Luxury tax history and how it applies to the Thunder

In Oklahoma City these days, the words “luxury tax” have become a brand name. It’s almost as Oklahoman as saying Boomer Sooner or Orange Power or doing something stupid. Here’s how far it’s gone: My mom breathlessly used “luxury tax” in sentence the other day, and used it properly.

It’s gone so far that I really don’t feel it necessary at all to explain what it is in this intro. Because you already know. And if you don’t, you also probably don’t know who James Harden is and you also are probably looking for this website, not here.

With the conversation about whether or not the Thunder can or will pay up to keep their core dominating our lives right now as we sit and wait, a little history might be relevant. As in, how much precedent is there for small market teams paying the NBA’s penalty for breaking over the salary cap?

You might be surprised — quite a bit.

Via Mark Deeks of Sham Sports who did serious work researching team payroll histories, since 2002 when the luxury tax system was implemented, seven teams have gone without ever paying it. One being, you guessed it, the Thunder/Sonics. (The other six: the Wizards, the Bobcats, the Bulls, the Warriors, the Clippers and the Hornets.)

The most any team has ever paid in a season might surprise you. It was the 2002-03 Trail Blazers who had a $51,971,000 tax bill. The highest amounts teams have paid over that time is the Knicks ($195,288,145 total), the Mavericks ($150,530,433), the Blazers ($89,052,474) and the Lakers ($84,417,253).

Of note: Portland is technically considered a small market being the 22nd largest TV market in the U.S. and the 22nd largest in the NBA. Oklahoma City is the 45th largest overall, and the 28th largest in the league. Memphis and New Orleans are the two cities behind OKC, with Memphis having paid the luxury tax in 2003 and 2006.

Other small markets (I’m determining small market on teams outside the top 15 in market size) that have paid the tax: Miami (four times, $22,667,988 total), Denver (three times, $21,157,439 total), Cleveland (three times, $43,126,121 total), Orlando (three times, $38,951,508 total), Sacramento (twice, $30,518,745 total), Portland (four times, $89,052,474 total), Indiana (three times, $8,809,087 total), Utah (twice, $8,103,619 total), Milwaukee (once, $4,734,000 total), San Antonio (five times, $12,597,554 total) and Memphis (twice, $11,297,452 total).

The teams that have paid it the most are the Mavs (every year, nine times), the Lakers (seven times), the Knicks (seven times), the Celtics (six times) and wait for it, the Spurs (five times).

Again, there’s a precedent for smaller market teams paying the bill. However, there’s a different catch this time around that makes things different for OKC: The tax is much more punitive than its ever been. Starting in 2013-14, instead of dollar-for-dollar like it was with all of these previous payments, it’s an escalating tax depending on what you’re over. For the Thunder if they sign Harden, it’ll likely be $1.50 for every dollar over the threshold or potentially $1.75 depending on how Harden’s deal was done.

It’s obvious though that the playing field has never been level in the NBA. Outside of the Bulls and Clippers, all the big markets have broken into the tax, with most of the smaller ones keeping the bill low or nonexistent. But teams in OKC’s position have almost always ponied up and paid it. It’s why Paul Allen broke the bank in 2003. He had a contending team and wanted to chase a title. Same goes for the Spurs, the Cavs with LeBron, the Pacers in 2006 and Sacramento in the first part of the decade with Chris Webber. I’m not sure there’s an example of a team being in a title contending position that didn’t in order to continue the run.

Will the Thunder fall in line with that? I think so. While the tax is harsh, you don’t abandon a title chase like that. At least other teams haven’t. Plus, it’s not like the Thunder are committing to paying the tax for the next 20 years. It could be for only a season, maybe two. With options with Kendrick Perkins and the amnesty clause or other moves, OKC could dive right back under the tax line if necessary. And then when Durant, Westbrook, Ibaka and Harden are up again in five years, you reassess and plan for the next course.

We still have to wait and see though. This may not be decided until next summer. Which would be awesome, because that means we can continue to talk about it nonstop for another year.