Why the NBA will pay more for basketball players
As a member of the NBA, the Miami Heat are well aware of the value of the league’s brand.
The Heat are also well aware that there is no guarantee the brand will remain relevant after the team is sold.
This is why the team will pay up to $1 billion in luxury taxes and fees in 2018, the league announced Tuesday.
“The Miami Heat will continue to pay its taxes and other fees, and will defer payments to the NBA until it becomes financially viable,” the NBA said in a statement.
“As a result, the team’s 2018-19 tax bill will be $1.8 billion, including $650 million of deferred tax liabilities.”
The NBA will not be able to pay the remaining tax liability until the team has reached the $3 billion in fully-guaranteed revenue and net income, and is not expected to reach the NBA’s current debt obligations.
NBA owners also announced that the team would pay a tax of $1,400 per team member, a $1 million increase from its current $750 per team player payment.
The Heat’s tax bill for 2018-2019 will be approximately $1bn, or $1billion in tax deferral, and it will pay off debt at a lower rate.
The league also announced the NBAPA will pay $1m to the team for all of its labor and medical benefits.
The NBA, in turn, will pay an additional $600,000 for employee medical expenses.
“As a team, the Heat will be able enjoy greater financial flexibility,” the league said.
“The NBA is committed to working closely with the NBA Players Association, the players and all interested parties to provide all players with the best possible financial opportunity.”
The league said the tax deferment payment will be used to support the teams charitable endeavors and its NBA Foundation.
The NBAPA, however, was not available for comment, but its vice president of government affairs, John Jenkins, told the Associated Press that the tax plan was a “satisfactory step” for the league.
The announcement comes a week after the league paid out $500 million in back taxes to the United States.
The league’s total tax bill from 2019 to 2021 is $2.2 billion.