams, good NBA teams, to refuse to pay the luxury tax.

Now, that is not to say that I think the Bulls should take the same stance. I think they should be willing to spend some tax if the right move is available. But its inaccurate to say that you can't be serious about contending if you won't pay the tax.

[Leslie Forman]

Phoenix and Detroit in particular are absolutely adament about not paying the luxury tax.

I would argue that Phoenix's total unwillingness to go over the tax threshold is directly responsible for the Suns not being as good as they could be. They lost Kurt Thomas for nothing, they pissed away God knows how many draft picks, and they could have kept Joe Johnson if it wasn't for just several million dollars' difference in negotiations before he became a free agent.

Can you imagine if the Suns had Nash, Stoudemire, Marion, Johnson, Deng, Barbosa and who knows who else? It was all possible if they weren't such cheap bastards.

[DuckIII]

I would argue that Phoenix's total unwillingness to go over the tax threshold is directly responsible for the Suns not being as good as they could be. They lost Kurt Thomas for nothing, they pissed away God knows how many draft picks, and they could have kept Joe Johnson if it wasn't for just several million dollars' difference in negotiations before he became a free agent.

Can you imagine if the Suns had Nash, Stoudemire, Marion, Johnson, Deng, Barbosa and who knows who else? It was all possible if they weren't such cheap bastards.

I agree. But they are still considered a serious contender. And Larrivee said you can't be a serious contender if you don't want to pay the tax.

Any team with a wise front office (so ignore the Knicks) could probably be a little bit better than they are if they were willing to spend more than they currently are willing to spend.

[Leslie Forman]

Any team with a wise front office (so ignore the Knicks) could probably be a little bit better than they are if they were willing to spend more than they currently are willing to spend.

Indeed. The Bulls are definitely in that category.

[DuckIII]

Indeed. The Bulls are definitely in that category.

Correct. I'm in your corner. I was just pointing something out to Red in response to an assertion he made.