Just wanted to make a correction on my earlier Salary Cap Article. Eddie Griffin is on the books this year for $1,450,000. That puts the Timberwolves' salary figure at $67,181,964 (making assumptions on Troy Hudson's buyout. That puts them $11,551,964 over the cap and $683,036 below the luxury tax.
So the cap is different from
So the cap is different from the luxry threshold?
How does this apply to the Suns situation, where they are basically ONLY making personel moves (with a team that is on the cusp of being championship caliber) based on $$$. Are they trying to stay under the cap, or are they over and trying to avoid the tax?
The salary cap and luxury
The salary cap and luxury tax are indeed different. See Larry Coon's definitive FAQ for why a salary cap and why a luxury tax.
If you're over the salary cap, the penalty is a restriction on spending further (ie you can only spend new money on your own players at will or new players with limitations).
The luxury tax penalty is a dollar for dollar tax. So, if the luxury tax is $65 million and a team's payroll is $67 million, they pay their $67 million in salaries AND cut the league a $2 million check to be distributed to all non-luxury tax teams. The luxury tax is only calculated at the end of the season. A team can be over the tax all season and then somehow get below it at the end and not pay any taxes.
Phoenix is definitely trying to get below the tax. With Kurt Thomas, their payroll was at about $78 million. With a luxury tax threshold of just under $68 million, they were set to pay $78 million in salaries PLUS $10 million in tax. Moving KT's put them at about $70 million in salaries (therefore about $2 million in tax).
When all is said and done, they lost Thomas and 2 1st rounders, but saved $16 million in salary and tax.