Luxury Tax Could Significantly Impact The Players Of L.A. Lakers
The Los Angeles Lakers may be looking at paying upwards of $100 million in luxury tax next season thanks to the high costs of keeping their team together. While there’s no reason to suggest the team wouldn’t foot the hefty price tag if it meant a successful season, its evidence of the rising payrolls of professional NBA teams.
ESPN provided a breakdown of the expenses the team may stand to face during the upcoming season. The publication explained they’re expected to cough up $170 million for payroll in order to keep the existing team intact. This could result in more than $100 million owed to luxury taxes, leading ESPN to estimate that the team’s financial commitments for next season could be anywhere between $250 million to $270 million.
The publication goes into full detail about the Lakers’ financial burden for the upcoming season. For instance, the Lakers need to provide financial incentives to retain players. After turning down a preseason offer from the team, Dennis Schroder’s team is gearing up to negotiate once again with the Lakers. The team also recently offered new contracts to Anthony Davis, Kentavious Caldwell, and signed Montrezl Harrell. Many of the team’s players are free agents, so they may have to offer further financial incentives in the near future to get them to stay.
Nevertheless, ESPN warns the high figures won’t be a challenge for the Lakers to pay. In fact, they estimate the team earns over $200 million per year in television deals for the league. The high prices associated with luxury taxes, which directly correlates to raises in payroll, has never appeared to be an issue for the Lakers since it came into effect during the 2002-2003 season.
The NBA employs a luxury tax system that requires teams pay a tax fee if their team payroll exceeds a specific threshold. The penalty requires the team pay per dollar in which the payroll exceeds the max number. This threshold has changed throughout the years. The NBA also uses a soft salary cap. This means there is a maximum salary, however, this can be exceeded thanks to a variety of exceptions.
Bleacher Report notes that the Lakers’ potential tax bill for the upcoming season could easily exceed the total they spent on taxes during 2007-2014, which was $105.6 million. The publication notes this will be the first season in which the team faces a luxury tax penalty while operating under Jeanie Buss.
Sources: ESPN, Bleacher Report,
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