A side question: What exactly is it that worries people here about paying luxury tax? I know it's cliché to say, but it isn't our money. Is there some downside to paying luxury tax that I am unaware of -- any penalty other than the tax itself? If not, then the question should be for Wyc and Steve, etc -- how much do they care about paying the tax? If they are "all in" then what do we care?
I would guess that as the C's grow in popularity as a contender, the revenue that comes in likely makes up for some if not all of the tax. My guess is that our ownership has that all nicely calculated.
The NBA recently implemented an escalating repeater tax for any team that exceeds the luxry tax threshold for consecutive seasons. It's potentially steep enough to wipe out ALL profits for even a big market franchise. Right now the luxury tax threshold is $119 Million. The Celtics avoided the tax this season but it will be difficult to stay under next year.
Let's look forward to 2019-20 and assume the Celtics have resigned Kyrie at the max, Marcus at $10 million per(could be more but I thought this was fair), and Rozier at $20 Million per(might need to match more than this on the open market). This leaves us at $138 million in salary for just Kyrie, Hayward, Horford, Smart, Jaylen and Tatum. We will still need to fill in the remaining roster with veteran free agents and draft picks. Let's assume they manage to fill in the rest of the roster with only $12 million(this number would probably be higher). This puts us at a payroll of $150 million. The estimated luxury tax threshold for 2019-20 is $130 million. The Celtics would pay an additional tax of $45 million on the $20 million above the luxury tax. All in all the final payroll would come to $195 million.
Things would get even worse in 2020. Horford comes off the books but Jaylen would be due for a max deal. Let's say our pre-tax payroll jumps to $160 million. The Celtics would now enter the "repeater" tax where penalties become even worse. The estimated tax for a $160 million payroll in 2020 is $104 million. $264 million in payroll after tax is more than the Celtics total revenue from last season. Keep in mind that I used conservative salary projections for guys like Smart and Rozier.
Obviously we have a few years before this gets insane but Danny will need to make some tough decisions. It might serve the franchise best to trade Rozier for a draft pick or let him walk after next year. Rookie contracts will become increasingly valuable when it comes time to pay guys like Jaylen and Tatum.