The Nets have the second highest payroll in the NBA, with the likelihood they’ll pay out a record amount in luxury taxes this year alone. Not to mention the future. Can the Nets, specifically Joe Tsai, keep up the pace of spending?
“Do you think that is still a question?” Tsai joked. “I mean I did pay luxury tax last season. This season, it’s all public information, I’ll be paying over $100 million in luxury tax.
“So the answer is yes, yes, I’m committed and I’m committed for the long haul.”
Tsai told NetsDaily that while the tax may seem onerous, he sees it as more of an investment than a straight loss. It’s a way to improve the value of the team — and gain “respect” in the league equal to some of the legacy franchises. Moreover, he contended that if you subtract the cost of the luxury tax, the Nets are making a profit.
Tsai specifically mentioned that he’s willing to pay the dreaded repeater tax which would up his tax bill substantially if, as is assumed, the Nets go over the luxury tax threshold in three out of four years, he could pay four dollars in tax for every dollar Nets spend for salaries.
Indeed, even by conservative estimates, Tsai could pay up to $1 billion in salaries and tax payments to the league over the next five years.
“I think we approach it with a business mindset. I think obviously for the things we can control, which is attendance and sponsorship dollars we can get. We’ve actually been doing very well with sponsorships. We signed probably the largest jersey patch and international marketing rights with WeBull. All of this is part of us trying to generate more revenue.
“When you look at an NBA team, the cost is the cost, right? It’s the players salaries
“You have have a set of P&L (profit and loss) that’s before you pay the tax and a set of P&L that’s post luxury tax. At least on a pre-luxury tax basis, we’re making money.”
Tsai explained how the luxury tax is an investment.
“The luxury tax is important in that I see it as an investment for the future. That goes to the value of the team and just how people think about the team.
“Obviously with the cost of luxury tax, we’re putting together a contending team that gives us a chance at winning a championship. And I think you need to win a championship to sort of get to that level of respect and aspiration just like these long term franchises like the Lakers, the Celtics and the Golden State Warriors in recent years.”
On the Nets and Knicks early season attendance woes, Tsai said he thinks that it’s early and the woes are transitory.
“Not everyone is back in office yet,” said Tsai who also conceded the city’s vaccine mandate may have had an effect. He expects to see things “ramp up” during the season.
The Nets are currently 16th in attendance, the resurgent Knicks 13th. In terms of percentage of capacity, the Nets are 12th, the Knicks 22nd.
On the other hand, Tsai said he intends to get to more games this year now that he’s about to return to the city as a resident after a 25-year absence.
Tsai also said that with his decision to purchase a $157.5 million condo on 220 Central Park South, he expects to spend more time in the city and more time rooting for the Nets either courtside or from his suite overlooking halfcourt.
“Look, it’s because I’m a fan. I’d love to be in Brooklyn. I love to go to games. I love to watch games. So any opportunity I can be in Brooklyn to see games, I will definitely come.”