How much do taxes play a part in FA signings?

[NOVoodoo]

I was talking about how the Rockets and Mavericks are trying to make a move for Dwight Howard, and someone pointed out to me that Texas doesn't have a state income tax, nor does Florida. Tennessee also only taxes dividend and interest income. Also, as far as property taxes go, Louisiana barely has any at 0.18%.

I would assume that gives teams like the Rockets, Mavericks, Spurs, Magic, Heat, Grizzlies, and Hornets an advantage over other franchises, considering the large incomes and property values of the average NBA player.

With that said, how much of a role do you think that realistically plays during the Free Agency period? Also, does Oregon's lack of a sales tax play any sort of role in the recruiting process?

I'd assume of all the taxes, that'd probably be on the lower end of the spectrum for guys whose profession puts them on the road all the time, but it is a unique selling point for the Blazers that no other NBA team can sell players on, especially versus a 7.5% sales tax for the players on the California teams.

 

[EL PRESIDENTE]

7.5% sales tax? Try 9.75% sales + 13.3% state income tax in California.

Should play a huge factor.

On a 100 million dollar contact for five years.... figure 13 million in state taxes. So you are taking home 87 million over 5 years... versus what the rockets can offer. ... 80 million over four years.
Texas makes more sense financially. Unless someone like Dwight Howard won't make it through his contract.

hoop fam

 

[SlyPokerDog]

I think endorsements play into it much more. I remember hearing David Lee made $6mill a year in local endorsements when he played for the Knicks. The biggest player we had in Portland recently was Brandon Roy and I heard he got paid $80k for a Goodfeet commercial and got a free Ford truck for doing a Northwest Ford Dealer commercial. LaMarcus's biggest local endorsement has been for the local hospital that did his heart surgery. I'm sure that wasn't that much.

As far as D. Howard goes sure LA is bigger than Houston but LA has a lot of celebrities to do endorsements, commercials and appearances. Houston, 5th largest city but it doesn't have a ton of celebs. I could see a player like D. Howard making more in Houston than he would in LA.

(And I'm only talking about local, as in the city they play in endorsements. Not national accounts like Nike, or Haines underwear or other national campaigns and brands. Great players like Durant who play in small markets are still going to get paid for nationwide endorsements but if he went to a bigger city he would make far more than he does playing in OKC.)

 

[jlprk]

Washington State has no income tax. Did you see players standing in line to join the Sonics? No, they had the same Northwest problem as the Blazers. So taxes are overstated as being a recruiting impediment.

 

[NOVoodoo]

Washington State has no income tax. Did you see players standing in line to join the Sonics? No, they had the same Northwest problem as the Blazers. So taxes are overstated as being a recruiting impediment.

You know, the impetus for starting this thread came from some posts I made that derailed an OT thread about what you'd do with $60 mill. The poster "GOD" was saying that there has been a growing trend of players becoming more financially responsible. That, coupled with seeing Marc Gasol's mega-mansion that's appraised at under 600K, made me think that maybe nowadays taxes could also be a factor in where players sign, as well as a city's property values.

The sales tax is probably on the lowest end of the spectrum, given how players travel for a living and a good majority of them live in other cities in the offseason. The state income and property tax rates could probably be a real factor though, giving a huge advantage to the Texas teams.

I think SlyPokerDog raised an interesting point about local endorsements, but New York is an atypical market. With the city only having two of the thirty teams in the league, they're sort of an outlier in valuing local endorsements. Los Angeles is a huge market, but it's not a sports city in the way New York is. Outside of those two, are there really any cities that could net a player endorsements to the tune of $6 million? Maybe Chicago could, but at the end of the day, property and income taxes have to hold more sway than local endorsement opportunities.

 

[SlyPokerDog]

You know, the impetus for starting this thread came from some posts I made that derailed an OT thread about what you'd do with $60 mill. The poster "GOD" was saying that there has been a growing trend of players becoming more financially responsible. That, coupled with seeing Marc Gasol's mega-mansion that's appraised at under 600K, made me think that maybe nowadays taxes could also be a factor in where players sign, as well as a city's property values.

The sales tax is probably on the lowest end of the spectrum, given how players travel for a living and a good majority of them live in other cities in the offseason. The state income and property tax rates could probably be a real factor though, giving a huge advantage to the Texas teams.

I think SlyPokerDog raised an interesting point about local endorsements, but New York is an atypical market. With the city only having two of the thirty teams in the league, they're sort of an outlier in valuing local endorsements. Los Angeles is a huge market, but it's not a sports city in the way New York is. Outside of those two, are there really any cities that could net a player endorsements to the tune of $6 million? Maybe Chicago could, but at the end of the day, property and income taxes have to hold more sway than local endorsement opportunities.

If David Lee in NY could make $6mill (remember he wasn't that good. hardly a star player) I bet star players in San Fran, Chicago, Houston, Dallas, Boston could make at least the same if not more.

 

[NOVoodoo]

If David Lee in NY could make $6mill (remember he wasn't that good. hardly a star player) I bet star players in San Fran, Chicago, Houston, Dallas, Boston could make at least the same if not more.

What did other Knicks make in local endorsements (with the phenomenon of Jeremy Lin being an outlier to the original outlier)? I'd be interested to see what players make in local endorsements across the board. I did a quick, peripheral Google search on it, and all of the results that came up just involved the player's total endorsement package.

It'd also be more interested to see one of the major sports media outlets (ESPN/Yahoo/SI/etc.) put together a piece that calculated the value of playing in certain cities that included all of the tax incentives, housing values, local endorsement opportunities, and national exposure.

Just taking a cursory glance of the situation suggests that playing in Houston or Dallas is the way to go. I think it also might be more interesting to find out the cities that are both expensive to live in and provide little exposure. I would assume that Sacramento would be near the top of that list, as would Minneapolis.

 

[Charcoal Filtered]

I do not think they do very much. None of the Texas teams and Orlando have clearly been able to sign guys they should not have or get players to accept less money. I believe they also have to pay taxes on road games. Would love to see one of these guys tax return.

 

[e_blazer]

I do not think they do very much. None of the Texas teams and Orlando have clearly been able to sign guys they should not have or get players to accept less money. I believe they also have to pay taxes on road games. Would love to see one of these guys tax return.

Yup. Oregon taxes NBA players for all of the road games that they play at the Rose Garden.

 

[Draco]

Yeah you guys are right on the road games, all NBA players pay the same tax on road games.

So the only income tax difference is for half of a players salary when they are playing home games.

 

[Reep]

Texas has no income tax and also has reasonable endorsements. Texas wins in the tax wars.

I do agree with Sly though that endorsements are much bigger than tax losses. LA, NY, Chi will still draw the biggest money.

 

[magnifier661]

California has some of the highest income tax in the nation. I think anyone making over 500k is paying roughly 15% tax to the state.

 

[BlazerCaravan]

California has some of the highest income tax in the nation. I think anyone making over 500k is paying roughly 15% tax to the state.

Which is why the Lakers suck perennially.

 

[NOVoodoo]

I do not think they do very much. None of the Texas teams and Orlando have clearly been able to sign guys they should not have or get players to accept less money. I believe they also have to pay taxes on road games. Would love to see one of these guys tax return.

Keying in on Orlando, wasn't the taxation a major reason why they were a player in Tim Duncan's free agency, when he was in his prime? Granted, he was loyal to the Spurs, but it seemed like his fee agency was a 51/49 proposition between the Spurs and Magic, as I remember it, and the taxation played a role in limiting his choices.

Thanks for bringing up the taxes on road games though. That's very interesting, and I was completely unaware of that aspect of NBA income. I wonder if any website/sports show/blog has ever weighted salaries based on playing in certain conferences. For example, does it cost you more of your salary to play for an Eastern Conference team?

 

[jlprk]

Which is why the Lakers suck perennially.

It feels so good to read that, I think I'll do it again!

 

[handiman]

Interesting. So, Florida/Texas players only get a break on income taxes for half their salary. But, the difference might be even less than that. If they have to pay state income taxes for games played in other states, it stands to reason that players from other states don't pay taxes for games played in FL/TX. Otherwise, you'd have double-dipping going on for a Blazer playing in New York, for example. Of course, TX players wouldn't pay tax on games played in FL, so maybe it balances out.

 

[PtldPlatypus]

Interesting. So, Florida/Texas players only get a break on income taxes for half their salary. But, the difference might be even less than that. If they have to pay state income taxes for games played in other states, it stands to reason that players from other states don't pay taxes for games played in FL/TX. Otherwise, you'd have double-dipping going on for a Blazer playing in New York, for example. Of course, TX players wouldn't pay tax on games played in FL, so maybe it balances out.

I could be wrong, but I think that if an Oregon resident earns income in Washington, they still have to pay Oregon income tax on it. I believe it's only income that was already subject to tax in another state that is tax-exempt in the home state.

 

[magnifier661]

I could be wrong, but I think that if an Oregon resident earns income in Washington, they still have to pay Oregon income tax on it. I believe it's only income that was already subject to tax in another state that is tax-exempt in the home state.

Yeah I think they only live in Washington for the car and home owner's tax savings. They also want to live close to Oregon, so they can shop there to avoid sales tax.

 

[handiman]

That changes things.

 

[PapaG]

If David Lee in NY could make $6mill (remember he wasn't that good. hardly a star player) I bet star players in San Fran, Chicago, Houston, Dallas, Boston could make at least the same if not more.

I find it hard to believe that Lee received $6m in local endorsements. Damian Lillard is in a national TV ad, and he gets nowhere near that type of money.