During the Celtics-Bulls game Friday night, Hubie Brown observed that one reason that Danny Ainge might be postponing his next move is that his club is $19 million over the NBA salary cap.
I just figured that was old Hubie being fast and loose with his figures.
So I did a little research of my own.
Sure enough, Hubie was right.
The NBA salary cap for the 2007-08 season is $55 million.
The Boston Celtics payroll for the 2007-08 season is $74 million.
What Hubie Brown failed to explain is that a luxury tax payment is required of teams whose payroll exceeds a certain "tax level," determined by a complicated formula, and teams exceeding it are punished by being forced to pay one dollar to the League for each dollar by which their payroll exceeds the tax level.
For the 2007-08 season the luxury tax threshold is set at $68 million.
This means the Celtics are slated to pay the league $1 of luxury tax for ever dollar the team is over the threshold, or $6 million as of today.
Now if the Celtics were to sign PJ Brown and Gary Payton, the luxury tax would presumably grow, though a different rule provides that a player who has been in the NBA for three or more seasons, and is playing under a one-year, ten-day or rest-of-season contract, the league actually reimburses the team for part of his salary - any amount above the minimum salary level for a two-year veteran.
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