Four Teams Who Could Become Taxpayers By Re-Signing Key Free Agents

The Cavaliers, Warriors, and Thunder had the three most expensive rosters in the NBA in 2017/18, finishing the season well over the tax line. While those three clubs don’t currently project to be taxpayers again in 2018/19, that will change quickly if they’re able to re-sign their top free agents.

If LeBron James returns to Cleveland, Kevin Durant re-ups with the Dubs, and Paul George remains in Oklahoma City, all three clubs will blow past the luxury-tax threshold once again, barring separate cost-cutting moves.

For those teams, the possibility of going back into tax territory and continuing to run their repeater-tax clocks probably isn’t particularly appealing. But based on their high payrolls this past season, we know that ownership is willing to pay those penalties to contend, if necessary.

Heading into the 2018 offseason, there are several more clubs who could see their respective team salaries surpass the tax line if they re-sign certain free agents, and it remains to be seen just how comfortable some of those ownership groups are with the idea of becoming taxpayers.

Here are four teams whose team salaries are worth watching as they navigate free agency:

  1. Houston Rockets: With a little less than $78MM in guaranteed salaries on their books for 2018/19 at the moment, the Rockets appear to have some breathing room. However, lucrative new contracts for Clint Capela and Chris Paul would quickly change that equation. If we assume Paul gets a maximum-salary deal and Capela receives a starting salary in the range of $15-20MM, that would mean adding $50-55MM to Houston’s 2018/19 cap, which would put the team over the projected tax line with only eight players under contract. Ditching Ryan Anderson‘s contract would almost certainly be the club’s preferred method of avoiding a massive tax bill, but as we saw last offseason when the Rockets unsuccessfully shopped Anderson in trade talks, that won’t be easy.
  2. New Orleans Pelicans: With seven players on guaranteed contracts worth about $93MM, the Pelicans will get into some financial trouble if they re-sign DeMarcus Cousins to a pricey new contract. Even if we assume Cousins’ Achilles injury will prevent him from landing a max deal, he’s probably a good bet for a starting salary in the neighborhood of $20-25MM. Filling out the rest of the roster with minimum-salary contracts around Cousins and their other seven players would see New Orleans carry a team salary in the $122-127MM range — and that’s a conservative estimate which doesn’t include another important free agent, Rajon Rondo. Solomon Hill ($12.75MM) would be the most logical trade or release candidate if the Pels need to cut costs.
  3. Portland Trail Blazers: A solid but unspectacular season for Jusuf Nurkic should ensure that the Trail Blazers won’t have to pay him near-max money to keep him. Still, Portland is already carrying more than $110MM in guaranteed money for eight players, and Nurkic is probably worth an eight-figure salary. If the Blazers want to bring him back and avoid the tax, it’s possible we’ll see the team try to move one or more highly-paid players like Evan Turner ($17.87MM), Maurice Harkless ($10.84MM), or Meyers Leonard ($10.6MM).
  4. Denver Nuggets: While the Nuggets only have about $85.6MM in guaranteed 2018/19 money on their cap, a pair of player options for Wilson Chandler and Darrell Arthur figure to increase that total to about $105.9MM. Will Barton will also be due a raise, increasing team salary even further if he’s re-signed. But the real killer will be a potential extension for Nikola Jokic. Denver could probably avoid the tax by simply exercising Jokic’s cheap team option for 2018/19, but doing so would put him on track to become an unrestricted free agent in 2019 and wouldn’t sit well with the young center’s camp. Turning down the option, making him a restricted free agent, and locking him up to a mega-deal this offseason might be the Nuggets’ best move, but doing so would likely put the team over the tax line. Chandler ($12.8MM), Arthur ($7.46MM), Kenneth Faried ($13.76MM), and Mason Plumlee ($12.92MM) would become trade or release candidates in that scenario.

The Toronto Raptors deserve an honorable mention on this list, since re-signing Fred VanVleet would create some financial issues for them. However, even if they let VanVleet walk, the Raps will need to find a way to shed some salary in order to avoid becoming a taxpayer. Toronto already has more than $126MM in guaranteed contracts on its 2018/19 books without accounting for VanVleet.

Photo courtesy of USA Today Sports Images.

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9 thoughts on “Four Teams Who Could Become Taxpayers By Re-Signing Key Free Agents

  1. Assuming they do re-sign Paul and Capella, and also Ariza to even a modest deal, the Rockets almost have to unload Anderson even if it means attaching a 1st to get it done (even two 1st’s if some team will swallow the contract whole). It’s almost always idiocy to “pay” (in draft picks) to get rid of a bad contract, but this would be an exception. In this case, having Anderson on the roster vs not could cost them up to 75 mm.

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    • madmanTX

      They tried already to get rid of Anderson’s contract with 2 number 1’s, but nobody wants to help out the Rockets. What value are the number 1 picks if the Rockets go on a championship run the next few seasons?

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      • Really? I didn’t hear of any such proposed deal. To who? Odd, since they weren’t a taxpayer last year, and they couldn’t trade a 1st until 2020 (that changes after this draft, when they could trade 2019 and 21). Honestly, knowing how Morey values draft picks, I can’t believe he would throw 2 away when it creates no cap space and he’s not even facing the luxury tax.

        Yes, the picks are likely not going to be high. That was the Nets rationale when they acquired Garnett and Pierce to go with DWill, JJ and Lopez.

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  2. rxbrgr

    By “release” candidates you mean stretch candidates, correct? Just releasing a player with contract as-is wouldn’t affect the team’s cap or tax numbers.

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    • Luke Adams

      Yes, in any of these cases, stretching would be a given.

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  3. Stretching will help some, but it will continue putting them in the tax for likely 2 additional seasons (Paul, et. al, aren’t doing 1 year deals) wherein they incur repeater penalties on the tax, and other not so great restrictions on operating. That’s why this is one situation where a trade is preferable. Anderson, when healthy, isn’t a bad player, he just has a bad contract, and it’s only 2 seasons more.

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    • x%sure

      Of course trading is better, but all those names listed as “trade/release” have been offered before with no takers. With the exception of MHarkles– he had a fine year– but Portland is desperate, like CHAR with Marvin Williams & DET with ATolliver.

      One could add HOU’s RAnderson to that list but, some say nobody wants to help the Rockets. Did I read that at HR.

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  4. Denver must give some money to Jokic this year, the guy is been playing for less than 1,5MM this year, is ridiculous, they already saved tons on him, now is the time to pay him, otherwise he might just walk, & that would be the Nuggets biggest mistake ever, cannot see them recovering from that. Just pay him & then try to get rid of as many players as you can.

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  5. steve dolan

    Pelicans need a good ball handling, shooting point guard. They should trade Davis and Diallo for Celtics Irving and Morris

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