NBA: 5 Teams That Are In Serious Financial Trouble

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1. Brooklyn Nets

May 4, 2013; Brooklyn, NY, USA; Brooklyn Nets shooting guard Joe Johnson (7) looks to pass the ball around Chicago Bulls shooting guard Marco Belinelli (8) and point guard Nate Robinson (2) in game seven of the first round of the 2013 NBA Playoffs at the Barclays Center. Bulls win 99-93. Mandatory Credit: Debby Wong-USA TODAY Sports

I put the Brooklyn Nets at the top of my list even though they are technically the second team that owes the most to its players next season next to the Miami Heat. The Nets have about $86 million committed next season, and that number is excluding the assumed re-signing Andray Blatche.

The Nets will be deep in tax next year and will have to pay incremental rates compared to the normal fee. The 2013-14 tax level will be calculated by taking 53.51 percent of the projected “Basketball Related Income,” or BRI, which is the basketball and basketball-related operation’s income received by the NBA. They then take that number, subtract projected benefits and then divide it by the number of teams in the league.

So for the 2012-13 season, that number was $70.3, and the Nets had to pay nearly $13 million to the league in taxes. They will be lucky to pay anything close to that number next year, as the rate will increase incrementally based on how much they owe, much like the tax system used by the government.

For the sake of comparison, if Brooklyn had to pay using incremental rates for the 2012-13 season, they would have owed roughly $23 million, essentially paying another Joe Johnson. Now, why am I putting the Nets at the top of this list when the Heat share the same problems and owe more?

Well, it comes down to profitability. Forbes magazine did an evaluation of the current value of all 30 of the NBA’s franchises. The Nets ranked ninth but had the lowest revenue of all the teams with a payroll of at least $84 million. This means that even if teams like the Los Angeles Lakers and New York Knicks going far beyond the tax level, they have the money to deal with it. The Nets, unfortunately, don’t have that flexibility.