In likely the most shocking trade in NBA history, the Dallas Mavericks sent Luka Dončić to Lakers on February 1st, 2025.
In exchange for the 25 year old Superstar, the deal involved Anthony Davis, Jalen Hood-Schifino, Max Christie, and two future first-round picks heading to Dallas.
This move, reportedly orchestrated behind closed doors by the franchises GM’s Nico Harrison and Rob Palinka, caught the world, and even Dončić himself off guard.
According to both Dončić and Davis, neither player had requested a trade, nor had any prior indication that the GM’s were negotiating a deal.
Beyond the on-court implications, this trade had staggering financial consequences for Dončić.
Luka lost his eligibility for a $345 million supermax extension, which would have made him one of the highest-paid players in NBA history. (Until the Shai Supermax)
True Cost of the Trade
Historically, only two players with multiple championships (Steph Curry and Nikola Jokić), have signed supermax deals and then went on to win the NBA championship.
While Luka’s superstardom trajectory suggested he would follow suit, (making an NBA Finals appearance just last season in 2023-2024), GM Nico Harrison’s public statement was that Dallas should not commit $345 million to one player.
Seemingly signaling that the Dallas front office was in agreement.
The trade meant that instead of the five-year, $345 million supermax, Luka is now only eligible for a five-year, $229 million max contract.
Surely a max deal is nothing to scoff at either, but the money he is missing out on now that he is ineligible and has moved to California, it is unlikely Dončić will make up the $116 million difference anytime soon.
A ~$116 million loss is significant, but the hit doesn’t stop there.
| Scenario | Supermax in Dallas (TX) | Max in Los Angeles (CA) | Difference |
|---|---|---|---|
| Contract Value | $346M | $230M | -$116M |
| State Tax (0% TX, ~13.3% CA) | $0 | ~$30.6M | -$30.6M |
| Total After Taxes (Est.) | ~$205M | ~$136M | -$69M |
California vs. Texas Tax
One of the biggest differences between playing in Texas (0% state income tax) and California (13.3% state income tax) is the massive financial impact on player contracts and take-home earnings.
- Had Luka signed the supermax in Dallas, he would have paid no state income tax on his salary.
This means he would have saved ~$45 million in income taxes alone if he had signed a supermax.
Instead, he will be paying an additional $29 million in income taxes per year, on his already significantly lesser valued contract. - Now, playing in LA, his contract will be taxed at the highest bracket.
With Federal Tax, California State Income Tax, jock taxes, agent fees and the implementation of the Lakers travel tax, Luka Dončić will lose tens of millions in tax-free money overnight. - After factoring in federal taxes (~37%) and State taxes (~13.3%), there are still agent fees (~2%), and NBA escrow (10%).
Combined at roughly 62.3%, Luka’s is taking home less than $100 million (~$83 million) in tax-free income, while also losing out on a contractual $116 million. - The estimated total loss between contract and tax implications is estimated to be ~$150 million.
$116 million was contractually lost from the moment of the trade.
Another ~$100 million will now be lost to CA taxes, team fees and the cost of living in Los Angeles on his soon to be 4-year, max-deal.
While fans argue that LA’s marketability could help Luka recover the money, the reality is he would need to generate an additional $300 million+ off the court, to be able to break even with what he would have earned on a supermax.
That’s an uphill battle regardless of the market you belong to.
Luka’s Real Estate & Strategy
Luka has been actively investing in real estate, purchasing a $12M mansion in Dallas, a market where luxury properties provide substantial long-term value.
Reports have also surfaced about Doncic purchasing a second, $15M home, but if that purchase was in progress, he may need to reconsider.
- In Dallas, a $15M mansion represents high-end luxury with low overhead costs.
The only financial aspect that Los Angeles has a positive in over Dallas in regards to saving income, is property taxes. Likely due to being a no-income-tax state, the average property tax rate in the Lone Star State is 1.74%, while the state of California sees ~0.75%.
However, the average home price in the state of California is 2x, sometimes 3x of the standard residency in Texas.
So, while the rate is 1% lower, the state likely does not profit much less, if not still more than Texas in property tax.
- In LA, $15 million barely scratches the surface of the luxury market, and with property taxes, insurance, and upkeep, it’s a much riskier investment.
Los Angeles is known for their ridiculous home sizes and prices.
Luxury homes with appliances, rooms and features that the average human does not need, as well as the culture, weather and location of the city, has set the market for even a standard, single-family home go for upwards of $1 million or more.
In Dallas Fort Worth, the median home price is ~$390k, compared to the ~$990k median price in Los Angeles county.
So, while Luka may be able to make back some of his lost money in the major players market in LA, his wealth, despite being generational, is not the top dog in LA by any means.
His home size and location are certainly still going to be outstanding, it just costs more for half of what he could get in Texas.
When it comes to making money, LA is your place, when it comes to investing that cash though?
Dallas has been in the works of development for years and has a higher possibility for a market rise, rather than a crash.
With the uncertainty surrounding the LA housing market due to recent wildfires and natural disasters, Luka’s potential real estate investments will also require a more cautious approach.
So, while he may have to play for the Lakers, if his money man is good at his job, Doncic will continue to invest in Texas financial and property markets.
From a financial perspective, his best move might be renting a luxury condo in LA instead of purchasing property, given the volatility.
Can LA Endorsements Make a Difference?
Luka Doncic is already one of the most marketable athletes globally, with endorsement deals from Nike (Jordan Brand), Panini, BioSteel, and 2K Sports, among others.
Yet, the question remains: will being in LA significantly boost his off-court earnings to earn the ~$300 million+ needed to net supermax earnings?
- The Dallas Mavericks rank 5th in team revenue, while the Lakers rank 3rd. This is what stood out to myself when I saw the announcement from Shams and then the breaking of the internet for the next 24-hours or so.
Yes, the Lakers are a bigger market than the Mavs both franchise wise and location wise, but it is not like Dallas is in Ohio.
The median home-price value difference may throw off most fans in which market in better for investment, as a lot of people think the bigger the number, the better the market.
However, Dallas is a major city in a major state, so while it is not LA or Miami, Texas markets are rapidly on the rise, while other well established markets tend to fluctuate rather than increase.
There is also the fact that the Lakers do not have the highest valuation in the NBA, and that the Mavericks are just 2 spots behind. The fact of the matter is that LA is not the only magic needed for Doncic to make back the money he will lose following the trade. - LA’s media exposure is undeniably larger, but Luka was already a global superstar before this trade.
- While new endorsement opportunities might arise, the idea that LA alone will make up a ~$300 million shortfall is unrealistic.
LA’s Housing Market & Luka’s Next Move
Beyond state taxes, Luka will now also be subject to additional international taxation on endorsements and appearances.
Given that he plays for Slovenia in international competition, this adds another layer of financial considerations.
From a Dallas salary cap perspective, trading Luka meant they avoided committing $345 million long-term, which could have financially restricted their ability to build a deeper roster. Whether that gamble pays off remains to be seen.
With LA’s real estate market still recovering from natural disasters, buying a $15 million+ mansion is an entirely different financial equation than in Dallas. $15 million in LA doesn’t hold the same weight, making it unlikely that Luka will get the kind of value he had in Texas.
Thus, it would make more sense financially for the Slovenian born Superstar to continue investing his money into the Dallas and greater Texas housing markets.
While his brand image and stock for endorsements and partnerships will increase in LA, he was already an international star, making his climb to earn that $300 million+ difference much harder than if he was a states born rising star.
Can Luka Close the Gap?
To truly recover the $150 million lost from this trade, Luka would need to generate ~$300 million or more outside of basketball, factoring in federal, state and county taxes, as well as player fees, league fees, agent fees and potential fines and other unknown but mandatory expenses.
Life is still life for superstars. Even with LA’s market power, only a few NBA players, LeBron, Steph, and Jordan-level athletes have reached those earnings through endorsements and investments. This means Luka will have to take a strategic approach to endorsements, business ventures, and real estate to make up the difference.
The reality? LA is a better market, but the financial loss is nearly impossible to fully recoup.
Biggest Trade Cost Ever
Luka Dončić moving to LA is already a mind-numbing and groundbreaking trade, but financially, it might be one of the most costly moves for a single player in NBA history.
- $345 million supermax gone
- $116 million lost from contract downgrade
- $150 million lost when including California taxes
- $300 million+ needed outside of basketball just to break even
While LA offers marketing potential, it’s a massive financial risk for Luka.
Unless he secures high-revenue business ventures, or decides to start his own company in LA, this trade could cost him more money than any NBA player has ever lost in a single transaction.
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Next Reads
- Luka Dončić Traded to the Lakers for Anthony Davis
- Lakers’ $10 Billion Sale
- Los Angeles Lakers 2025 Valuation: Pre-Trade Snapshot
- Kevin Durant’s Trade to the Houston Rockets
- Shai Gilgeous-Alexander’s Path to an $80 Million Per Year Contract Extension
Credits
Written by: Aidan Anderson
Research and Analysis: Apostle Sports Media LLC
Sources: NBA salary databases, ESPN Insider, Spotrac, Basketball-Reference, NBA CBA regulations, APSM Proprietary Analysis.
Social Media Clips: Instagram & X
Featured Image: Public Domain / Instagram
Disclaimer: This article contains general financial information for educational purposes and does not constitute as professional advice.
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