Lakers luxury tax hit about to explode

Dwight HowardThis is not news to anyone, but the Los Angeles Lakers have one of the richest histories in the NBA. They took a big step in making sure that history continued when they traded for Dwight Howard and Steve Nash.

They also made sure that the richest payroll in basketball got richer. 

As Larry Coon explained to ESPN, the difference between doing this trade now and doing it during the last collective bargaining agreement is the luxury tax, which is going to hit the Lakers hard in a couple of summers, especially if Dwight Howard re-signs to a max deal (h/t to Eric Freeman, Ball Don't Lie).

"The Lakers will have a tax bill of around $30 million next July, and in retrospect, will view this season as their salad days — it's the last one where the tax rate is dollar-for-dollar. Starting in 2013-14 the new "incremental" tax takes over, where being $30 million above the tax line will mean paying a whopping $85 million tax bill.

And it gets worse. Starting in 2014-15 teams will pay an even higher rate for being repeat offenders — defined as paying tax in at least three of the four previous seasons. A team $30 million over the tax line will pay — brace yourself — an additional $115 million in luxury tax."

That is just crazy.  Of course, if any team can afford it, it is the Lakers. 

They will make extra revenue from Nash and Howard jersey sales, make extra revenue from people showing up to meaningless preseason games and most likely make extra revenue in ticket sales during an extended playoff run. Not to mention the franchise's new TV deal. I do not think they are totally ready to pay $115 million in luxury tax ON TOP of what they would be paying in salaries, but they have a couple of years to figure out their payroll before that bullett hits them.