It's a considerable price for owners to pay if they chase NBA championships with a roster loaded with large contracts. In other words, if a team is over the cap in the $5 million to $9 million range, the penalty increases to $2.75 for every $1 over. If a team pays the luxury tax in at least four out of five seasons, the fee is then increased by $1.00.
Where it gets steep is if a team is considered a repeat offender. From there, the tax will increase 50 cents for each additional $5 million a team is over, according to the NBA-NBPA collective bargaining agreement. The tax rises to $1.75 for every dollar in the $5 million to $9.99 million range to $2.50 if the total doesn't surpass the $14.99 million mark, and to $3.25 if it is in the $15 million to $19.99 million range. If a team is over the mark by $5 million or less, it will be charged $1.50 for every dollar it exceeds. The way the tax system works is the NBA penalizes a team when its payroll rises above $132 million for the 2019-20 season. "They're done with Capela," one Western Conference executive told CNBC, requesting that his name remain anonymous.Īccording to league sources who spoke to CNBC, Rockets owner Tilman Fertitta is seeking to shed additional salary off the team's nearly $140 million payroll hoping to avoid a luxury tax. ESPN has already reported one of the first big names floating around in trade discussions, as the Houston Rockets are flirting with the idea of trading center Clint Capela, who signed a five-year, $90 million deal with the team last season.
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