The
Thunder were going to buyout or waive Carmelo Anthony before the season began.
He was owed about $27 million for the 2018-2019 season. In a buyout situation, Anthony’s
protected compensation would be reduced, and he would have been paid in equal
installments over the next three years. The cap hit would also be reduced by
the amount of the buyout, and it’s possible that the Thunder could have
stretched that as well to reduce their enormous tax burden.
However,
Sam Presti found a way to keep a live asset and avoid the dead cap hit in
trading him to the Hawks. The trade worked from both teams’ perspectives.
The Trade Restrictions
Please
note that each trade has a set of rules which applies to it.
Analyzing Atlanta’s Trade Restrictions
|
|||||
Post-Trade Salary
|
Outgoing Salary
|
Restriction
|
Incoming Salary
|
Status
|
|
Trade with Sixers
|
Under the Cap
|
$5,000,000 (Muscala)
|
None
|
$4,060,999 (Anderson and Cabarrot)
|
✓
|
Trade with Thunder
|
Under the Cap
|
$17,044,951 (Schroeder and Cabarrot)
|
None
|
$27,928,140 (Anthony)
|
✓
|
Note,
that ATL's moves must be viewed in isolation of each other to have successfully
worked. The team acquired Carmelo Anthony in exchange for Schroeder by using
cap room. The team was initially at a cap position of $89 million, but was then
able to clear about an extra $1 million in room by trading Muscala for Anderson
and Cabarrot. The team had to do the Muscala trade before it did the Anthony
trade to create room. The team then flipped Cabarrot to the Thunder along with
Schroeder, and because they were still under the cap after the trade, they did
not have to match salaries. Had the Sixers not been involved, the team would
have been over the cap after the Anthony trade, and as such a trade restriction
would have applied (the 100% of outgoing salary + $5,000,000 restriction)
making the trade untenable.
Analyzing Oklahoma City’s Trade Restrictions
|
|||||
Post-Trade Salary
|
Outgoing Salary
|
Restriction
|
Incoming Salary
|
Status
|
|
Trade with Hawks
|
Over the Tax
|
$27,928,140 (Anthony)
|
125% of the outgoing salary + $100,000 ($35,010,175)
|
$17,044,951 (Schroeder and Cabarrot)
|
✓
|
*Note: Thunder gain $10,883,189 TPE Credit which expires on
7/25/2019.
Note
that the Thunder only made a trade with the Hawks, not the Sixers. I arrived at
this conclusion by noting that trade restrictions would not have allowed for
the Thunder to receive Cabarrot without giving up anything of value. See the
chart below for how this would have failed:
Analyzing Oklahoma City’s Trade Restrictions
|
|||||
Post-Trade Salary
|
Outgoing Salary
|
Restriction
|
Incoming Salary
|
Status
|
|
Trade with Sixers
|
Over the Tax
|
$0
|
125% of the outgoing salary + $100,000 ($100,000)
|
$1,544,951 (Cabarrot)
|
X
|
Furthermore,
the trade between the Thunder and the Hawks was a non-simultaneous trade, which
is how the trade was able to generate the TPE credit. Last but not least, here
is the trade from Sixers perspective. The team saw an opportunity to play
middle man here and add a rotation piece in Muscala moving forward.
Analyzing Philadelphia’s Trade Restrictions
|
|||||
Post-Trade
Salary
|
Outgoing
Salary
|
Restriction
|
Incoming
Salary
|
Status
|
|
Trade with Hawks
|
Over the Cap
|
$4,060,999 (Anderson and Cabarrot)
|
175% of the outgoing salary + $100,000 ($7,206,748.25)
|
$5,000,000 (Muscala)
|
✓
|
Anthony
is one of the few players in the league with a no-trade clause, and Anthony
approved this trade in exchange for the promise of the Hawks cutting him.
The Future Outlook for the Hawks and
Thunder
Hawks: From the Hawk’s perspective, they gained additional cap
room for next summer, approximately $15 million worth. However, they increased their
total salary obligations this summer by about $11 million (i.e. the difference between Anthony’s and Schroeder’s and
Cabarrot’s contract). They gain the bird rights of Justin Anderson who will be
a restricted free agent next summer, giving them the first right of refusal.
They have the option to stretch Anthony’s cap hit for the next three years if
they wanted, however they should take the cap it all this year to preserve future
cap room. They also get to hand the reigns of point guard over to Trae Young
immediately, which is a good vote of confidence for their young player.
Thunder: From the Thunder’s perspective, they save money on
their cap, and significantly more money on their tax. Had the team bought out
or waived Anthony, it would have paid a significant tax bill. Assuming he was only
waived and the team made no other moves, it would have paid about $150 million in
tax, placing the true value of their payroll at nearly $300 million for the
season. The number is inflated by the fact that the Thunder would be a repeat
offender, having paid the luxury tax in three of the last four seasons. The
repeat offender rate for the team would have reached a maximum tax rate of $4.25
for each dollar spent at $20,000,000 above the cap, with an increasing $.50 for
each additional $5 million.
The
Thunder saved about $70 million in payroll and taxes this season as a result of
the trade. As it currently stands, the Thunder are still paying a high tax, but
they have until their last regular season game to mitigate that tax liability. Here
is a quick look at their cap sheet as of today (August 25, 2018).
OKC Full Cap Sheet
|
||||||
Type
|
Player Option
|
Team Option
|
Non-Guaranteed
|
UFA Cap Hold
|
RFA Cap Hold
|
|
Player
|
2018-19
|
2019-20
|
2020-21
|
2021-22
|
2022-23
|
2023-24
|
Westbrook
|
$35,654,150
|
$38,506,482
|
$ 41,358,814
|
$44,211,146
|
$47,063,478
|
$49,416,652
|
George
|
$30,560,700
|
$33,005,556
|
$35,450,412
|
$37,895,268
|
$44,761,500
|
|
Adams
|
$24,157,304
|
$25,842,697
|
$27,528,088
|
$36,540,000
|
||
Schroder
|
$15,500,000
|
$15,500,000
|
$15,500,000
|
$23,250,000
|
||
Roberson
|
$10,000,000
|
$10,740,741
|
$16,111,111
|
|||
Grant
|
$8,653,847
|
$9,346,153
|
$9,346,153
|
$17,757,691
|
||
Abrines
|
$5,455,236
|
$10,364,948
|
||||
Patterson
|
$5,451,600
|
$5,711,200
|
$10,851,280
|
|||
Singler
|
$4,996,000
|
$5,333,500
|
$10,133,650
|
|||
Huestis
|
$2,243,326
|
|||||
Ferguson
|
$2,118,840
|
$2,475,840
|
$3,944,013
|
$11,832,039
|
||
Noel
|
$1,757,429
|
$1,988,119
|
$1,722,426
|
|||
Cabarrot
|
$1,544,951
|
$2,529,684
|
$7,589,052
|
|||
Brewer
|
$1,512,601
|
|||||
Felton
|
$1,512,601
|
$1,618,486
|
||||
Nader
|
$1,378,242
|
$1,618,520
|
$1,752,950
|
$1,808,547
|
||
Diallo
|
$838,464
|
$1,416,852
|
$1,663,861
|
$2,079,827
|
||
Salary
|
$149,579,364
|
$154,015,344
|
$136,544,291
|
$82,106,414
|
$47,063,478
|
-
|
Guaranteed
|
$148,651,122
|
$147,063,324
|
$133,127,480
|
$82,106,414
|
$47,063,478
|
-
|
Cap
Holds
|
$3,755,927
|
$13,427,276
|
$46,407,519
|
$93,268,104
|
$44,761,500
|
$49,416,652
|
Dead
Hit
|
-
|
-
|
-
|
-
|
-
|
-
|
Cap
Space
|
($66,848,017)
|
($58,442,620)
|
($66,951,810)
|
($57,584,565)
|
$25,538,648
|
$72,710,340
|
Salary
Cap
|
$101,869,000
|
$109,000,000
|
$116,000,000
|
$121,800,000
|
$127,890,000
|
$134,285,000
|
Tax
Space
|
($25,846,364)
|
($22,015,344)
|
$4,455,709
|
$65,943,586
|
$108,389,522
|
$163,226,000
|
Lux
Tax
|
$123,733,000
|
$132,000,000
|
$141,000,000
|
$148,050,000
|
$155,453,000
|
$163,226,000
|
Max Cap
|
-
|
-
|
-
|
$29,668,467
|
$69,247,510
|
$121,021,719
|
Hard Cap?
|
No
|
|||||
Calculating
how much tax a team has to pay is different than determining a team’s salary
cap position. See the below chart.
Calculating
Team Salary for Tax Purposes
|
|
|
|
|
|
|
|
For
the purpose of calculating the Thunder’s luxury tax, we’ll assume that unlikely
bonuses were not earned and that likely bonuses were earned. I’ll assume that
no trade bonuses or settlements of grievances are in play.
The
two-year minimum salary for the 2018-2019 season will be $1,050,262. Hamidou
Diallo will make less than the two-year minimum salary, but because he was
selected as the 45th pick in 2018 NBA draft, we will just use his
salary for the tax calculation.
Raymond Felton signed a one year $2,393,887 deal on July 11,
2018. This constitutes a minimum deal. However, his cap hit will only be $1,512,601.
This is because, when a team signs certain players to a one-year minimum salary,
the league will reimburse the team for any amount above the minimum salary for
a two-year veteran, which is $1,512,601.
The player gets paid his full salary by the team, the team’s cap hit is lowered
to the two-year veteran minimum salary, and the team get cash back from the
league for the difference.[1]
Taking
into account the numbers above, the Thunder project to be $25,846,364 above the tax threshold for the 2018-2019 season. In
sum, the tax bill projects to be $93,193,416
for the season.
Note
that because the Thunder are above the Apron ($129,733,000)
it cannot use the Bi-Annual exception, has
a smaller MLE, loses protection afforded by the Arenas provision, and cannot
receive a player in a sign-and-trade.
The
team could waive and stretch players to lessen its tax liability, for example
Kyle Singler. If they intend to do so, they have until 5:00 PM Eastern Time on
January 7, 2019. They could make trades to dump salary, but they can only do so
with teams that are under the cap and can absorb salary. In any event, it
appears that the team is locked in with its core and it will not have cap room
until the start of the 2020-2021 season.
A
note on Dennis Schroeder’s contract. It may be extended on
the third anniversary after the extension was signed (October 26,
2019). The last date it can be extended is typically in late October. Scrhoeder’s
contract may be extended up to 5 seasons, including the remaining season on the
contract. The salary in the first year of a veteran extension may be any amount
up to 120% of the player's previous salary, or 120% of the estimated average
salary, whichever is greater, however, the player’s maximum salary limits still
apply. The maximum raises in this scenario are 8%.
[1] Since Felton is on a one year
deal and will have Early Bird Rights after the deal, he has a no-trade clause.
