When Cleveland Cavaliers Owner Dan Gilbert welcomed LeBron James’ return in 2014, he gave the team’s front office a budget that was in his words “a blank check.” And he famously added, “they exceeded it!”
Gilbert was joking referring to the money the team has spent beyond the league imposed a salary cap, a ceiling on how much a team could spend on salaries so as not to give big market teams with large TV deals or those with fat cat owners willing to go deep in their own pockets an advantage
It was a promise Gilbert made to LeBron and one that he has kept but one that comes with a price in the form of the league’s luxury tax. It is a tax imposed on the teams that go over the cap, a tax that gets worse once you’ve gone over the cap for more than three years in a row.
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