NBA
AD will earn 62 million a year, but how much after taxes
Anthony Davis is set to earn $62 million per year with his new Lakers contract. However, the pertinent question is, what will his net income be after taxes?
Anthony Davis, a basketball player with the Los Angeles Lakers, recently set a new NBA record for the highest contract amount in a single season. “The Brow” signed a three-year extension with the “purple and gold” team, earning an impressive $62 million per season.
Andrew Petcash, a sports entrepreneur and content creator from the United States who focuses on the business aspects of sports, noted that a significant portion of this contract will not be deposited into the basketball player’s bank account.
It’s worth noting that due to California’s strict tax policy, which is the state where the Lakers are located, Davis is expected to receive only $24 million out of the $62 million that was publicly announced. The federal tax will amount to $22.9 million, while NBA escrow, a mechanism designed to maintain financial balance in the league, will cost Davis $6 million.
Additionally, the California tax on this contract will cost him $4.1 million. His agent will receive $1.8 million as compensation for a job well done, and the so-called Jock Tax, which is a tax on citizens who do not reside in the city where they make their income, will also add up to $1.8 million. Finally, health insurance will cost Davis $1.4 million.
Also, we must consider the NBA Escrow, which refers to the portion of player salaries the league withholds. The NBA currently holds 10% of player wages and distributes the money back to players after the season if salaries fall short of the agreed-upon numbers. Every year, it is required that player salaries reach a certain percentage of revenue. In the NBA, the escrow percentage is set at 10% of basketball players’ wages, with a cap of 50% of the basketball league’s revenues. This ensures that players receive a fair share of the league’s earnings, at least 50%.
“NBA escrow” is returned in nine out of ten cases so that Davis can earn up to $30 million.
In the last season, Anthony Davis averaged 25.9 points, 12.5 rebounds, 2.6 assists and 2 blocks.