The Celtics' Luxury Tax Dilemma

[colincb]

Current ownership has increased the value of the Cs from $360 million in 2002 to $3.2 billion today. That's a 13% increase annually. At that rate, the franchise's value would double every 5.5 years and would increase by another $400+ million next year, far more than any luxury tax hit. That 13% growth rate is not unusual either - the prior owners experienced an annual valuation growth rate of 17% over 19 years

Looking forward, the next TV contract in 2025 is expected to be triple the value of the current one. With all types of tax advantages that allow owners to shelter operating and other ownership income streams until the franchise is sold, sports franchises are great investments, particularly in large TV markets.

So the idea that the luxury tax significantly constrains the Cs ownership is an erroneous one. It doesn't mean the Cs owners want to go into the luxury tax if they don't have to, but it's in their interest to maximize the team's brand, and there's added monetary value to having championships. In summary, I'd be surprised if the Cs ownership doesn't want to at least retain the talent they have accumulated, and I actually expect them to use the rest of the GH TPE.

[Celtics4ever]

In summary, I'd be surprised if the Cs ownership doesn't want to at least retain the talent they have accumulated, and I actually expect them to use the rest of the GH TPE.

There is some talent we should keep and some we should just walk or let go.  I too hope/expect us to use the GH TPE.

[Walker Wiggle]

This is a great post. Bernardoni-esque, if you will.
...

1) trade Kemba's last two years (helps that he's been playing like an all-star again of late) for a legit super-star to pair with Tatum and Brown. ...

2) offload Kemba's last two years for picks, if you can pull it off, to be used down the line to trade for a superstar. You'll be under the tax with contracts you can still aggregate up to a max contract (Smart/Fournier/Thompson/etc.)

...

4) trade Brown plus another contract (again, like Smart/Thompson/Fournier) plus whatever additional draft capital for a superstar. Again, go ahead and be over the tax; you'll be a contender.

...

In my opinion, the simplest thing to do is to trade Kemba into someone else's cap space. I don't think you'll need to attach picks to get this done; there will be a team out there who's interested in Kemba. ...

i am not sure all the suggested actions above are as simple as they may seem. so i have a few questions.

any suggestions on what teams would give up their superstars for kemba's salary bloat?

any team with salary space MIGHT take kemba, as the celtics once took on gerald wallace's horrific salary. but at what cost to the celtics? you seem to say that if the celtics simply ask a team with cap space to take kemba, they will do so.

do you have any suggestions on which teams would eat that salary and not require some sort of compensation?

which superstar specifically do you think the celtics would acquire for brown and add ons?

thank you.

Good questions. Here’s what I think:

- Who would take Kemba? Any team with cap space that whiffs in free agency and is looking to save face with ownership and the fan base. There will be teams out there and they will be able to argue “We added an all-star caliber player and only gave up one first rounder.”

- Will it take assets to offload Kemba? I personally do not think so. We are all dramatically underselling his value across the league — especially if he can stay healthy for the playoffs — and, again, it only takes one desperate team. This is not Gerald Wallace, who was much more washed up by the time of that Celtics-Nets trade, plus the Celtics only got back one additional first rounder for taking him on. You are not going to have to part with multiple firsts to offload just two years of Kemba.

- Which teams would give up their superstars? Every year is a new season, and every new season has a new disgruntled superstar demanding to be traded. A year ago no one expected Harden to be on another team. By next trade deadline at least, there will be at least SOMEONE making max money available. The Celtics will be one of the teams with all of their own future draft capital still available to pursue such a player. Essentially they can pull off something similar to what the Nets did this season.

[Moranis]

Is there any team in recent league history that paid such a hefty luxury tax bill for a roster that was not an obvious on-paper contender?

I think it's easy to assume a billionaire will not bat an eyelash at several tens of millions, but I tend to think rich people care about the principle of money.

Like I said above, is Fournier worth spending $50 million dollars? It's not like he would be putting the Celtics over the top to contention.


The Celtics have never come close to paying such a large luxury tax bill, even when the team has been a clear contender.

The Warriors.

And, regardless of Wyc’s own cheap precedent (along with the other owners) the fact is that he’s raking in money hand over first.

Aren't the Warriors paying so much because they knowingly locked themselves in for several years of huge bills back when they were winning titles?


I think it must be pointed out as well that Boston is neither New York nor the SF Bay.  Those are much larger markets.

That just isn't true with respect to San Francisco.  Boston is the 11th largest metropolitan area in the country.  San Francisco is 12th about 150k less people than Boston.  Now the San Fran/Oakland/San Jose tv market is a bit larger than Boston by about 175k people, but that shows they are pretty similar sized markets and cities.  Obviously NY and LA are different, those are huge markets and Chicago is 3rd by a pretty wide margin, but outside of those 3, Boston isn't too far off from 4th. 

Boston is clearly a top 10 market ranking them in the top 3rd of the league, and some of the markets ahead of them like Atlanta, Washington, and Phoenix are much worse draws than Boston (at least historically).  This idea that Boston isn't a big market is just silly.  I mean look at the Red Sox.  They are a top 3 draw in MLB (with the Yankees and Dodgers).  There is plenty of money in the Boston sports market.  PLENTY.

[Moranis]

Is there any team in recent league history that paid such a hefty luxury tax bill for a roster that was not an obvious on-paper contender?

I think it's easy to assume a billionaire will not bat an eyelash at several tens of millions, but I tend to think rich people care about the principle of money.

Like I said above, is Fournier worth spending $50 million dollars? It's not like he would be putting the Celtics over the top to contention.


The Celtics have never come close to paying such a large luxury tax bill, even when the team has been a clear contender.

The Warriors.

And, regardless of Wyc’s own cheap precedent (along with the other owners) the fact is that he’s raking in money hand over first.

Aren't the Warriors paying so much because they knowingly locked themselves in for several years of huge bills back when they were winning titles?

They re-locked themselves in when they signed Klay to a max deal after he tore his ACL and Durant had left.  Further, they made a S&T to get Russell (and his salary) when KD departed.  They weren’t going to contend that year without Klay, but they chose to stay in the tax (and the repeater tax no less) to keep salary on the books for future deals (Russell turned into Wiggins and a nice pick).  This offseason they also picked up Kelly Oubre and his $14 million salary using a TPE, after Klay had gone down and they again weren’t going to contend for a title.

This is it exactly.  The Warriors intentionally went gung ho into the tax after they weren't a realistic contender, hoping that maybe they would become one again.  This isn't a Cavs type situation where they just had all this salary on the books when they were competing for championships with Lebron, and then Lebron left and they still had a lot of the lesser players on the books.  In retrospect, the Warriors made a lot of bad financial decisions and are paying the price for it.

[Vermont Green]

Managing the tax is going to be an issue moving forward, no doubt, but this tends to only be a problem when you have signed players to more than they are worth.  Or more specifically, you are not getting your money's worth out of max or near max contracts. 

In the case of the Celtics, there is only one contract, Kemba, that is in this category.  I am fine paying Tatum, Brown, Smart, Thompson and even Fournier (all the rest are low cost rookie type deals).  Kemba is a bit out of whack but I am not sure really how much.

He is averaging 19 pts on 15.5 shots per game and pitching in 5 assts. as a shoot first type PG.  His 3p% has climbed up to 36% (he was 38% last season) in what is a "down" year for him due to injury.  Plus he brings leadership and a history of hitting big shots.

In trying to find some "comps" for Walker, CJ McCollum is at about 23 pts/5 assts/39% 3p and making $31M in 2021/22.  Yes, I would rather have CJ at $31M than Kemba at $36 but if CJ is fair at $31M, would Kemba be fair at $20M or $25M?  Brogdon is at about $22M which seems like a really good deal but in the range.  Lowry is at $31M.  Holiday will be $30M next season.

My point is yes, we have one "bad" contract but even that one bad one should not cripple the team.  The way things have worked out with signing Kemba and Tatum coming due and put us in a tough spot but I think in a few years, we will be back well within the norms of the top market teams.

[nickagneta]

Managing the tax is going to be an issue moving forward, no doubt, but this tends to only be a problem when you have signed players to more than they are worth.  Or more specifically, you are not getting your money's worth out of max or near max contracts. 

In the case of the Celtics, there is only one contract, Kemba, that is in this category.  I am fine paying Tatum, Brown, Smart, Thompson and even Fournier (all the rest are low cost rookie type deals).  Kemba is a bit out of whack but I am not sure really how much.

He is averaging 19 pts on 15.5 shots per game and pitching in 5 assts. as a shoot first type PG.  His 3p% has climbed up to 36% (he was 38% last season) in what is a "down" year for him due to injury.  Plus he brings leadership and a history of hitting big shots.

In trying to find some "comps" for Walker, CJ McCollum is at about 23 pts/5 assts/39% 3p and making $31M in 2021/22.  Yes, I would rather have CJ at $31M than Kemba at $36 but if CJ is fair at $31M, would Kemba be fair at $20M or $25M?  Brogdon is at about $22M which seems like a really good deal but in the range.  Lowry is at $31M.  Holiday will be $30M next season.

My point is yes, we have one "bad" contract but even that one bad one should not cripple the team.  The way things have worked out with signing Kemba and Tatum coming due and put us in a tough spot but I think in a few years, we will be back well within the norms of the top market teams.

Is Kemba's contract even a bad contract? No one seemed to be complaining last year with what he provided. The calls about Kemba's contract being so bad only started this year when he was diagnosed with arthritis. Most thought he would suddenly fall off on his quality so very much and be a giant net negative due to his arthritis, even though there is a wealth of examples of players playing at All-Star level or above for years with arthritis.

And sure enough, the predictions of Kemba's fall were as accurate as Max Kellerman's thoughts that Tom Brady's game were going to fall off a cliff.

After Kemba's first 10 games, games Ainge and Brad has mentioned Kemba needed to get back in NBA shape, here are Kemba's numbers last year compared to the this year after those first 10 games:

Stat : Last Year : This year after game #10
PPG : 20.4 : 20.2
APG : 4.8 : 5.1
RPG : 3.9 : 4.1
SPG : 1.1 : 1.1
TOPG : 2.1 : 2.2
FG% : 42.5 : 43.9
3PT% : 38.1 : 37.6
FT% : 86.4 : 91.7
TS% : 57.5 : 58.7

I could go farther with the more in depth advanced stats, but it's all the same. Basically, Kemba over the last 31 games, after a ten game stretch he used as a training camp/preseason, is the same Kemba we saw last year.

If that is the Kemba the Celtics get over the next 2 years, that contract will have been probably right around the proper value, or maybe even be a bargain contract if Kemba helps get this team a title sometime over the next three playoffs.

[Roy H.]

Managing the tax is going to be an issue moving forward, no doubt, but this tends to only be a problem when you have signed players to more than they are worth.  Or more specifically, you are not getting your money's worth out of max or near max contracts. 

In the case of the Celtics, there is only one contract, Kemba, that is in this category.  I am fine paying Tatum, Brown, Smart, Thompson and even Fournier (all the rest are low cost rookie type deals).  Kemba is a bit out of whack but I am not sure really how much.

He is averaging 19 pts on 15.5 shots per game and pitching in 5 assts. as a shoot first type PG.  His 3p% has climbed up to 36% (he was 38% last season) in what is a "down" year for him due to injury.  Plus he brings leadership and a history of hitting big shots.

In trying to find some "comps" for Walker, CJ McCollum is at about 23 pts/5 assts/39% 3p and making $31M in 2021/22.  Yes, I would rather have CJ at $31M than Kemba at $36 but if CJ is fair at $31M, would Kemba be fair at $20M or $25M?  Brogdon is at about $22M which seems like a really good deal but in the range.  Lowry is at $31M.  Holiday will be $30M next season.

My point is yes, we have one "bad" contract but even that one bad one should not cripple the team.  The way things have worked out with signing Kemba and Tatum coming due and put us in a tough spot but I think in a few years, we will be back well within the norms of the top market teams.

Is Kemba's contract even a bad contract? No one seemed to be complaining last year with what he provided. The calls about Kemba's contract being so bad only started this year when he was diagnosed with arthritis. Most thought he would suddenly fall off on his quality so very much and be a giant net negative due to his arthritis, even though there is a wealth of examples of players playing at All-Star level or above for years with arthritis.

And sure enough, the predictions of Kemba's fall were as accurate as Max Kellerman's thoughts that Tom Brady's game were going to fall off a cliff.

After Kemba's first 10 games, games Ainge and Brad has mentioned Kemba needed to get back in NBA shape, here are Kemba's numbers last year compared to the this year after those first 10 games:

Stat : Last Year : This year after game #10
PPG : 20.4 : 20.2
APG : 4.8 : 5.1
RPG : 3.9 : 4.1
SPG : 1.1 : 1.1
TOPG : 2.1 : 2.2
FG% : 42.5 : 43.9
3PT% : 38.1 : 37.6
FT% : 86.4 : 91.7
TS% : 57.5 : 58.7

I could go farther with the more in depth advanced stats, but it's all the same. Basically, Kemba over the last 31 games, after a ten game stretch he used as a training camp/preseason, is the same Kemba we saw last year.

If that is the Kemba the Celtics get over the next 2 years, that contract will have been probably right around the proper value, or maybe even be a bargain contract if Kemba helps get this team a title sometime over the next three playoffs.

One caveat:  last year’s Kemba was really two different players, pre-injury and post-injury.  We’re never going to get All-Star starter Kemba again, but the guy we have now is quite good.

[mef730]

This is a great post. Bernardoni-esque, if you will.
...

1) trade Kemba's last two years (helps that he's been playing like an all-star again of late) for a legit super-star to pair with Tatum and Brown. ...

2) offload Kemba's last two years for picks, if you can pull it off, to be used down the line to trade for a superstar. You'll be under the tax with contracts you can still aggregate up to a max contract (Smart/Fournier/Thompson/etc.)

...

4) trade Brown plus another contract (again, like Smart/Thompson/Fournier) plus whatever additional draft capital for a superstar. Again, go ahead and be over the tax; you'll be a contender.

...

In my opinion, the simplest thing to do is to trade Kemba into someone else's cap space. I don't think you'll need to attach picks to get this done; there will be a team out there who's interested in Kemba. ...

i am not sure all the suggested actions above are as simple as they may seem. so i have a few questions.

any suggestions on what teams would give up their superstars for kemba's salary bloat?

any team with salary space MIGHT take kemba, as the celtics once took on gerald wallace's horrific salary. but at what cost to the celtics? you seem to say that if the celtics simply ask a team with cap space to take kemba, they will do so.

do you have any suggestions on which teams would eat that salary and not require some sort of compensation?

which superstar specifically do you think the celtics would acquire for brown and add ons?

thank you.

Good questions. Here’s what I think:

- Who would take Kemba? Any team with cap space that whiffs in free agency and is looking to save face with ownership and the fan base. There will be teams out there and they will be able to argue “We added an all-star caliber player and only gave up one first rounder.”

- Will it take assets to offload Kemba? I personally do not think so. We are all dramatically underselling his value across the league — especially if he can stay healthy for the playoffs — and, again, it only takes one desperate team. This is not Gerald Wallace, who was much more washed up by the time of that Celtics-Nets trade, plus the Celtics only got back one additional first rounder for taking him on. You are not going to have to part with multiple firsts to offload just two years of Kemba.

- Which teams would give up their superstars? Every year is a new season, and every new season has a new disgruntled superstar demanding to be traded. A year ago no one expected Harden to be on another team. By next trade deadline at least, there will be at least SOMEONE making max money available. The Celtics will be one of the teams with all of their own future draft capital still available to pursue such a player. Essentially they can pull off something similar to what the Nets did this season.

I'm giving you a TP for being upbeat. I'm really concerned about our ability to do something with Kemba. He's had a few games where he's looked great, but he simply can't stay on the court and it doesn't look like that's going to change. I think it's hard to convince a team to give up anything of value for a guy on the wrong side of 30 who makes as much as he does and can't be a reliable #1 or #2 option.

I love Kemba. I thought DA made the right move signing him and he clearly made the Celtics locker room a more fun place to be. If he goes, the only "former-Celtics" that I'll root harder for is IT4 (Maybe throw Avery Bradley in there.). But we're in a tough spot with him.

Total tangent, but I don't think we're ever going to be able to do what the Nets did. The Nets can trade all of their future draft picks at-will, because there will always be free agents who want to play in New York, and the choice is playing for the Nets or playing for a crazy man-boy owner with the Knicks. The Celtics just don't have the same kind of geographic appeal.

Mike

[nickagneta]

Managing the tax is going to be an issue moving forward, no doubt, but this tends to only be a problem when you have signed players to more than they are worth.  Or more specifically, you are not getting your money's worth out of max or near max contracts. 

In the case of the Celtics, there is only one contract, Kemba, that is in this category.  I am fine paying Tatum, Brown, Smart, Thompson and even Fournier (all the rest are low cost rookie type deals).  Kemba is a bit out of whack but I am not sure really how much.

He is averaging 19 pts on 15.5 shots per game and pitching in 5 assts. as a shoot first type PG.  His 3p% has climbed up to 36% (he was 38% last season) in what is a "down" year for him due to injury.  Plus he brings leadership and a history of hitting big shots.

In trying to find some "comps" for Walker, CJ McCollum is at about 23 pts/5 assts/39% 3p and making $31M in 2021/22.  Yes, I would rather have CJ at $31M than Kemba at $36 but if CJ is fair at $31M, would Kemba be fair at $20M or $25M?  Brogdon is at about $22M which seems like a really good deal but in the range.  Lowry is at $31M.  Holiday will be $30M next season.

My point is yes, we have one "bad" contract but even that one bad one should not cripple the team.  The way things have worked out with signing Kemba and Tatum coming due and put us in a tough spot but I think in a few years, we will be back well within the norms of the top market teams.

Is Kemba's contract even a bad contract? No one seemed to be complaining last year with what he provided. The calls about Kemba's contract being so bad only started this year when he was diagnosed with arthritis. Most thought he would suddenly fall off on his quality so very much and be a giant net negative due to his arthritis, even though there is a wealth of examples of players playing at All-Star level or above for years with arthritis.

And sure enough, the predictions of Kemba's fall were as accurate as Max Kellerman's thoughts that Tom Brady's game were going to fall off a cliff.

After Kemba's first 10 games, games Ainge and Brad has mentioned Kemba needed to get back in NBA shape, here are Kemba's numbers last year compared to the this year after those first 10 games:

Stat : Last Year : This year after game #10
PPG : 20.4 : 20.2
APG : 4.8 : 5.1
RPG : 3.9 : 4.1
SPG : 1.1 : 1.1
TOPG : 2.1 : 2.2
FG% : 42.5 : 43.9
3PT% : 38.1 : 37.6
FT% : 86.4 : 91.7
TS% : 57.5 : 58.7

I could go farther with the more in depth advanced stats, but it's all the same. Basically, Kemba over the last 31 games, after a ten game stretch he used as a training camp/preseason, is the same Kemba we saw last year.

If that is the Kemba the Celtics get over the next 2 years, that contract will have been probably right around the proper value, or maybe even be a bargain contract if Kemba helps get this team a title sometime over the next three playoffs.

One caveat:  last year’s Kemba was really two different players, pre-injury and post-injury.  We’re never going to get All-Star starter Kemba again, but the guy we have now is quite good.

I wouldn't be so quick to say we won't ever see All-Star starter Kemba again. He could play that good but not ever get the votes needed to get the All-Star starter nod. And I definitely think Kemba can make another All-Star team, especially if Boston rebounds from this year and breaks out into a top 2-3 record in the league before the ASG.

[PhoSita]

There's no way they're paying top dollar to bring this group back

[blink]

There's no way they're paying top dollar to bring this group back

+1

[keevsnick]

 Ya this is one reason why I thought the fournier trade
was odd. I just can't see how he's brought back unless a corresponding salary saving move like dumping Kemba or flipping smart is also involved. Even trading thompson doesnt do much because you then you have no backup center for a guy who appears injury prone.

I think ultimately the move is Kemba. You hope you can move off his money in a lopsided trade where you take back a smaller salary from a team with cap space then resign Fournier hopefully to a good deal to replace Kemba scoring.

But ya I can't see them paying 20+ million in tax for a 7th seed.

GSW may have done it, but dont forget they did it while constructing a new building they want to lure fans to AND during/after a series of finals runs. The celtics have never gone even 15+ million into the tax and we know they care because they dumped theis this year to avoid the tax.

[PhoSita]

GSW may have done it, but dont forget they did it while constructing a new building they want to lure fans to AND during/after a series of finals runs. The celtics have never gone even 15+ million into the tax and we know they care because they dumped theis this year to avoid the tax.

exactly.

and even though you can argue the Bay Area is not actually a "bigger" market than Boston / New England, there's so much more money there.  And it is a much larger market if you take into account the greater Bay area (basically most of Northern California).

[keevsnick]

Managing the tax is going to be an issue moving forward, no doubt, but this tends to only be a problem when you have signed players to more than they are worth.  Or more specifically, you are not getting your money's worth out of max or near max contracts. 

In the case of the Celtics, there is only one contract, Kemba, that is in this category.  I am fine paying Tatum, Brown, Smart, Thompson and even Fournier (all the rest are low cost rookie type deals).  Kemba is a bit out of whack but I am not sure really how much.

He is averaging 19 pts on 15.5 shots per game and pitching in 5 assts. as a shoot first type PG.  His 3p% has climbed up to 36% (he was 38% last season) in what is a "down" year for him due to injury.  Plus he brings leadership and a history of hitting big shots.

In trying to find some "comps" for Walker, CJ McCollum is at about 23 pts/5 assts/39% 3p and making $31M in 2021/22.  Yes, I would rather have CJ at $31M than Kemba at $36 but if CJ is fair at $31M, would Kemba be fair at $20M or $25M?  Brogdon is at about $22M which seems like a really good deal but in the range.  Lowry is at $31M.  Holiday will be $30M next season.

My point is yes, we have one "bad" contract but even that one bad one should not cripple the team.  The way things have worked out with signing Kemba and Tatum coming due and put us in a tough spot but I think in a few years, we will be back well within the norms of the top market teams.

Is Kemba's contract even a bad contract? No one seemed to be complaining last year with what he provided. The calls about Kemba's contract being so bad only started this year when he was diagnosed with arthritis. Most thought he would suddenly fall off on his quality so very much and be a giant net negative due to his arthritis, even though there is a wealth of examples of players playing at All-Star level or above for years with arthritis.

And sure enough, the predictions of Kemba's fall were as accurate as Max Kellerman's thoughts that Tom Brady's game were going to fall off a cliff.

After Kemba's first 10 games, games Ainge and Brad has mentioned Kemba needed to get back in NBA shape, here are Kemba's numbers last year compared to the this year after those first 10 games:

Stat : Last Year : This year after game #10
PPG : 20.4 : 20.2
APG : 4.8 : 5.1
RPG : 3.9 : 4.1
SPG : 1.1 : 1.1
TOPG : 2.1 : 2.2
FG% : 42.5 : 43.9
3PT% : 38.1 : 37.6
FT% : 86.4 : 91.7
TS% : 57.5 : 58.7

I could go farther with the more in depth advanced stats, but it's all the same. Basically, Kemba over the last 31 games, after a ten game stretch he used as a training camp/preseason, is the same Kemba we saw last year.

If that is the Kemba the Celtics get over the next 2 years, that contract will have been probably right around the proper value, or maybe even be a bargain contract if Kemba helps get this team a title sometime over the next three playoffs.

I'd say it pretty obviously is. I don't think you'll going a be able to find another team to take on 73 million over 2 years for a 6'0 point guard with knee arthritis about to turn 31 unless you are taking back some bad salary, or sending out some value.

Look i get the general premise. Over his last 30 ish games he's been about what he was last year. But that ignores a lot of context

A) You have to erase his first ten games. Which sure, maybe he was in "pre-season" mode but also pre-season isnt 10 games long and the rust was the result of coming back from an injury which he's probably gonna be dealing with off/on for the rest of his career. So not great.

B) It ignores the fact that he's gonna end up playing less than 2/3 the games this year, and he didn't play back to backs. He was about as rested as a guy could be this year.

C) Offense was generally way up this year just across the league. So putting up similar numbers is somewhat less impressive

D) The end of last year was effected by the injury as well, so those numbers were somewhat depressed already. 

I just dont see how you can look at these two Kemba years (which on the whole you'd expect to be the better two years of his deal) and say "ya, this has been a win." He's certainly better than he looked at the start of this year, he's not cooked, and to be fair he was super important in their ECF run last year. But his having him on his contract may very well hurt us more than it helps it moving forward.

But who knows. maybe he is just past the injury and bounces back big next year. thats kind of what you have to hope.