You’re going to hear these two words a lot over the next few days: luxury tax.
The Los Angeles Lakers are currently around $8 million over the luxury tax threshold and could benefit from moving below the line before the season’s end.
If a team is in the tax for more than two years over a five-year period they will get hit by the repeater tax.
The repeater tax starts at $1.50 for every dollar over the luxury tax threshold and increases to as much as $3.75 per dollar for teams more than $20 million over the line.
This new penalty will likely be a driving force behind many moves leading up to the deadline – the Chicago Bulls have already made a trade to get out of the tax by dealing Luol Deng in January – though Lakers general manager Mitch Kupchak insists the franchise isn’t worried about the repeater tax and its penalties.
“It’s not a big concern at all,” Kupchak said in an interview with reporters last week, according to Lakers.com. “It’s not a big concern at all.”
The Lakers could move under the tax by trading a combination of Jordan Hill, Steve Blake and/or Chris Kaman. They could also get under the line by trading Pau Gasol to the Phoenix Suns in the rumoured deal for Emeka Okafor, and then dealing just one of the aforementioned players.
While teams like Suns – and previously, the Cleveland Cavaliers – will try and acquire Gasol for less than his market value by pointing out the kind of salary cap relief a potential deal would bring for the Lakers, their stance is that getting under the line isn’t all that important this season.
Kupchak is either lying here in order to hold leverage in trade talks, or he’s simply telling the truth.
As Kupchak mentioned, the Lakers could avoid the repeater tax by not going over the threshold over the next two seasons, and seeing as Kobe Bryant is the only big contract on the books over the next two years, it doesn’t seem like the team will go over the line unless they add some serious salary between now and then.
However, the Lakers may decide to kill two birds with one stone by trading some of their free-agents-to-be (Gasol, Hill, Kaman, Blake) while receiving compensation in the form of picks or young talent and, in turn, move below the tax line in the process.
It was revealed on Monday that the Lakers had been involved in discussions with the Brooklyn Nets about a potential deal that would involve Hill being dealt to the East Coast. The Nets are the owners of a disabled player exception due to Brook Lopez’s season-ending injury, and Hill could therefore be dealt to Brooklyn without the Lakers needing to receive any salary in return, thus helping them move ever closer to getting under the luxury tax line this season.