Although there is nothing holding him to it, and you can't expect him to honor it for decades if he owns the team in perpetuity, Vivek said he had no intention of taking the revenue sharing from luxury taxes during the move to Seattle saga.
Revenue sharing and luxury tax payouts are entirely different things, although they may sometimes receive funds from the same source (at least that's how I read this
http://www.cbafaq.com/salarycap.htm#Q22). I think what Vivek was promising was relating to the traditional revenue sharing, i.e. "we know Sacramento is a viable market to support a team, and to put our money where our mouth is we wont accept revenue sharing payments for small-market/non-profitable teams." Now, I think the question of whether that promise is even binding is very legitimate, and I haven't heard much about that promise since it was originally made.
This has always been a confusing piece of the non-relocation puzzle to me. Reports seemed to indicate that Vivek would not accept revenue sharing payments once we moved into the new arena. But revenue sharing is massively huge. It's a terribly complicated system, but for a thumbnail picture you can look at it like this: teams contribute about 50% of their total revenues to a single pool, and then take a 1/30th portion of the pool back. The pool is on the order of $2B, so the backpayment is on the order of $67M. Every team gets this chunk back, it's just that the highest-revenue teams put a lot more in. The point being, there's absolutely no way we'd be forgoing a ~$67M payment every year. That would be franchise suicide. So that can't be what we're doing. Luxury tax payments, on the other hand, have been amounting to a few million a year. This year, with the Nets going nutty on the tax, it looks like the luxury tax payouts were a tiny bit over $2M per team. We could renounce that without hurting ourselves.
This actually brings me to another question, which is why our front office seems so absolutely panicked about crossing the luxury tax threshold. If we cross it by a dollar, it costs us about $2M - if luxury tax receipts in '14-'15 are as high as they were this year. Right now only four teams are over the tax and the vast majority of the tax would come from the "repeaters" in NY and Brooklyn. My quick numbers say that if the tax were collected now, the collected amount would be very close to $100M, which means the payout to each non-luxury-tax team would be 1/30th of $50M (only half goes back to the teams), or $1.7M. It seems to me that $1.7M just isn't enough for us to get all paranoid about - it's the amount of a player contract for a near-minimum guy. Obviously on top of that we would pay 150% tax on the overage, but with the MLE restricting us to the $4M apron, our maximum tax bill by rule would be $6M. I just can't see this as being a strong incentive for us to avoid the tax. So why are we studiously avoiding the tax? Well, the only other effective penalty of crossing the tax line is that if you cross the tax line three years out of four, you pay the repeater tax, which is effectively a dollar-for-dollar tax raise to the original tax - if you're $8.6M over the tax line, you pay the regular tax bill plus another $8.6M as a repeater. You'd hate to cross the tax threshold by a dollar in '14-'15 and then be forced to pay the repeater penalty in '16-'17 because of it.
So this is a really longwinded way of saying: It looks like the Kings are getting ready to spend some serious money. They can't be giving up their revenue sharing slice, but they could be giving up their luxury tax slice. Of course, the luxury tax slice isn't that big, and they wouldn't get it anyway if they were over the tax. Are they going to be over the tax? Well, they're studiously avoiding the tax this year for what would be very small savings now. The most logical reason for that I can see is that they expect to be over the tax repeatedly in the future and want to save themselves (at least) one year of repeater tax. We're acting like a franchise that has plans to spend big in the future.
