One side effect of the NBA’s huge salary cap spike this summer was that fewer teams are in danger of paying the luxury tax. The Cavaliers remain well above the tax line, but they’re the only club guaranteed of being a taxpayer in 2017.
The Clippers have the league’s second-highest team payroll so far this season, exceeding $114.74MM. That puts Los Angeles above the tax threshold, which is $113.287MM, but not by much — if the Clips really wanted to avoid paying the tax, they could likely find a trade at the deadline that would allow them to sneak under that line, though it may cost a draft pick or two, depending on whose salary they move.
Of course, the Clippers’ tax bill wouldn’t be exorbitant if their team salary stays where it is now. As our Salary Cap Snapshot for the team shows, we’ve calculated L.A.’s projected tax bill to be worth about $3.633MM, which would hardly break the bank for owner Steve Ballmer. Still, shedding that bill isn’t the only incentive for the team to avoid the tax.
Luxury tax payments are always more punitive for repeat taxpayers, and this would be the Clippers’ fourth straight season in the tax. Teams are considered repeat taxpayers if they’ve been in the tax for at least three of the last four seasons, so perhaps the Clippers – recognizing that new contracts for Chris Paul and Blake Griffin next summer may put them back into the tax anyway – won’t feel compelled to get out for just one season, but it’s still worth considering.
Additionally, the money paid by teams in the tax ends up being partially split up by the clubs below the tax line. In 2016, the 23 non-taxpaying teams each received about $2.5MM in total tax payments from the seven taxpaying clubs. With only the Cavs in the tax this year, that amount would be smaller, but again, it’s a factor worth taking into account.
While it will be interesting to keep an eye on the Clippers’ cap situation over the course of the season, they’re not the only team close to the tax line. Currently, the Trail Blazers and Mavericks are getting dangerously close to that threshold. Here’s a breakdown of how things look for those two teams:
Portland Trail Blazers
Team salary for cap purposes: $112,823,450
Team salary for tax purposes: $113,260,410
Amount below tax: $26,590
Salary Cap Snapshot
Since Tim Quarterman was signed as a free agent, the two-year minimum salary ($980,431) is used in place of his rookie salary ($543,471), bumping the Trail Blazers dangerously close to the tax line. That detail on Quarterman’s contract, along with the fact that his is the only non-guaranteed salary on the team’s books, makes his hold on a roster spot perilous. It wouldn’t be surprising to see him waived on or before the January guarantee deadline.
Still, the Blazers are widely considered one of the NBA’s most likely teams to complete at least one trade this season. ESPN’s Zach Lowe recently suggested he’d be “blown away” if Portland doesn’t make at least one deal. The team would likely have to come close to matching salaries in any deal, but there’s some wiggle room within those trade rules, and if the Blazers can shave off even $1-2MM in a deal, it would create a significant amount of breathing room for a team right up against the tax line.
Considering the Blazers’ current 2017/18 guaranteed salaries would put them well over the projected tax threshold for next season, staying below the tax this year figures to be a priority for the club.
Team salary for cap purposes: $110,920,751
Team salary for tax purposes: $112,715,267
Amount below tax: $571,733
Salary Cap Snapshot
Like the Blazers, the Mavs see their team salary for tax purposes increase a little due to free agents with less than two years of experience. Dorian Finney-Smith, Nicolas Brussino, and Jonathan Gibson (who was signed to a guaranteed contract, waived, then re-signed) are among them. In total, Dallas is less than $600K from the tax line, but there are reasons to believe the team should avoid surpassing that line.
For one, Finney-Smith and Gibson are still on partially guaranteed contracts, so they could be waived prior to January’s guarantee deadline to avoid having their full salaries count against the cap.
Secondly, and perhaps more importantly, the Mavs simply don’t look like a contender this season, having started the season with an NBA-worst 2-12 record. Assuming the team doesn’t go on a lengthy winning streak to climb back into the postseason hunt, the front office should be more inclined to sell than buy at this season’s trade deadline.
It’s not clear yet exactly what pieces the Mavs would move if they become sellers, but Andrew Bogut looks like a prime trade candidate. One team executive recently suggested to Kevin O’Connor of The Ringer that Bogut would draw “plenty” of trade interest if Dallas put him on the block, while Bill Simmons – O’Connor’s boss at The Ringer – tweeted today that the Celtics would be a good fit for the veteran big man. Bogut is earning more than $11MM this season, so if the Mavs were to acquire contracts worth about $8-9MM in return for Bogut, they’d comfortably distance themselves from the tax threshold.
Salary information from Basketball Insiders and The Vertical was used in the creation of this post.