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Nets, Joe Tsai could be beneficiary of new NBA regulations

New York Knicks v Brooklyn Nets Photo by Nathaniel S. Butler/NBAE via Getty Images

When the new NBA cap and luxury threshold numbers came out a couple of days ago, it appeared there would no abrupt change. Despite the loss of revenue due to COVID-19 and the league’s dispute with the Chinese government, the league kept the salary cap at $109.1 million and the luxury tax threshold at $132.6 million.

That would mean that the Nets could pay something like $50 million in luxury taxes, the fifth highest ever, depending on what they do with Joe Harris’ contract, Garrett Temple’s team option and the first round pick guarantee. Not to mention any changes due to trades.

But buried in the details was this caveat that’s friendly to the Nets and the three other teams projected to be over the tax threshold: If the NBA doesn’t reach its projected revenue level of $8.45 billion, luxury taxes will be reduced accordingly. In other words, if the revenue total falls 30 percent short of projections, so will the tax payments. As Brian Lewis adds, that’s helpful to the Nets owner’s finances, which have been hit hard in the last two weeks...

The Nets still have to re-sign Joe Harris, and could face a luxury-tax bill of more than $50 million, which would be the fifth-highest of all time. Despite Tsai’s vast wealth — and a stated willingness to spend — offsetting some of this week’s financial losses can only be good news for Brooklyn.

Tsai’s stock in the Chinese e-commerce giant Alibaba, the biggest source of his wealth, has been hammered in the last week as Chinese financial regulators have signaled greater restraints on the company’s business.

Twice in the past two weeks, he’s had daily losses of $1 billion, according to Forbes and Bloomberg’s daily estimates. China first suspended a public sale of stock in Ant Financial, an Alibaba spinoff, then announced proposed regulations of Alibaba and the rest of China’s e-commerce and financial technology companies. The People’s Republic is clamping down on the increasingly independent tech giants.

Of course, Tsai is still one of the world’s richest men, with an estimated net worth of $14 billion (two billion more than Mikhail Prokhorov who sold him the Nets) and despite recent losses, he’s up nearly $2 billion for the year.

The Nets are currently at the luxury tax threshold without a new Harris contract, the Temple option, a full guarantee for Timothe Luwawu-Cabarrot and first round pick