NBA Teams In Danger Of Paying The Luxury Tax

Nearly half of the NBA is above the luxury tax threshold or less than $5MM below it. That can, and most likely will, change between now and the final day of the regular season, when payrolls are finalized for tax purposes. Still, the 14 teams in danger of paying the tax will have limited flexibility to add to their rosters unless their owners decide to open their checkbooks.

The Nets and Knicks, the NBA’s two most profligate spenders who meet for tonight’s game in Brooklyn, have rarely shown aversion to paying the tax, so their high payrolls probably won’t deter their front offices from piling more cash on top if necessary. There’s more intrigue surrounding the Clippers, the only other team above this season’s $76.829MM tax line as it stands. Owner Steve Ballmer isn’t short on funds, but it remains to be seen just how much more he’s willing to pump into his team after paying $2 billion to purchase it earlier this year.

The tax is determined based on a slightly different payroll calculation than the league uses for the salary cap. Players who signed as free agents and make less than the two-year veteran’s minimum salary count at the two-year veteran’s minimum for tax purposes, inflating their cost. That’s reflected in our accounting below. Any incentive clauses that the NBA believes a player is likely to trigger are included on his cap figure, but they don’t count toward the tax unless the player actually achieves them. The reverse is true for unlikely bonuses, which don’t show up on the cap but would count against the tax if the player achieves them. The outcomes of those incentive clauses usually aren’t known until the end of the season, so I haven’t taken them into account here.

These totals also assume that teams will keep the players they have on non-guaranteed contracts, which certainly isn’t a given. Still, teams usually fill the roster spots of the players they waive, so they fail to reap the savings unless they’re willing to play a man short. The totals for the Thunder and Pacers will likely go down by nearly $900K each, since they’re both carrying 16 players thanks to hardship provisions the league has given them to offset their injury woes. The provision only lasts as long as at least four injured players are out of action, so those teams will most likely cut a minimum salary once the health of their players improves.

Caveats aside, here’s where each team in the vicinity of tax territory stands relative to the $76.829MM threshold, with the payrolls rounded to the nearest $1K.

Above the tax line

  • Nets: $93.84MM
  • Knicks: $89.918MM
  • Clippers: $80.041MM

Less than $5MM shy of the tax line

  • Grizzlies: $76.479MM
  • Wizards: $76.245MM
  • Raptors: $76.097MM
  • Thunder: $76.05MM
  • Pacers: $75.666MM
  • Celtics: $74.751MM
  • Nuggets: $73.693MM
  • Cavs: $73.605MM
  • Warriors: $73.057MM
  • Heat: $72.756MM
  • Kings: $71.869MM

The Basketball Insiders salary pages were used in the creation of this post.

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