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Los Angeles Lakers Would Save $15 Million By Cutting Metta World Peace

This article is more than 10 years old.

Can we give Peace a chance? (Image credit: Getty Images via @daylife)

The Orange County Register is reporting that the Los Angeles Lakers plan to waive Metta World Peace (the artist formerly known as Ron Artest) under the NBA's amnesty provision. World Peace, 33, has one year left on his contract at $7.7 million and will receive the full amount if the team makes the departure official. But his salary will be excluded in the team's salary cap total and more importantly when calculating the team's luxury tax bill for the 2013-14 season. The move is expected to save the Lakers roughly $16 million in tax payments.

Lakers' star Kobe Bryant took to Twitter Monday night to express his disappointment with the potential move: "No game 7 win without Metta! This is a tough day for laker nation #misspeace #newcbacasualty." He later tweeted, "Personally I'd keep Metta and make a run with the unit we have and just add a few pieces #keepthepeace #lakersstilldeciding."

Bryant's #newcbacasualty hashtag pinpoints the issue facing the Lakers and other free spending NBA teams like the Miami Heat and Brooklyn Nets. The new collective bargaining agreement levies a much more punitive tax on high payrolls starting next season. Previously, the tax was dollar-for-dollar over the tax threshold and the Lakers mostly ignored it with the NBA's highest payroll each of the past four seasons. The Lakers paid $85 million in luxury taxes during that time.

But starting next season, the luxury tax goes haywire with incremental increases every $5 million over the tax threshold, which is expected to be in the $72 million range. The tax rate is $1.50 for the first $5 million over and rises to $3.75 for teams that are $20 million over (it jumps a further $0.50 every $5 million after that). The tax becomes even more onerous the following season with repeat tax offenders forced to be a rate $1 higher in each case (check out Larry Coon's NBA website for all the details about the CBA).

Cutting MWP and replacing him with someone at the veteran minimum means cutting the Lakers' payroll by $7 million. The Lakers payroll is still expected to approach $80 million thanks to the $59 million collectively owed Bryant, Pau Gasol and Steve Nash, but getting within $10 million of the luxury tax threshold is an important distinction as the tax rate jumps from $1.75 to $2.50 at $10 million. An $80 million payroll will trigger a $13 million tax next year, while a $87 million payroll would mean $29 million in taxes (this assumes a $72 million tax threshold). The Lakers will have to replace MWP on the roster mostly likely with someone at the veteran minimum, which means an overall savings of roughly $15 million by cutting World Peace. A team that claims MWP off of waivers would inherit part of his salary boosting the Lakers' savings even more.

The Lakers were looking at a $95 million tax bill for the 2013-14 season on a $105 million payroll if they had managed to lock up free agent Dwight Howard and not amnestied any players. Howard, of course, bolted for Houston and now the Lakers are setting the stage for 2014-15 when only Nash is under contract among current players.

The Lakers can certainly afford outsized payrolls with the team’s new TV deal with Time Warner Cable that kicked off last season. The deal is expected to be worth as much as $5 billion over 25 years. But the Lakers are forced to share a significant portion of the contract as the new CBA dramatically increased revenue sharing that is transferred from the haves to have nots. The Lakers are expected to contribute as much as $50 million to the revenue sharing pool annually.

The new CBA is having the desired effect of punishing the spending teams and giving smaller markets a more equitable platform to compete. The one team that did not get the memo is the Nets, who will have a payroll close to $100 million next season with the addition of Kevin Garnett and Paul Pierce. The Nets' tax bill will exceed $70 million. Owner Mikhail Prokhorov can afford it. He is worth $13 billion.

Note: A prior version of this story incorrectly added World Peace's salary to the Lakers' savings for a total of $23 million.

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