Los Angeles Lakers: Dwight Howard Deal Will Cause Huge Luxury Tax

When the Los Angeles Lakers managed to pull off the deal of the summer, basically acquiring Dwight Howard from the Orlando Magic for nothing, many fans were upset that the new CBA, implemented by the NBA last season, was not working. But what many fans did not look at was that the effects of this trade would not affect the Lakers this season, but rather next season when the more punitive NBA luxury tax kicks in. And for many fans to say that the luxury tax, and the effects it may have on their franchise in the future, has not affected the Lakers thinking in the front office is just not true. For the last year or so the Lakers have been looking to move forward Pau Gasol, mainly because his contract is just way too much.

If the Lakers would like to keep this core of players together for the next few years it is going to cost them. Moving Gasol, though for a much cheaper, and younger option like, such as Josh Smith, would be a smart decision because it would help the Lakers money situation. Thus the reasoning behind the Lakers decision to making Gasol available. Still, though it does not seem that Gasol is going anywhere soon, rather the Lakers would like to see how Gasol can mesh with Steve Nash before making any rash decisions. So, this now brings up the question, just how much in salary, and luxury tax are the Lakers going to have to pay this season, and in the next few seasons, assuming that Howard does re-sign with the Lakers? Well let’s take a look.

Howard’s salary for the 2012-2013 season is $19.26 million and it will increase if he signs an extension next summer, which is what will most likely happen. According to salary cap wizard Larry Coon this will probably be the last days of free, careless spending in Lakers land. Next July the salary tax kicks up to $30 million, not too much for a Lakers franchise used to being over the salary cap by so much. But, at the beginning of the 2013-2014 season being over the luxury tax by $30 million means having to pay an astonishing $85 million.

This is due to the fact that the new CBA, which many fans have complained about, will start to carry out the new “incremental” tax. If you thought $85 million was bad you haven’t seen anything yet. At the beginning of the 2014-2015 season repeat offenders, those teams who have been over the luxury tax line for three of the last four years, will be charged with an even higher tax. The Lakers $30 million over the luxury tax will cost them anextra $115 million in taxes. Now keep in mind that this is not even counting the Lakers amount of revenue sharing, probably the dumbest idea ever, that they will have to give to fellow teams around the league. In 2013-2014 the Lakers are projected to have a revenue sharing amount of $49.4 million.

Now, I’m no business man, but at some point, most likely over the course of the next few seasons, the Lakers are going to have think long and hard about whether this sort of careless spending is really worth it. I mean let’s face it, no team is winning the championship every single season. And while the Lakers have certainly made their case as one of the favorites to win the NBA title for the next few seasons, do they really want to keep spending this sort of money? If they do then the next question to be asked is this, where will your profit be made?

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  • Armin

    This is sloppy, unresearched analysis. First, the Lakers reach the end of both Kobe Bryant and Pau Gasol’s contracts after 2014, two seasons from now. Its safe to say the 2012 and 2013 approx. $50M salaries for them will be cut in half(if you assume as I do Kobe won’t retire at the end of his contract), seeing as how Kobe will be 36 and Gasol 34. That’s minimum $20M or so off the $100M in their current payroll alone. Next, you have the end of Metta World Peace deal after 2014, who if he stays (it will be amazing) but if so it will be at a significantly less amount than nearly $8M. So, without one single roster change you can see how the Lakers pare their payroll down to somewhere close to a $75-80M cap number in 2014.

    But having said that, yes, for the next two seasons the Lakers will be on the hook for massive luxury taxes….big deal, they can more than afford it. Who is going to cry all night long for the most valuable team in the NBA having to share part of their revenues with the other clubs?

  • Joshua Casey

    If you have a problem with the salary cup numbers then please refer your gripes to the man who I stated in my article provided them, Larry Coon.You can reach him at his Twitter handle, @LarryCoon

  • Pat

    Takes money to make money

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  • tyler

    I want to see whats going to happen in L.A. now! http://www.formvote.com/discuss.php?postid=742295465707439