In three seasons as owner the Houston Rockets, Tilman Fertitta has yet to pay the NBA’s luxury tax. Barring a radical reconstruction of the roster, however, that’s likely going to change in the 2020-21 season.
The Rockets are on the hook for approximately $120 million in team salary next season just from their starting five (Russell Westbrook, James Harden, Eric Gordon, Robert Covington, and P.J. Tucker).
This year’s luxury-tax threshold was $139 million — and it may potentially fall to a much lower number next year, owing to the league’s revenue losses from the COVID-19 pandemic and the lack of fans at games.
Even if it stayed the same, the Rockets would almost certainly be above that threshold by the time they fill out their roster. GM Daryl Morey has said repeatedly that Fertitta has not issued a directive to duck the tax.
Now, Fertitta is explaining why. In a new interview with Jerome Solomon of the Houston Chronicle, Fertitta says revenues from an NBA championship would make it all worthwhile. Among his comments:
We want to be champions. You win a championship, it’s probably worth $30-$50 million dollars the following year to you from sponsorships and people wanting to buy tickets and everything else. So you want to spend the money to win a championship. …
We don’t make basketball decisions of two or three million dollars based on the luxury tax. Our whole budget this year was to be in the luxury tax.
A billion-dollar hit? Ouch. @TilmanJFertitta talks money, Rockets, media and tells us how he would have handled the pandemic had he been President tomorrow at 7 p.m. on the debut of "@ChronTXSN IN-DEPTH" on @ATTSportsNetSW. https://t.co/0BDlNwP3im pic.twitter.com/IkfN5c0AIv
— Jerome Solomon (@JeromeSolomon) August 8, 2020
Houston dropped comfortably below the 2019-20 luxury tax line with its February trade for Robert Covington, though the primary motivation for that trade certainly appears to be about basketball — as evidenced by the team’s clear excitement about its switch to a smaller lineup.
Clearly, the pandemic has hurt revenues for Fertitta’s hospitality empire, headlined by the Landry’s Inc. restaurant group and the Golden Nugget casino chain. But the 63-year-old Houston billionaire firmly denies that there’s any connection between those businesses and the Rockets, who he contends operate “in a silo” of their own.
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“That’s bad journalism,” Fertitta told Solomon. “That’s bad information to the public. OK? I’m gonna do whatever it takes to put the best team out there for the Rockets. And what happens over here has nothing to with what goes on at the Houston Rockets. It has nothing to do with it.”
Fertitta did admit to Solomon that the financial consequences of the pandemic had cost him about $1 billion in the first half of 2020.
“But that’s why it’s good to have a few billion,” said Fertitta, who is estimated by Forbes to currently have a net worth of $4.1 billion.
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