Taxes and the NBA
10/242011
With the recent NBA lockout, and no clear end in sight, basketball fans are wearing frowns across the nation. To get those guys back in uniform, the National Labor Relations Board (NLRB) would have to issue a complaint against the owners, rule that the league has engaged in unfair labor practices, then convince a federal court that the players have been caused irreparable damage during the lockout. With over 100 days now gone by, things are looking grim. And to compensate their salaries, many players are looking to the Euro league to take them on.
Talks with some of the league's elite players, with salaries hovering around $50 million a year, have been on the table for several weeks now. With incometax preparation far different from any tax filing matters we’ll ever have to deal with, will these guys get the same treatment over on the other side of the pond? Nobody in Europe--where EU sports execs, agents, fans and media are not used to hearing of salaries like this--is anywhere close to offering that kind of dough. "We cannot say that the European market, at the level we are at right now, is ready to afford this kind of challenge,” said Euroleague CEO Jordi Bertomeu. “Kobe Bryant or LeBron James [or players of their caliber] would be out of our expectation. It's easy to dream...but it is not realistic.”
According the ESPN.com, basketball salaries quoted in Europe are expressed in net figures--the amount left in a player's pocket after paying tax--as opposed to gross, the number most Americans report to their tax preparer or income tax preparation service. Hypothetically, let’s say Kobe accepted an offer to play for Virtus Pallacanestro Bologna, the Italian ball club currently courting Bryant to play in their league. In order to meet his salary expectation, Virtus would have pay him around $66.1 million--or roughly €47.8 million--gross, in order to provide him with the $24.8 million he took home during the 2010-2011 season. "For me, the problem would be if European teams go to a level of salaries that we can't fulfill. That would be a problem,” said Bertomeu.
To put it in perspective, let’s look at what EU athletes are taking home. Europe's elite handful of soccer players, in countries like England and Italy, can expect contracts of around $15 million net per year from their ball clubs. Most Euroleagues have budgets ranging as high as $50 million, to as low as $3 million - and those figures are for total budgetary expenditures, not just players' salaries.
Just last week David Stern, NBA Commissioner, canceled the first two weeks of the season, from Nov. 1-14, totaling 100 games. And if things don’t get resolved soon, the traditional Christmas matchup will be out of the question.
Article Sources:
- http://espn.go.com/los-angeles/nba/story/_/id/7030253/los-angeles-lakers-kobe-bryant-playing-italian-league-very-possible
- http://sports.espn.go.com/nba/columns/story?page=NBA-Europe-080827
- http://www.therichest.org/sports/forbes-highest-paid-athletes/