No Luxury: Lakers Taxed $20-Million by NBA

Dr. Jerry Buss has never been shy about spending money on his franchise. His willingness to go to whatever lengths necessary to win has helped to maintain the winning tradition of the Lakers while constantly creating heightened expectations. That’s why the NBA’s 2010-11 audit is so painful to the best owner in basketball.

The Lakers are among three teams that will pay somewhere in the neighborhood of $20-million in luxury taxes for exceeding the salary cap threshold.

It’s one thing when Dr. Buss is cutting a check that size on the heels of a victory parade through downtown. Quite another when he’s breaking that kind of bread while his team is at home watching the playoffs on TV in June. Perhaps that is why the Lakers are laying off longtime employees in such unceremonious fashion.

According to the NY Post the Lakers, Orlando Magic and world champion Dallas Mavericks are the other teams that must divvy up funds to David Stern. I’m sure it’s a check Mark Cuban doesn’t mind cutting being that he’s having eggs and bacon with the Larry O’Brien trophy every morning.

The luxury tax issue is one of the bigger reasons why the NBA owners have locked out the players. Smaller market teams simply cannot generate the capital to compete with free spending franchises like Dallas and Los Angeles. Of course that blame falls squarely on Stern and the rest of ownership.

Being that the NBA allows for teams to exceed the cap then it is not the fault of owners who seek to win titles via big spending. Aside from the horribly run Knicks of the early 2000’s the overwhelming majority of teams that have been hit by the luxury tax are most always title contenders.

In addition the league secretly encourages teams to exceed the cap as this revenue is split amongst the rest of the league. Without a proper business model for true revenue sharing this is the hole the NBA has dug for itself.

But we’re getting off the point.

The point is that Dr. Buss or his learning-on-the-job son, Jim, must make some tough decisions going forward. Should a hard cap be instituted in the terms of the new CBA the Lakers will have to rediscover creative ways to win with a lesser payroll. As it stands now the Lakers are on the hook for just over $90-million in player salaries for the potentially never-to-occur 2011-12 season with little relief in sight.