Thursday, July 9, 2009

NBA Lowers Its Salary Cap and Luxury Tax


The National Basketball Association has announced that the Salary Cap for the 2009-10season will be $57.7 million. The tax level for the 2009-10 season has been set at $69.92 million. Any team whose team salary exceeds that figure will pay a $1 tax for each $1 by which it exceeds $69.92 million.

The 2008-09 Salary Cap was $58.68 million and the tax level was $71.15 million. Although league-wide revenue increased 2.5% this past season, the decrease in the Salary Cap and tax level for the 2009-10 season is the result of the formula used to set the Cap and tax under the terms of the collective bargaining agreement.


Each July the league projects Basketball Related Income (BRI) and benefits for the upcoming season. They take a defined percentage of projected BRI which is currently 51% , subtract projected benefits and make adjustments based on whether the previous season's BRI was above or below projections. They then divide by the number of NBA teams (except expansion teams in their first two seasons) to arrive at the cap. The salary cap adjusts each yer and unfortunately for this year's free agents the adjustment has been downward.


Some of the items included in BRI includes Regular season gate receipts



  • Broadcast rights
  • Exhibition game proceeds
  • Playoff gate receipts
  • Novelty, program and concession sales (at the arena and in team-identified stores within proximity of an NBA arena)
  • Parking
  • Proceeds from team sponsorships
  • Proceeds from team promotions

The Luxury Tax is computed by taking 61% of projected BRI, subtracting projected benefits, and adjusting for whether the previous season's BRI was above or below projections. They then divide by the number of teams (except expansion teams in their first two seasons) to arrive at the tax level.



Associated Press


NBA.Com


New York Times

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