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Caseloads
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Joined: 7/29/2001
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http://sports.espn.go.com/nba/columns/story?columnist=stein_marc&id=1790188
By Marc Stein
ESPN.com
Back in December, it was possible to talk taxes in NBA circles without angst. Commissioner David Stern spoke cautiously of his efforts to generate enough revenue to avoid a luxury tax after this season. Stern admitted that was a long shot, but there was widespread confidence that there would be no tax triggered after the 2004-05 season, because revenue growth would sufficiently outstrip the rise in player salaries by then.
Figures now that, in the vicinity of April 15, tax talk has taken on a darker tone.
Stern said after the recent Board of Governors meeting that the league remains "in a negative cash position" despite some revenue gains. Specifics are scarce for those of us who don't have access to detailed information on NBA finances, but we do know teams are revising their forecasts and bracing for disappointments this summer and next.
Dan Rosenbaum, a UNC-Greensboro economics professor who ranks as a leading luxury-tax authority, told us at Christmas that he was projecting a less than one-in-10 chance of a luxury tax being triggered after the 2004-05 season. Rosenbaum now sees at least a 30-percent chance of a tax coming in the summer of 2005, and that might be a conservative estimate.
Rosenbaum's calculations also suggest that the salary cap could go down this season from the current $43.8 million for just the second time in league history. If the cap indeed goes down -- or even if it stays relatively flat -- and with a luxury tax after next season more of a possibility, this summer's free-agent market would surely be affected.
A 2005 luxury tax would put a crimp in the Pistons' plans to re-sign Rasheed Wallace, right.
In his latest analysis (located at http://www.uncg.edu/bae/people/rosenbaum/luxtax.html), Rosenbaum suggests that the Clippers and Suns will find it tougher to clear the salary-cap space needed to make a max-contract offer to Kobe Bryant. Rosenbaum also contends that the Pistons and Spurs will face even greater challenges retaining their own free agents -- Detroit keeping Rasheed Wallace and Mehmet Okur, for example.
Teams that will have significant cap room, meanwhile, are in an even stronger position now, according to Rosenbaum. Instead of more liberal signing and trading, as expected back in December, Rosenbaum sees another offseason of conservative spending, which could enable the Hawks, Nuggets, Jazz and expansion Bobcats to A) bargain-shop for free agents who struggle to find money elsewhere and B) charge teams like the Clippers and Pistons a high price for taking on salary in trades.
Stay tuned. Forecasts change quickly and surprises happen, so this prognosis isn't terminal. Last July, you'll recall, the cap went up higher (to $43.8 million) than anyone envisioned once the final numbers were calculated and gave teams like Washington that little bit of extra cap room needed to sign a Gilbert Arenas.
Unfortunately, the people we know who are good at math say it'll take another big surprise this summer to loosen up offseason player movement.
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