Originally posted on Fox Sports Florida  |  Last updated 12/6/11
MIAMI Addressing the media during the NBA Finals last spring at AmericanAirlines Arena, NBA commissioner David Stern couldn't guarantee the Miami Heat would be able to keep its three superstars intact under a hard salary cap. Flash forward half a year. A five-month lockout is finally over. There will not be hard salary cap. And a new collective bargaining agreement is about to be ratified that at least should benefit the Heat for the short term. It remains to be seen what will happen with LeBron James, Dwyane Wade, Chris Bosh and the rest of the gang when a much more punitive luxury tax is put in place in 2013-14. And it's true Miami, when it gets deep into luxury-tax territory, only will be allowed to use a 3 million, rather than a 5 million mid-level exception. But the new CBA does give the Heat an amnesty clause to help prepare for the future, one that Miami could use this month on Mike Miller to save on future tax payments. And how does the new agreement really help the Heat for at least the next two seasons and perhaps beyond? Less competition. "I think in a way (the new CBA) can benefit them because it now makes it much more difficult for the next super team to be formed because the luxury tax is so punitive," said Gabe Feldman, an associate professor and director of the sports law program at Tulane Law School who followed the NBA lockout closely. "So down the road it makes it virtually impossible for a team to replicate what the Heat did." The Heat, which lost the Finals last spring 4-2 to Dallas, already has its Big Three in place. James, Wade and Bosh this season will combine to make 47.6 million and next season will combine for salaries of 50.1 million. The real hit won't come until 2013-14, when the NBA's luxury-tax rules change and the Big Three will then combine to make 56.7 million. But Heat officials have a few years to figure out what they might do then. And, while they have their stars now in place, other teams might be scared off by doing something similar due to tax implications. While teams now incur a dollar-for-dollar luxury tax, teams in 2013-14 will begin by paying 1.50 on each dollar. Then the tax will increase with each 5 million additionally that a team goes over the luxury-tax threshold. After 1.50, the tax will move in increments to 1.75, 2.50, 3.25, 3.75 and 4.25 per dollar. And teams that are taxpayers for four out of five seasons can add another dollar on top of that. Those penalties will make many more teams think twice about loading up on superstars with huge contracts. As for what the Heat might do when a big tax bill becomes due in 2013-14 remains to be seen. But NBA TV analyst Dennis Scott believes he knows. "He'll pay it because he has it," Scott, an NBA guard from 1990-2000, said about Miami owner Micky Arison. "Just as Dr. (Jerry) Buss (the Lakers' owner) and Mark Cuban (the Mavericks' owner) will do, because they have it. Small-market teams want to do it too but they can't because they don't have it." The Lakers don't seem overly wary of the new tax system as they are making pushes to acquire stars Dwight Howard of Orlando and Chris Paul of New Orleans. New York, also looking at Howard and Paul, is another on the short list of teams seemingly willing to continue to spend very big. The NBA wanted to level the playing field in its new CBA between big- and small-market teams, and it will help having a much more robust revenue-sharing plan that could result in small-market teams tripling their revenue. However, a team with less riches that might want to go for a short period deep into the luxury tax to keep a core of players together might really be deterred in the future from doing that. And less spending by others could mean less competition for the Heat. Of course, if Arison is really willing to write huge luxury-tax checks in the future, he better hope members of The Big Three, whose contracts run through 2015-16, continue to live up to expectations and stay healthy. Because any pieces added to the team could end up being quite expensive. "If the tax level goes to 2 for every dollar and you're going to add a player that costs you 5 million, that is an actual 15 million for that player," said Russ Granik, the NBA's deputy commissioner who negotiated collective bargaining agreements in 1999 and 2005 before leaving that post in 2006. "There's a point in which it becomes much more difficult. But it's still available. You can keep doing it (adding players), but it's going to cost you more." But if Stern and NBA owners had gotten their original desire of establishing a hard cap, the Heat wouldn't even have had the option to continue to pay and pay. "I think it's good news for a team like Miami because they don't necessarily have to break up their squad," said Granik, now vice chairman of Galatioto Sports, which advises on the buying and selling and sports teams. "If it was a hard cap, it would have been almost impossible to keep all three of (The Big Three)." For now, Big Three members don't plan on going anywhere. Bosh is excited the team at least now appears ready to add some more supporting actors. "I think it looks good for us," Bosh said of the new CBA, which will be 10 years in length, with either the owners or the players union able to opt out after six. "The structure is good. It allows us to go out there and sign free agents, keep our nucleus together and we can continue to build." Of course, there are some limitations. Teams more than 4 million over the luxury-tax line will get a 3 million mid-level exception rather than a 5 million one. And that high-spending team also wouldn't get the 1.9 million bi-annual exception. The Heat are committed now to about 67 million in salaries this season when considering eight players on the roster, rookie Norris Cole and some since-waived players owed money. With the luxury tax expected to be around 70 million and the roster minimum 13 players, Miami almost assuredly would have to use the amnesty clause on Miller, who is due 24 million over the next four years, to have the 5 million and 1.9 million exceptions. The Heat still would be responsible for Miller's salary but it wouldn't count against the salary cap. The deadline to make a decision on Miller is shortly before the Dec. 25 regular-season opener. If Heat officials decide to hang on to him, they still could amnesty him, or any other player with an existing contract, in a future year. One thinks the Heat will look to sign players in free agency to deals of not more than two years in order to position the team better for when the more punitive luxury tax starts in 2013-14. Contracts for James, Wade and Bosh will continue to increase until the three are due a staggering combined total of 60.2 million in the final year of 2015-16. How might the new tax affect one of those players? Using the example of a player making 20 million (around what each of Big Three will make annually in the final seasons on their deals), if all that money was in excess of the tax threshold, that would be the equivalent of paying that player 65 million. That's 20 million plus 45 million in tax (7.5 million on the first 5 million over, 8.75 million for the second 5 million over, 12.5 million on the third 5 million over and 16.25 million for the fourth 5 million over). It could get ugly for Heat finances in two years. Until then, though, there figures to be less competition from other teams beefing up due to the supertax looming. And there definitely will be less competition from big spenders if Arison is willing in 2013-14 and beyond to write huge tax checks. Chris Tomasson can be reached at christomasson@hotmail.com or on Twitter @christomasson.
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