To Heck with the Bobcats: A Semi-Educated Guess About Last Year’s Luxury Tax Changes

In his younger days, David Stern was viewed as a great commissioner.  Now, we think of him as a hypocrite who supposedly supports the smaller-market teams.  To be fully honest, I don’t think that Mr. David Stern cares one bit about the small-market owners, at least compared to the big-market ones.  I’m going to  use the extra luxury tax penalties as an example.

In last year’s new Collective Bargaining Agreement (CBA), the NBA decided to make the penalties for exceeding the luxury tax threshold even more severe.  The purported reasoning behind this was to dissuade teams from spending more money in salaries.  I believe that this will occur as designed, more or less.  However, I believe that the big-market teams are still going to throw as much money as they possibly can at free agents.  They’re still going to sign to the mid-level exceptions, and they will still try to trade for the best players.  Just look at Mikhail Prokhorov; he has shown a willingness to go above and beyond the luxury tax and pay those penalties.  I would imagine that the same is true for James Dolan, Mark Cuban, Jerry Buss, and others as well.  They’re going to spend the money; the only question is how much.  In last year’s CBA battle, even the least-optimistic estimates showed that one-third of the NBA teams were making money.

However, some teams will still fear the penalties.  Teams with lesser revenues and “poorer” owners (poorer being a very, very relative term when talking people rich enough to own a major stake in an NBA team) will be disadvantaged because they will not exceed the luxury tax “apron.”  The harsher penalties will prevent them from taking on extra salary.  Therefore, the luxury tax’s extra penalties are better designed to widen the gap between the rich and the poor rather than make it narrower.  This seems to reflect the political climate of our nation as a whole at the moment, but that’s another story.

The question is if David Stern’s actual plan-make the NBA more money by having superteams in major markets-will work.  (We know that this is his plan because he’s accidentally let his dream Finals match-up slip.  I’m telling you; it wasn’t Utah vs. Cleveland.)  Don’t worry; it won’t.  NBA teams are known to make ruinously poor personnel decisions, and David Berri and two others’ The Wages of Wins have proven that competitive balance is dependent on talent pool, not league business structure.  However, all you T’Wolves fans out there, fear the day when NBA front offices start to make the right decisions.  Thank you for reading, please comment, and please come back.

P.S. This is my one-hundredth post ever.  Hurrah!

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