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Posts Tagged ‘luxury tax’

Bulls Ownership Received $9,379,603 million In Kickbacks

Monday, August 3rd, 2009

As originally pointed out by imagge on the RealGM forums, the Bulls ownership group received some additional money, a sum greater than $6 million, in escrow money.

The NBA’s escrow system is in place to make sure that players don’t receive more than 57% (except in a few cases) of the basketball related income (BRI) in salary and benefits. The league will take a certain percentage of a players paycheck (9% this past season) and put it into the escrow account. If there is an overage, some of the escrow money will be distributed back to the teams.

This past season, each team received $6,467,847.

This is in addition to the $2,911,756 that the Bulls received from being a team under the luxury tax.

That makes for a total of $9,379,603 in kickbacks for the Bulls from the league office.

However, savings for the Bulls don’t stop there. The Bulls also saved $1,600,000 for this coming season when they bought out Tim Thomas for $4,866,600 as pointed out by Mark Deeks on Bulls Confidential.

So between the escrow and tax kickbacks, and the Tim Thomas buyout, the Bulls saved a whopping $10,979,603.

When the Bulls are saving that much money through various avenues, it gets a bit annoying to hear Jerry Reinsdorf set the luxury tax as a hard barrier of sorts for the team. Those savings are more than enough to cover the cost of the luxury tax payment that would have been in order had the Bulls chose to retain Ben Gordon this past summer.

It’s really disheartening as a fan to see a player of the caliber of Ben Gordon become a tax casualty when the Bulls’ ownership group is saving that kind of money this summer.


Check out Larry Coon’s Salary Cap FAQ for more information on the escrow system.

Ben Gordon Received $11 Million Promise From Pistons?

Wednesday, June 17th, 2009

According to Bulls.com, Ben Gordon may have received an $11 million a year promise from the Pistons.

But I also heard that Gordon’s agent allegedly has been saying he has an $11 million promise from the Pistons.

This seems about what Ben Gordon is worth. Gordon’s scoring average this year fell right on the tier where I said he would be able to make $11 million a year when doing my analysis of whether the qualifying offer was a good idea or not.

I think it would be sickening to let Ben Gordon walk if this is all he is seeking. It will simply come down to the Bulls not wanting to pay Ben Gordon what he is worth.

Bulls’ management has conditioned the fans into thinking that the luxury tax is some thing that would be unacceptable for the Bulls to go into. The fact is that the luxury tax is not a hard barrier, and should not be a factor, at all, for the most profitable team in the NBA keeping their best player and leading scorer for the past four seasons.

Larry Coon: Jerome James Could Be Excluded From Bulls’ Luxury Tax Calculation

Monday, June 8th, 2009

According to Larry Coon, a cap guru, Jerome James’ contract could be excluded from the Bulls luxury tax calculations.

For the first question — the salary counts. It doesn’t matter whether insurance is paying it. The team can apply to have the salary removed, after a year waiting period.

For the second question — the Board of Governors can exclude the salary of disabled players from the luxury tax, and typically does so.

This would be huge for the Bulls, as it would give the Bulls’ much more room to operate under the luxury tax, allowing them to re-sign Ben Gordon without making any major moves.

Of course this is all dependent on Jerome James having to medically retire.

Amare Still Available From Suns Cash Crunch?

Tuesday, February 17th, 2009

Chris Sheridan said that the Suns still could trade Amare Stoudemire for financial reasons, during an appearance on ESPN’s First Take. Financial reasons will drive the Suns decisions between now and Thursday.

Sheridan says the Suns are a team that will lose $30 million if they stand pat. They want to move Shaquille O’neal primarily because that would take them from losing $30 milion, back to a positive $10 million.

Sheridan says that Robert Sarver is in Western Alliance Bancorp, and that company has lost 80 percent of it’s value in the past two years.

And this is why a trade involving Amare Stoudemire is still a possibility. There is a good chance the Suns will not be able to unload Shaquille O’neals contract and therefore, they will have to seek other avenues for financial relief.

If the Bulls were to trade Drew Gooden, Tyrus Thomas, and Cedric Simmons for Amare Stoudemire, Louis Amundson, and Matt Barnes, the Bulls would be saving the Suns a little more than $16.93 million next year (Sheridan’s Shaq number is exaggerated as not all of it would be under the luxury tax), in addition to $4.24 million in savings this year.

If the Bulls were to use their trade exception in a second part to the deal to take back Jared Dudley, the Bulls could sneak the Suns under the luxury tax this year, and save the Suns an additional $1.12 million this year and an additional $1.31 million next year.

This trade of Amare Stoudemire to the Bulls would save the Suns a total of $23.6 million in salary, and this is why a trade is still possible. Yes, a trade of Shaq for expirings would save more, but they aren’t likely to find a trading partner that gives them that package for Shaq.

In addition to these savings, the Suns would get extra savings from their share of the luxury tax revenue, as they would now be under the luxury tax in both seasons.

This is why the Bulls continue to have a shot at Amare Stoudemire. Trade talks in the NBA die and come back to life. That’s the nature of trade talks in the NBA. Even if talks are dead right now, there is always the chance that the talks resume. The Bulls and Suns will have talks on Thursday, to think they would not is naive.

Anything you read about the Bulls not being sure about the trade because the Bulls think Tyrus Thomas and Joakim Noah, or multiple draft picks is too much to give up for Amare is likely not true. The recent play of Tyrus Thomas and Joakim Noah isn’t good enough to halt an Amare Stoudemire trade.

Instead, the financial side of things would be why the Bulls turn down a potential trade for Amare Stoudemire. If the trade I proposed above (including Dudley for the trade exception) were the one to go through, the Bulls would take on an extra $7.07 million for this season. The Bulls would then have to spend $20.38 million more than they are obligated to right now, next season. And that is without Ben Gordon in the mix yet, who the Bulls would have to pay double the dollar for, as they would already be in the luxury tax.

In addition to these expenses, the Bulls would lose out on their share of the luxury tax revenue.

While this wouldn’t sink the Bulls into the red, it would cut into the Bulls profits quite a bit. Although these amounts would be somewhat mitigated from the extra revenue the Bulls would receive from making the playoffs, and extra ticket sales. (The Bulls have not been selling out every game this year).

For this reason, an Amare Stoudemire trade, if it does happen, might be accompanied by a salary dump of Kirk Hinrich, Luol Deng, and/or Andres Nocioni. If the Bulls are unable to lessen their salaries from dumping one of those players, the Bulls could just let Ben Gordon walk in free agency. The latter option would make the Bulls far less competitive.

While the Amare Stoudemire trade is a home run trade basketball wise, the ownership group has to be less than ecstatic about taking on all the extra money.

If the Bulls somehow do end up in a position to reject an Amare Stoudemire trade, it will be a financial decision, not a basketball decision.


Notes:

-The savings and spending numbers for this year should only be taken as estimates, as it is impossible to determine how much money has already been paid off.
-Next years numbers are based off the luxury tax staying the same at $71,150,000 and use the Shamsports.com salary data.

Ben Gordon Wants To Remain a Bull?

Friday, November 28th, 2008

According to the morning report on Hoopsworld.com, Ben Gordon wants to remain a Bull, has always wished to stay with the Bulls, but the money is still an issue.

While the luxury tax was an issue in offering Gordon a contract next season, those problems are unlikely to come up again this offseason because of Drew Gooden’s expiring contract.

The Bulls real problem is finding their way into the picture for the 2010 free agency. Letting Drew Gooden walk in free agency, or signing him to a short, two year deal, is a given if the Bulls want to get into the mix in 2010.

After not giving Gooden a contract that is lasts more than three years, the Bulls next task is to play the trade markets. The Bulls have three players who will for sure be under contract in 2010 and those are, Luol Deng, Derrick Rose, and Joakim Noah. The Bulls will then probably look at trading Kirk Hinrich, and probably Nocioni as well.

The Bulls have a problem working towards creating cap space for 2010 if they cannot find a take for either Kirk Hinrich or Andres Nocioni. If the Bulls still have Andres Nocioni and Kirk Hinrich under contract next summer, John Paxson will have to decide whether to re-sign Gordon or not. Not re-signing Gordon would make the Bulls a less desirable destination for some of the 2010 free agents, while simultaneously flushing a third overall draft pick down the toilet. However, there are a host of players that are better than Gordon available, and if they were able to land one of them, it would make letting Gordon walk look brilliant. If they cannot land one of the superstars, the move could end up costing the Bulls, or making the free agent signing a lateral move.

If the Bulls re-sign Gordon with Hinrich and Nocioni still under contract, Paxson could go directions immediately. The first direction is to continue pursuing trades involving Hinrich and Nocioni, and try to get in the 2010 game. The second direction would be to sign a solid free agent like Shawn Marion to the MLE this summer, while the rest of the league is scared to spend money. No matter what direction the Bulls choose to take in this scenario, they would be able to leverage Larry Hughes expiring contract for something good. Going the first direction, a Hughes trade would be the result of the Bulls not finding a taker for Hinrich or Nocioni. Going the second direction, Paxson could proactively seek trades involving Hughes’ contract.

Nonetheless, it is good to hear that Gordon wants to remain a Bull. Hopefully Paxson can find a taker for Hinrich or Nocioni this season so the Bulls can avoid another scary summer when it comes to free agency in 2009.

Bulls Beat #58 - Gordon’s played last game with Bulls?

Monday, August 18th, 2008

Doug Thonus, of Bullsbeat.com released the 58th episode of the Bulls Beat podcast today. This one is all about Ben Gordon and his comments that he has probably played his last games with the Bulls. It is an excellent podcast, and it really puts some well thought out perspective on the entire Gordon situation.

Doug first points out that Gordon hedged on the question. Gordon didn’t specifically come out and say that he played his last game as a Bulls. If you actually go look at the full interview with Ben, he said that it just looks that way, unless the negotiations change.

Doug thinks that it will absolutely stink if Ben Gordon doesn’t return because he is either our best or 2nd best player. He thinks that the argument that the Bulls shouldn’t pay Gordon $10 million a year is absurd, because at $10 million a year you aren’t asking a guy to be a superstar. Doug says he wouldn’t take a player who is making less than $10 million, that doesn’t fall into one of three categories: 1. Is still on his rookie contract and will make big money when he’s eligible for an extension. 2. A player who got significantly better after he signed his contract, such as Caron Butler. 3. A player who took a pay cut to stay with a contender, such as Manu Ginobili and Tony Parker.

He thinks that Gordon has sort of become a scapegoat for all of the team’s failures last year. Fans are venting their frustrations calling him short or inconsistent. He thinks it is absurd to think that someone like Jason Kapono could replace Gordon since he has a higher three point %. Doug contests that Gordon has to hit his threes off the dribble and while covered, while Kapono is completely wide open and set on all his threes. Kapono would have a low three point percentage if he had to make his the same way Gordon made his.

Doug thinks that Gordon is getting a raw deal. People are calling Ben a bench player, and using that as their point why Gordon shouldn’t be paid. In reality, Gordon isn’t a bench player, he has been 3rd or better in minutes every year he’s been with the Bulls. He’s a bench player since we elected to add scoring off the bench, not because he’s not good enough to start. Ben Gordon is on the floor in the important situations in games for the Bulls. Fans using this as an argument against Gordon are being intellectually dishonest.

He thinks that Gordon is bluffing. The Bulls won’t take crap back just to do Gordon a favor. They are going to want something really good for Gordon, not something like the 20th pick which they can just buy on draft night. Portland is the one team where Gordon is a good fit and they have the assets to make an attractive offer to the Bulls.

Options for Gordon if he’s not going to take the qualifying offer is to accept the Bulls offer or Europe. Europe screws him because he will still be a restricted free agent. Would be better for Gordon to bite the bullet and take the qualifying offer.

Doug also thinks that fans who think Ben Gordon isn’t worth the money because he can’t get an offer sheet are using a poor argument. The only team with any cap space is Memphis and they have a truckload of guards.

This situation can become nuclear for both the Bulls and Gordon. For Gordon, wanting more money is understandable, since he takes all the important shots and is the one aske to score on triple teams when they have to get points. Thinks if Gordon has another down year, he might only be looking at the MLE, or a little above it, if he can’t get back to that 2006-2007 level. I think personally, this is a little unfair, since Gordon’s efficiency once Skiles was fired was sky high, and he was at 20 PPG for the season before Boylan benched him after the Wallace trade. Also nuclear for the Bulls because if Gordon leaves, they will be flushing one of their best players for nothing.

Gordon is the perfect complement next to a great player, which Derrick Rose should be. Gordon can play great in a shooter, off the ball role while Derrick Rose dominates, but also can step up 20-25 games a year and win them by himself.

Doug thinks those saying we will survive losing our leading scorer, because it happened with Jamal and Eddy are fooling themselves. According to Doug, Jamal Crawford sucks at basketball and Eddy Curry had one good year with the Bulls, and became crap with the Knicks because he never worked on his weaknesses. Neither Eddy or Jamal made consistent positive impacts on games for the Bulls. Ben Gordon on the other hand has consistently positively impacted a game for the Bulls. We have won tons of games because of Ben’s scoring ability. Gordon’s +/- has been great except for last year with the Bulls, when everyone’s was bad. He thinks Ben Gordon, like Elton Brand, could be the one high draft pick we get rid of that comes back to bite us in the butt.

Also, Doug thinks the Bulls offense hasn’t been well suited for Gordon. He thinks we spent too much time doing a useless pick and roll with Ben Wallace in the corner, which exposed Gordon’s flaws. He thinks if Ben goes to another team, he could really improve just by being in a better offense. This has been a complaint of mine. The example I like to use is the 2006-2007 playoffs. In the series against the Heat, the Bulls had Gordon playing at the top of the key, and ran him in pick and rolls with Nocioni. Luol Deng always gets the credit for being the best player in this series, and he did good, but I think Gordon was the most dominant player in this series. Then in the Pistons series, we put Ben Gordon back in the corner, and the Pistons simply pinned him there, making him ineffective.

Doug absolutely does not want to send Gordon to Miami. Gordon, Wade, and Beasley would make too good of a team, and also Shawn Marion, the piece the Heat would have to give up, does nothing for us.

He thinks the Bull should go up around $66 million in their offer to Ben. Thinks the Bulls, when trading Andres Nocioni or Kirk Hinrich, should shed some money to find room to get under the luxury tax. Doug thinks Gordon’s stance is that he knows they are going to make moves after they sign him, and since they are willing to go right up to the luxury tax right now with Ben, he knows they won’t be taking more salary back in those trades, so the Bulls could get under the luxury tax before the tax is calculated, and Gordon can get a larger deal.

Doug thinks that Gordon is full of it, and that Ben Gordon will either take the qualifying offer and if not that, then probably the Bulls long term offer.

You can listen to this podcast at Bullsbeat.com.

Ben Gordon on ESPN First Take

Monday, August 11th, 2008

Ben Gordon appeared on ESPN First Take this morning to discuss his contract situation and Ben Gordon’s Mount Vernon Community Weekend.

Gordon still does not know how the contract situation will play out, but he hopes that it will resolve itself pretty soon. Him and the Bulls are not close on a deal, but they are exploring situations to get closure on the situation for both sides.

There are two main hurdles for Gordon, money and the guard logjam. Gordon thinks Derrick Rose makes the Bulls logjam worse, but thinks Rose is going to be a good player. It could probably be assumed that Gordon wishes for Hinrich to be moved allowing for Gordon to get more minutes at the guard spot and to allow Ben Gordon more money under the luxury tax threshhold. It should be noted that the Bulls just have to get under the luxury tax threshold by the end of the season, so they can pay Gordon more now with the intention of trading Hinrich during the season, after allowing him to recoup some of his value.

Gordon still sees Europe as an option as a result of the way the game is being globalized. Although it doesn’t seem like Gordon is very serious about considering Europe as an option. He thinks both Kobe and Lebron are serious about considering Europe.

Once again, Ben Gordon will be in Mount Vernon to host Ben Gordon’s Community Weekend. A new even this year will be Ben’s Bowling Bash, which will feature stars such as Emeka Okafor and Elton Brand, as well as other NBA players, Eddy Curry and Quentin Richardson. Half of the money they raise will go to Mount Vernon’s high school’s save our sports initiative.