06-05-2009, 10:41 AM
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Join Date: Nov 2005
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Not A Luxury
Commissioner Stern says the league's tax for overspending will remain, even in these economic times with teams struggling
Quote:
LOS ANGELES -- Although several teams have taken a hit financially, Commissioner David Stern said Thursday the NBA has no plans to eliminate the luxury tax until the economy recovers.
With his team's player payroll projected to exceed $76 million, Hornets owner George Shinn could have to pay a luxury tax bill of more than $5 million next summer. The Hornets were one of the 12 teams which received loans from the league this spring. Since 2003, 17 of the league's 30 teams have borrowed a combined $2 billion since the league began establishing a line of credit for loans used by teams.
"There's a difference between choosing to and having a need to," Stern said at his state of his league address before Thursday's Game 1 of the NBA Finals at the Staples Center. Other teams replace depth with less expansive debt and use it to renegotiate with lenders. No, there's no contemplation of eliminating or reducing luxury tax."
Stern said the Hornets have been profitable. Last month, the Hornets announced 80 percent of their 10,700 season-ticket holders from this past season have renewed.
"New Orleans is profitable, and they tapped in," Stern said. "I can understand you tap (into the league's line of credit) -- some teams do it to cover operating losses so owners don't dip into their own pockets. Some do it because it's a good idea. The money is inexpensive and the credit line is a good."
Regardless of the economy, Stern said there are always teams that fare better than others. But he expects another record year in attendance for next season. However, Stern projects that league revenue could go down as much as 10 percent next season.
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Not A Luxury
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