good dolphin wrote:
Does having to pay the luxury tax in any way prevent the Bulls from acquiring players or is it just a situation like where the Yankees know they will pay it every year. If not, I don't see why any fan would see luxury tax avoidance for JR as a benefit of this deal to the fandom.
Luxury taxWhile the soft cap allows teams to exceed the salary cap indefinitely by re-signing their own players using the "Larry Bird" family of exceptions, there are consequences for exceeding the cap by large amounts. A luxury tax payment is required of teams whose payroll exceeds a certain "tax level," determined by a complicated formula, and teams exceeding it are punished by being forced to pay one dollar to the League for each dollar by which their payroll exceeds the tax level.
While most NBA teams hold contracts valued in excess of the salary cap, few teams have payrolls at luxury tax levels. The tax threshold in 2005–06 was $61.7 million. In 2005–06, the New York Knicks' payroll was $124 million, putting them $74.5 million above the salary cap, and $62.3 million above the tax line, which Knicks owner James Dolan paid to the league. Tax revenues are normally redistributed evenly among non-tax-paying teams, so there is often a several-million-dollar incentive to owners not to pay the luxury tax.
The luxury tax level for the 2008–09 season was $71.15 million.[22] For the 2009–10 season, the luxury tax level was set at $69.92 million.[23] The luxury tax level for the 2010–11 and 2012–13 NBA seasons was $70,307,000.[9]
The 2011 CBA instituted major changes to the luxury tax regime. The dollar-for-dollar tax provisions of the previous CBA remain in effect through the 2012–13 season. Starting in 2013–14, the tax changes to an incremental system. Tax will be assessed at different levels based on the amount that a team is over the luxury tax threshold. The scheme is not cumulative—each level of tax applies only to amounts over that level's threshold. For example, a team that is $8 million over the tax threshold will pay $1.50 for each of its first $5 million over the tax threshold, and $1.75 per dollar for the remaining $3 million. Starting in 2014–15, "repeat offenders", subject to additional penalties, are defined as teams that paid tax in previous seasons. In the first season, repeat offenders from in all previous three seasons will pay a stiffer tax rate; from 2015–16 thereafter, teams paying taxes in three out of four years will be subject to the higher repeater rate.[10] As in the previous CBA, the tax revenue is divided among teams with lower payrolls.[52] However, under the new scheme, no more than 50% of the total tax revenue can go exclusively to teams that did not go over the cap.[6] Initial reports did not specify the use of the remaining 50% under the 2011 CBA,[6] but it was later confirmed that this amount would be used to fund revenue sharing for the season during which tax was paid.[53]
For the 2013–14 season, the luxury tax threshold was set at $71.748 million. The Brooklyn Nets, whose payroll for that season was projected to be over $100 million, would face a luxury tax bill above $80 million, resulting in a total payroll cost of $186 million.
This Wiki article actually does a pretty solid job of explaining many of the rules pertaining to NBA contracts, trades, exceptions,...,etc.
http://en.wikipedia.org/wiki/NBA_Salary_Cap
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only 14 are lottery picks. Not good odds
