How the luxury tax may affect free agency & Boston's teambuilding

There's a lot of confusion in the league right now.

Confusion about the NBA Salary Cap, and how it might impact the composition, shelf-life, and success of more than a few teams at the top of the league. And rightly so, as it appears any team with a starting unit having Kevin Durant, Stephen Curry, Klay Thompson, and Draymond Green will likely remain unbeatable for as long as they are together.

The Golden State Warriors, however, may find themselves as crunched as the Cleveland Cavaliers, who tried (and failed) to field a team able to beat them, pushing their luxury tax bill to astronomical levels a year after it hit $169 million dollars - and they still managed to lose $40 million, if reports are to be believed. The Cavs have now payed the luxury tax two out of the last three years, and another year will send them into repeater status, adding another dollar to every dollar taxed for every dollar spent. For those of you who don't like math, just know that takes players on rookie deals to rotation player costs, makes rotation players cost starter money, and makes max players so costly you might as well just burn bonfires of Brinks trucks loaded to their windows with cash.


When I heard Dan Gilbert fired David Griffin, I was not surprised.


Griffin, the now-ex-General Manager of the Cavs (owned by Gilbert) was literally in the middle of setting up a trade to bring Jimmy Butler to Cleveland when he got canned. From a wins-and-losses perspective, it made all the sense in the world. Unfortunately for Griffin, the timing was wrong.

Bringing on Butler would have ensured Cleveland would be a repeating tax payer. Butler, as great a player as he is, would not have been enough to push the Cavs past the Warriors barring injury just as likely to dampen the Cavs odds as the Dubs. The tax bill, however, would be very, very large indeed, and virtually certain to come, given how much teams have overspent, and therefore unable to take on salary for assets.

The official word was a "difference in vision" - Griffin wanted more money and control, and we can only assume Gilbert did not want to lose and hemorrhage money. Was it a toxic move? Probably. It could have been handled better, giving Griffin a chance to interview for other jobs - there were weeks to arrive at the same conclusion, and the hints had been there for months - but, what we saw, tact aside, might be the new normal for teams.


Arguments on whether the Warriors themselves can prevent the cap shrinkage I discussed earlier this month from culling key players from their roster aside, the luxury tax may now be doing the opposite of what it was designed to - aid competitive balance. Deep pockets for even one season are needed to compete, and multiple goes beyond two seasons may not be possible for a half-decade or longer, depending on how the Warriors and the league navigate their current financial situation.

Consider then, the timetable of the Celtics' current roster, and a rumored trade which could bring Paul George and another player on a tier-two max deal (about $30 million) to the team: biggest cap hit? Al Horford, three years. George extension? Three years. Two most likely free agents being targeted to join him? Gordon Hayward, who will maximize his earning potential with a three-year deal with a player-option fourth year that would need to be opted-out of, and Blake Griffin, who is unlikely to get close to a full max deal with his durability issues...without a three year deal mitigated with a fourth year that's a team or mutual option.

Are you noticing a pattern here?

Three years of potential contention should that rumored deal go down. Zero years in the last four paying the tax. As Mark Allison recently suggested on the CelticsLife podcast, the plan for the Boston Celtics may be to assemble the players and figure it out after. And I don't mean they haven't thought about it - probably more than any organization aside from the Cavs and maybe the San Antonio Spurs, they have likely done MORE thinking about it. The question of how long could such an effort be sustained likely rests on largely intangible financial considerations as much as roster construction, if not more so.


How wealthy are all of the partners in the ownership group next year, the year after, and the year after that? I don't mean regarding basketball, mind you - I am talking their overall investments, market trends outside of the NBA, and how that might impact willingness and ability to spend. And if they DO pull the trigger, how much will they make back? Cleveland is not one of the smallest markets in the league, with a hungry and engaged fanbase...but they are not on Boston's level for reasons of history as much as market size. Will the team, without a LeBron James-like figure standing head-and-shoulders above the rest of the roster, make the same revenue?

Too much to account for, even for the best accountants and NBA minds, beyond basic projections and a hope and a prayer. But the fact remains that even the most optimistic tax bills would place the team in the neighborhood of the Cavs last year, and some north of $200 million per season. Would such a bill be too much to pay? Quite possibly, but only the ownership group can answer that - and even with titles in tow, probably would not survive beyond the three-year window baked-in to the current contracts and the proposed deal's structure. At this point, even the Warriors may not be able to afford this arms race, given the potential $300 million dollar pricetag it could eventually bring.


Which would leave the Celtics with a boatload of cap space and a young core entering or just having arrived at their rookie extensions, taking (probably) a season's step back, a middling draft pick in return, cap space, lack of taxpayer status for a pair of seasons, and a potential rinse-and-repeat cycle of the same type with probably a more favorable long-term outlook. A less-than-promising return on either the financial front or in the playoffs could see the team dismantled for future assets and more young players for very understandable reasons - presumably with more tact than Gilbert, a low bar if ever there was one - positioning Boston to rebound harder and faster around its young core.

Is this the plan? I have no idea. But based on what we can see, and have seen, around the league, something like this could make sense. In a little under a week (and possibly sooner), we'll find out.

For more stories about the offseason on CelticsLife, click here. For more by Justin, click here.



Luxury Tax image via Wikipedia
Follow Justin at @justinquinnn
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