2020-2021 Salary Cap Expected to Drop

[tazzmaniac]

The loss of the league's China-driven revenue has caused many front office executives to tell ESPN that they've been preparing for the possibility that the original 2020-2021 cap projection of $116 million could drop down as far as $113 million.

https://www.espn.com/nba/story/_/id/28596920/sources-nba-set-release-revised-2020-21-salary-luxury-tax-projections

[CelticsPoetry]

Any cap experts here that could explain what implications that holds for us/other teams (especially our rivals)? Danny has acted pretty responsibly with the contracts. I would guess some teams will go deeper into the luxury tax.

[LatterDayCelticsfan]

Welcome to Salary dump city, in the great state of Waiver Wire.

[NKY fan]

Any cap experts here that could explain what implications that holds for us/other teams (especially our rivals)? Danny has acted pretty responsibly with the contracts. I would guess some teams will go deeper into the luxury tax.

Philly may decide to trade Horford else they would lose Richardson ..
Warriors may trade DLo this week to get under the tax avoid and postpone repeater’s tax
Portland may decide to go under too by trading Whiteside
Same with Miami - maybe they trade Danny’s binkie Winslow
It can also mean celts are not going to trade for a highly paid center

[nickagneta]

It's still an increase of $4 million from this year(instead of an increase of $7 million), so I don't see this having any real impact on teams decisions whatsoever.

[Phantom255x]

Sorry to sound like I'm intruding here, but I figure it's the best place to ask:

1. Once we extend Tatum, are we officially over the luxury tax?

2. And what if Hayward say, opts-out. We obviously wouldn't have a max spot still (with Kemba/Tatum/Brown already extended), but would we still be under the luxury tax by a decent margin to make some other solid signings? Or are we still over the LT?

[nickagneta]

Sorry to sound like I'm intruding here, but I figure it's the best place to ask:

1. Once we extend Tatum, are we officially over the luxury tax?

2. And what if Hayward say, opts-out. We obviously wouldn't have a max spot still (with Kemba/Tatum/Brown already extended), but would we still be under the luxury tax by a decent margin to make some other solid signings? Or are we still over the LT?

Tatum's extension doesn't kick in until the 2012-22 year so the only major uptick in salary that we have next year is Brown's extension kicking in.

Assuming Hayward opts in and depending on how we use the MLE and which draft picks we end up using, the team could be up against the luxury tax but Danny will probably be able to keep the Celtics under that threshold fairly easily.

The year after Tatum's extension kicks in, but Hayward comes off the books and a lot of other players do too, so it's hard to speculate that far in advance.

[Fafnir]

Heck of a gut punch to the GSW ownership group. Less money in the league and you get more luxury tax payments ouch.

[saltlover]

The question is will this be a temporary slowing of growth, which will revert to the original trend line of China tensions soften, or if the line has permanently shifted downwards?

If it’s temporary, teams that were planning on being in the tax next year likely won’t alter their behavior too much.  It will increase their tax bills a little for a single season, but their long-term plans won’t change.  Think Golden State as an example.

For teams like the Celtics, who were right on the edge of being a tax team, the tax will now be more difficult to avoid.  The Celtics will need to consider whether they’ll just accept being a tax team (and be subject to the repeater tax the following season) or if they’re going to try to stay below it.  If it’s the former, it could find them willing to take on long-term salary at the deadline that they otherwise would have avoided.  If it’s the latter, it increases their incentive to move a non-rotation player with guaranteed money next year at the deadline (Poirier being the most obvious candidate.)

If it’s long-term, it will affect many more teams, as teams have been targeting the summer of 2021 already.  That won’t likely affect trades in the next week, but could have a sizable impact on the summer and next year’s deadline.

[fairweatherfan]

It's still an increase of $4 million from this year(instead of an increase of $7 million), so I don't see this having any real impact on teams decisions whatsoever.

This is an awfully important detail that isn't really mentioned in the headline but teams still do base their long-term planning on those projections.

From our perspective, it could have a (probably modest) impact on Hayward's decision to opt out or not. I think he will probably opt out at this point; the FA market is very very weak this offseason and while he might take a paycut next year a new deal lets him lock in tens of millions in future salary. I'd imagine at his current level of play, market rates and weakness of market he could probably get Jaylen's contract level or even more. If he plays well and has clean medicals somebody might even offer him a full max again.

The counter is that if he stays and keeps rounding into form he probably makes more money next year and is still young enough to potentially get a full max or close to it after that. It's a tough decision but having less $ and financially warier ownership out there changes the calculus a bit.

[hwangjini_1]

i am confused a bit. this isnt a drop in the cap, is it? it seems to be more a drop in the previously expected increase in the cap.

For the 2019–20 season, the cap is set at $109.14 million. the projected $113 is an increase, just not as much as expected.

am i missing something here?

[tazzmaniac]

i am confused a bit. this isnt a drop in the cap, is it? it seems to be more a drop in the previously expected increase in the cap.

For the 2019–20 season, the cap is set at $109.14 million. the projected $113 is an increase, just not as much as expected.

am i missing something here?

You're correct.  It is a drop in the projected increase for next season.   

Edit:  I don't know how to change the title but maybe someone else can to make it more clear. 

[keevsnick]

It's still an increase of $4 million from this year(instead of an increase of $7 million), so I don't see this having any real impact on teams decisions whatsoever.

From a luxury tax standpoint I would think it almost certainly will. Teams that didn't think they would be in the tax now might be and teams that  knew they would will be in much farther.

If its just a one year blip that might not matter too much, but for long term planning with things like repeater tax or with teams that have cheap owners if might force a salary clearing move here or there.
 

[keevsnick]

The question is will this be a temporary slowing of growth, which will revert to the original trend line of China tensions soften, or if the line has permanently shifted downwards?

If it’s temporary, teams that were planning on being in the tax next year likely won’t alter their behavior too much.  It will increase their tax bills a little for a single season, but their long-term plans won’t change.  Think Golden State as an example.

For teams like the Celtics, who were right on the edge of being a tax team, the tax will now be more difficult to avoid.  The Celtics will need to consider whether they’ll just accept being a tax team (and be subject to the repeater tax the following season) or if they’re going to try to stay below it.  If it’s the former, it could find them willing to take on long-term salary at the deadline that they otherwise would have avoided.  If it’s the latter, it increases their incentive to move a non-rotation player with guaranteed money next year at the deadline (Poirier being the most obvious candidate.)

If it’s long-term, it will affect many more teams, as teams have been targeting the summer of 2021 already.  That won’t likely affect trades in the next week, but could have a sizable impact on the summer and next year’s deadline.

Quick question, the repeater tax applies to being in the tax 3 out of 4 seasons right?  So they were last year, they aren't this year. If they could avoid it next year wouldn't that significantly push back the first repeater tax year?

I would think that might matter, especially with Tatum and maybe Hayward getting extensions. But who knows.

[saltlover]

The question is will this be a temporary slowing of growth, which will revert to the original trend line of China tensions soften, or if the line has permanently shifted downwards?

If it’s temporary, teams that were planning on being in the tax next year likely won’t alter their behavior too much.  It will increase their tax bills a little for a single season, but their long-term plans won’t change.  Think Golden State as an example.

For teams like the Celtics, who were right on the edge of being a tax team, the tax will now be more difficult to avoid.  The Celtics will need to consider whether they’ll just accept being a tax team (and be subject to the repeater tax the following season) or if they’re going to try to stay below it.  If it’s the former, it could find them willing to take on long-term salary at the deadline that they otherwise would have avoided.  If it’s the latter, it increases their incentive to move a non-rotation player with guaranteed money next year at the deadline (Poirier being the most obvious candidate.)

If it’s long-term, it will affect many more teams, as teams have been targeting the summer of 2021 already.  That won’t likely affect trades in the next week, but could have a sizable impact on the summer and next year’s deadline.

Quick question, the repeater tax applies to being in the tax 3 out of 4 seasons right?  So they were last year, they aren't this year. If they could avoid it next year wouldn't that significantly push back the first repeater tax year?

I would think that might matter, especially with Tatum and maybe Hayward getting extensions. But who knows.

Yes, I’m on 2 hours of sleep and didn’t say my thoughts clearly enough.  Essentially when Tatum’s extension kicks in that will be tax year 3 out of 4 seasons, IF they are also in the tax next year.  And as you say, if the Celtics avoid the tax next summer, they will essentially restart the clock on the repeater — they wouldn’t be potentially subject to it until Brown’s extension ends, giving them a lot of long run financial flexibility.

The above is why I’ve been expecting all season that the Celtics will not take on long-term salary at the deadline.  By the non-revised tax numbers, they were going to be over the tax, but not so much that they wouldn’t be able to move a small contract over the summer or at next year’s deadline to get back under it.  However, a decrease of the tax line by $3-4 million requires a more expensive player be shed.  (The one silver lining of the Memphis pick likely conveying at a worse defat position than we hoped is that it offsets some of this tax space loss.)