We've been burned before, but it feels like there could be a lot of player movement at the 2012 NBA Draft. Many teams seem open to trading their picks, and several quasi-stars in addition to the obvious (Dwight Howard, Deron Williams) have popped up in rumors. It remains to see how things play out, but I would be prepared for an active next few days.
And if things do materialize as expected, you can thank 2013.
Why 2013? That's a pretty big year for many top NBA teams, because that is when harsher luxury-tax penalties start to kick in. In the past, teams paid a proportional $1 fee for every $1 they were over the tax line. Starting in 2013-14, those penalties become more incremental, starting at $1.50 for every $1 over the tax and increasing to $1.75, $2.50 and $3.25 for each $5 million threshold passed. Worse, if teams were over the luxury tax in four of the past five years, they have to pay an additional dollar for each dollar spent as a repeat offender.
As an exercise, consider the Los Angeles Lakers. Last year, they had a payroll of nearly $86 million. Under the old system, which was in effect, the Lakers owed just under $16 million in luxury-tax fees. Under the new system, though, they would have owed $7.5 million for the first $5 million over the tax, $8.75 million for the next five million, $12.5 million for the next five million and $3.25 million for the final $1 million. Right there, that's a $32.25 million tax bill. In addition, since the Lakers were over the tax in four of the past five years, they would have owed an additional $5 million at each juncture. That leaves them with a tax bill of over $52 million for being $16 million over the threshold.
Those are some enormous consequences indeed.
Around the league, much work has been done by teams that were in danger of being well over the luxury tax at the wrong time. The Mavericks' decision to not re-sign Tyson Chandler to a long-term deal was very much a financial one, as was the Lakers' decision to trade Lamar Odom (ironically, to Dallas).
But there is still much work to be done for some teams, and chances are, the names you're hearing being mentioned in trade rumors are the best paths out of luxury tax hell for those teams. Throw in the normal trade talks you hear, and there are a surprising number of excellent players that may be moved for these teams to trim salary.
Who are they? You probably know by now, but in case you didn't, here's a list.
PLAYERS WHO COULD BE TRADED TO TRIM SALARY
The Chicago Bulls' championship window may have closed once Derrick Rose tore his ACL in the first round of the playoffs. Before then, they had a carefully-processed salary structure that allowed them to stay under the luxury tax as they pushed to the top of the league. But that careful work will come crashing down in the next few years.
Next season, including their draft pick at No. 29 overall, the Bulls will have $65.4 million earmarked for eight players. That doesn't include unguaranteed contracts for valuable role players Kyle Korver, CJ Watson and Ronnie Brewer, all of whom may be let go to keep the Bulls under the $70 million luxury tax. The Bulls must still fill out a roster, though, so they either need to bring some of those guys back or find others to fill out the roster. They'll likely be paying the luxury tax this year, whether they want to or not.
In 2013-14, it gets even worse. The combined salaries of the Bulls' top four players (Deng, Derrick Rose, Carlos Boozer and Joakim Noah) add up to $57.4 million. If the luxury tax level stays the same, that leaves the Bulls with less than $13 million to fill out at least nine other roster spots. That's going to be incredibly difficult, especially considering Rose's injury will likely linger all of next season.
That's why the Bulls seem to be shopping Deng. There are other factors too -- his wrist injury, his insistence on playing for Great Britain in the Olympics despite said injury -- but none of that would matter if Deng made less money. Deng is on the books for $13.4 million next year and $14.3 million in 2013-14. The Bulls will absolutely move that salary in a heartbeat if they can, especially considering owner Jerry Reinsdorf's long insistence on refusing to go over the luxury tax.
Which trade partners make sense? The Bulls unsurprisingly rejected the Golden State Warriors' advances -- with $62 million committed this year and $55 million in 2013-14, the Warriors don't offer much payroll help for Chicago. That leaves several teams that think they are closer to contention than they realize as part of the proceedings. Squads like the Kings (picking No. 5, about $11.8 million in cap room this year before holds), Raptors (No. 8, $10.3 million), Hornets (No. 10, $20.3 million) and Suns (No. 13, $25.7 million) make more sense as trading partners for the Bulls, due to their combination of a lottery pick and cap space to absorb Deng's salary and provide the Bulls with instant savings. But the Bulls must also convince those teams that Deng is healthy, a tough task given his stated wrist issues.
The Grizzlies have long been enamored with Gay's game, giving him a five-year maximum contract in 2010 based mostly on what they hoped he'd become rather than what he actually was. When healthy, Gay has performed much better than he did before signing the contract on both ends of the court, but he is still overpaid relative to his production. That leaves the Grizzlies in a really tough spot. They are caught between the hope of contention and the reality of future finances.
The Grizzlies have more hope to contend than most other future taxpaying teams because they have never really been able to see its full team play healthy together. Two years ago, the Grizzlies reached the second round of the playoffs after Gay's shoulder injury, only to fall in seven games to the Thunder. Last year, Zach Randolph missed most of the season with an MCL tear and wasn't himself when he returned for the Grizzlies' seven-game first-round loss to the Clippers. Memphis could easily talk themselves into believing that keeping the band together for one more year will yield better results.
At the same time, it better happen next year, because the books get dicey after that. The Grizzlies are currently slated to owe a whopping $59 million to their top four players -- Gay, Randolph, Marc Gasol and Mike Conley -- next season. If they choose to keep any combination of O.J. Mayo, Marreese Speights and Darrell Arthur, all restricted free agents this summer, you can add their salaries to that total. The Grizzlies are also a small-market team that absolutely can't afford a huge luxury-tax bill, even with new ownership coming in.
That's why you see the Grizzlies quietly exploring Gay's value this year. They won't give him away, because they know they can win with this group, and worse comes to worse, they can always give him away next year. But if they can turn Gay into a high draft pick and clear room to keep Mayo, they may replace Gay's production anyway. A deal involving Charlotte's No. 2 pick, for example, would likely appeal to the Grizzlies, assuming the Bobcats bite.
I would expect Gay to stay in Memphis this year, because trading him in a salary dump will not make their fanbase happy. But it would not surprise me for the Grizzlies to internally decide that their financial future over the next five years matters more than making one last go at it next year.
This one has been fairly obvious ever since the Lakers were eliminated in five games by the Thunder in the second round of the 2012 NBA Playoffs. Gasol has already been traded once in the vetoed Chris Paul deal and sounded resigned to his fate. Lakers fans are hoping that they can at least turn Gasol into useful players that can replicate his production.
Unfortunately, I think the motivations will be mostly financial. Due to Kobe Bryant's gargantuan salary, the Lakers will owe nearly $50 million in 2013-14 to just Bryant and Gasol. That's just two players making all but $8 million of the salary cap and 70 percent of the Lakers' luxury-tax bill. The Lakers aren't trading or using the amnesty clause on Bryant, so that leaves Gasol as the man who must go.
Lakers fans may feel immune to finances, but the reality is this process has already started. Last year's confusing trade of Lamar Odom for basically nothing was really nothing more than a salary dump. The Lakers wanted to trim his $8.9 million salary off their luxury-tax bill in preparation for the future. Now, if they get the chance to do the same with Gasol, I think they jump on it. A team like the Raptors, for example, strikes me as a good trade partner because they can offer cap relief, are ready to make a jump and have some smaller contracts for decent rotation players (Jose Calderon, for example) that can help the Lakers in the short term.
The Mavericks want Deron Williams, but they have just $9.1 million in cap room as is, meaning they need to trim some fat. Using the amnesty clause on disappointing center Brendan Haywood will cut another $8.3 million from their cap and may end up being enough to get Williams, but to be extra safe, they'll probably look to pawn off Marion to a team in the middle of the lottery. Marion is still well-regarded, but he had one of the worst years of his career last year, is 33 and plays a style that doesn't age particularly well.
It wouldn't surprise me to see the Mavericks give away the 17th overall pick if it means the team trading for it takes Marion's salary of $8.4 million next year with a player option for $9.1 million in 2013-14.
Smith has just one year left on his contract, so the Hawks aren't necessarily thinking about getting rid of him specifically to help their future luxury-tax bill. However, stars Joe Johnson and Al Horford combine to make over $33 million in 2013-14, close to half of what the current luxury-tax level is. Johnson is untradeable and Horford is a core piece of the franchise, so Smith might have to be their bait to improving the roster. Dealing Smith before they inevitably must let him walk after next year would allow the Hawks to extract some value from him. There's also the matter of all those rumors that consistently suggest Smith wants out.
I'm a fan of Smith's game, even if his demeanor is inconsistent, so I'd even consider dealing the No. 2 pick overall to get Smith if I'm the Bobcats. Other teams in the lottery, including Sacramento, Portland, Golden State, Toronto, Detroit, New Orleans and Phoenix, should absolutely look into dealing their pick and other considerations for him.
The yearly Iguodala rumors have begun, with HoopsWorld declaring that Iguodala was nearly traded last year and is "now back on the block again." The motivations here are slightly financial, if only because Iguodala makes a hefty some of money ($14.7 million next year, $15.9 million in 2013-14 if he does not opt out), but the 76ers don't have a horrible cap situation going forward. Elton Brand's huge deal comes off the books just in time before the luxury-tax penalties kick in, and while some of that money will go toward a contract extension for Jrue Holiday, the 76ers will have some breathing room. Iguodala's big salary, combined with Thaddeus Young's mid-sized salary, Evan Turner's large rookie deal and Holiday's extension, won't make it easy, but there's room.
Therefore, this is really about more than money. For whatever reasons, the 76ers seem to think Iguodala's a poor on-court fit with youngsters like Holiday and Turner. Perhaps Iguodala doesn't get along with Doug Collins. Perhaps the 76ers think Iguodala will opt out of his contract and won't re-sign with the club, in which case they, like the Hawks with Smith, may want to get something for him. Perhaps a new general manager will want to kick-start the youth movement, deal Iguodala and sink or swim with the kids. I don't know, really.
All I know is Iguodala is really good and teams in the lottery who aren't enamored with their options would be smart to try to trade for him.
The Kings don't have serious payroll issues right now, but as long as they remain in this holding pattern while being owned by the Maloof family, finances are on their mind. Therefore, you could argue that they're thinking ahead when it comes to Evans' future with the club.
It's no secret that Evans is not a very good fit with their roster. The emergence of second-round rookie Isaiah Thomas forced Evans to play more small forward, where he struggled. Trading Evans while he still has some value would therefore allow the Kings to find a better fit for their existing talent.
But I suspect some of the motivation is financial, too. Evans is due for an early contract extension this summer, and if he doesn't sign it, he becomes a restricted free agent next year. Given their issues with his on-court fit, the Kings have to be worried about handing Evans a five-year contract for a significant amount of money that starts before the 2013-14, when luxury-tax penalties kick in. The Kings aren't in danger of exceeding the tax window then, but they also have extensions for DeMarcus Cousins and Thomas to worry about in the coming years. Tying up money to Evans may not be wise.
I wouldn't be surprised, then, if Evans is dealt. If I'm the Bobcats, I would talk to the Kings about trading down, picking up Evans and the No. 5 pick for the No. 2 pick. Maybe the Kings go for it, maybe they don't, but I would not be surprised to see them give away Evans in a deal that seemingly looks lopsided from their perspective.
It's tough to figure out what the Rockets are doing right now. They seem to want to make an all-out push for Dwight Howard, but Howard doesn't seem interested in staying there long term. Nevertheless, they seem willing to blow up their roster for draft picks to woo the Magic in a trade package for Howard. They continue to be stuck somewhere in the middle of the NBA, so from their perspective, they have little to lose from giving this grand plan a shot.
But if that fails, I still expect the Rockets to try to trade Martin. While their overall payroll situation is clear, they have a bit of a conundrum at shooting guard. They played much better last year with Courtney Lee starting instead of Martin, so re-signing Lee, a restricted free agent, is a priority. However, Martin still has one year left for $12.4 million on his contract, so he's making too much to be a bench player. He already was traded once (in the Chris Paul deal that got vetoed), and he's not a good fit with Kevin McHale. I would expect the Rockets to try to deal him to secure more Dwight Howard assets.
Assuming they do, more teams really should pounce. Martin was one of the league's best shooting guards prior to his down year last season. With just one year left on his contract, it's worth the gamble to see if he can return to form.
- Watch out for the Celtics in trade talks. You know Danny Ainge is going to be aggressive, and Boston is $25.4 million under the salary cap. Lots of that money could go to retaining Kevin Garnett and Brandon Bass, but that leaves plenty of room to pull off unbalanced trades.
- The Cavaliers also have a ton of cap room (just over $20 million), and they also have an interesting trade asset with Daniel Gibson, who is owed $4.8 million, but only $2.5 million is guaranteed. The Cavaliers' plan has been to take on bad contracts in exchange for future draft picks. I wouldn't be surprised to see them continue to do that.
- The Pistons' cap situation is pretty messy, so they'll probably try to move Ben Gordon (owed $12.4 million this year, player option for $13.2 million in 2013-14) and Charlie Villanueva ($8.1 million next year, player option for $8.6 million in 2013-14). I don't see them succeeding, but we'll see.
- The Warriors would be smart to try to give Richard Jefferson (owed $10.2 million next year with a player option for $11 million in 2013-14) away, but it's going to be hard to find a taker.
- We've gotten this far without talking about the Thunder, who already owe nearly $48 million to five players in 2013-14 before keeping James Harden and Serge Ibaka. As Steve Perrin wrote earlier in the playoffs, they may not be able to afford both players without incurring major luxury-tax penalties. Nevertheless, considering they were so close to winning a title, I don't see the Thunder giving away a core piece for future considerations this summer.
- The Jazz have a clear cap situation next year (about $7.2 million in space with no key free agents), but Al Jefferson, Paul Millsap and Devin Harris are free agents after this year, and I would be surprised if the Jazz pony up the cash to keep all three. It wouldn't shock me to see any of those guys get dealt between now and next summer.