Wyc Grousbeck: Luxury Tax Allergic

[BudweiserCeltic]

Let’s not also forget, it’s becoming evident that the Kemba trade was done because yes Stevens likes Horford but because Wyc wanted to fit under the tax.

It won’t become clear for a while but dumping that 16th pick because of Wyc lack of financial commitment could be a huge setback.

Who knows if the Celtics pick Sengun or Murphy III but those are prospects you don’t lump into a salary dump.

We can agree on the premise of this thread, but bringing the Kemba trade into this is a massive stretch.

How is it a stretch?

We could have given away an elite prospect to dump one injury prone overpaid player (Kemba) for another injury prone overpaid player in Horford. Their contracts ended the same year, Horford’s is just a bit cheaper allowing the Celtics to sneak under the cap.

Fournier’s contract is also only 2 years as the third is a team option. If Wyc tells Stevens the tax is no issue, right now our team would be

Williams III
Tatum
Brown
Fournier
Smart

Walker
Theis
Prichard
Nesmith
Dunn
Williams
Sengun/Murphy

How is this team not better?

That there are some financial benefits to the trade doesn't mean that it was the driving force to move a player who underperformed and was universally seen as a player we needed to get "rid" of.

Kemba wasn't traded because of tax considerations. We didn't need to trade him to remain under the tax. Don't overplay your argument.

Haha

Yes we did, where are you getting your facts from?

“Brad Stevens moved Walker’s anchor of a contract, saving $9 million this season (yes, the one that just ended for Boston), but more importantly, Horford saves them $11.2 next season “

That has nothing to do with tax though. It says more about the timing, to save money last season, than it does about the need to trade him (which was a forgone conclusion). Again, we didn't need to trade Kemba to be under the tax this season. If anything it was also a move to potentially create cap space eventually, but to avoid luxury tax it wasn't. There was no need to go through this to accomplish that.

[colincb]

It’s become evident for me that Wyc Grousbeck has recently hamstrung Danny Ainge and now Brad Stevens, in regards to our roster because he doesn’t want to go into the luxury tax. This way of thinking doesn’t make sense because getting ASSETS requires going into the tax!

The Golden State Warriors brought in De’Angelo Russell because they knew they would lose the cap space after Durant left. That move eventually got them the 7th pick in the 2021 Draft. Kuminga wouldn’t be there if GSW didn’t stay in the tax.

If hypothetically a star wants to be traded to the Boston, the Celtics wouldn’t have the assets to trade for him. You can’t say to major free agents, ‘We will only spend once you sign here!’

We just trade dumped Theis & Thompson, then let Fournier walk to prevent paying the tax. Spending leads to winning, you don’t only spend after winning!

In regards to tickets sales, the Boston Celtics are one of the most supported sports franchises in the WORLD. The team hasn’t missed the playoffs in almost 15 years, that’s all extra income for ownership. Losing less then one season of tickets shouldn’t be an issue.

You need to understand the economics of the situation better. Cs are a major disadvantage to franchises in LA, SF and NYC. In any case, I wouldn't have paid up for EF either.

Our economics aren’t too bad.

https://www.forbes.com/teams/boston-celtics/?sh=62edfa90767b

We’re worth more and make more annual profit than the Clippers or the Nets, for instance.

Forbes valuations are scientific wild-ass-guesses and the accounting estimates are the same. Annual operating profit isn't a good indication of the economics that these teams face.

Spoken like somebody defending a cheap ownership group.

What numbers / evidence do you rely upon?

Celtics are a private company. They're not having Forbes come in to do a valuation so they can be on a list in a magazine. I don't have access to their numbers and unless we have someone working for them or have them as a client, nobody here knows what they're worth or what their operating profit (not annual profit nor net income) is. I do know that as of today the Cs have a team payroll that is 7th highest in the NBA and they could go higher.

[ozgod]

I think it's more fair to say that Wyc and ownership don't want to go into luxury tax for the sake of it. They want to go to luxury tax for a contender. I found an article from 2018 that listed how many times each team has paid luxury tax. The Celtics were 5th on the list, having paid it 7 times. On top of the list? The NY Knicks (10 times, $248m). Just ahead of us, the Cavs (7 times, $179m).

Here's the blurb for the Cs, followed by the link to the article.

5. BOSTON CELTICS: SEVEN TIMES
Another team with a perfect history when it comes to paying the luxury tax and making the playoffs in the same year. Despite having paid the luxury tax seven times, the total amount the Celtics have paid – $47.3 million – is actually one of lowest total amounts among teams that have a championship in the last 16 years.

Total amount: $47.3 million
Record in tax seasons: 350-207 (62.8 percent)
Playoffs in tax seasons: Seven appearances, 11 series won, one championship

https://hoopshype.com/2018/11/16/how-many-times-has-each-nba-team-paid-the-luxury-tax/

Keep in mind it doesn't include data from the last couple of years but it should give an indication of ownership's willingness (or lack thereof) to go into the tax depending on the situation. There's probably a chicken and egg question somewhere in there but it looks like they want their money to be well spent.

[Jvalin]

Fwiw, here's a link showing each team's tax payment history since the luxury tax came into effect in 2002/03.

https://www.spotrac.com/nba/cba/tax/

[Vermont Green]

I think the criticism of the Celtic's financial management is a bit over the top.  Do people want us to be the Knicks?

As to the Kemba trade, I feel that was good financial management.  People throw around that we had to give away a pick to dump Kemba but that is an entirely inaccurate narrative in my mind.  We traded Kemba and a pick that we didn't really need and got back Horford, a player on a bad contract of his own but a player at a position of greater need, and Moses Brown, a promising big.  This promising big was then flipped for Josh Richardson who is a versatile player who will help us and is on a good contract.

Kemba was then simply cut but picked up by the Knicks.  I am pretty happy with Horford and Richardson for Kemba and that pick.  Both these players will give us primary rotation minutes and I expect will help the team.  Both also offer some financial flexibility next season.  I think that all turned out pretty well considering what we started with.  OKC had to pay Kemba, gave up on Moses Brown, but got a middling pick that they were able to trade for even more picks.

[Roy H.]

I think the criticism of the Celtic's financial management is a bit over the top.  Do people want us to be the Knicks?

I suspect that they want the team to go into the luxury tax to sign good players.  For instance, if Dennis Schroder was willing to sign for the Taxpayer MLE, would we do it without moving other salary as a precondition?  We’d be above the tax but below the apron.  Does that seem unreasonable?

[Celtics4ever]

I think they have paid it when were competitive.  When we are not they do not pay it.

[Csfan1984]

I feel avoiding the tax now only makes sense if you plan to have a big three and two mid level support players in the near future. Having that much cap locked in without a tax allows for additions of better quality for the bench via non-taxpayer mle.

 This team's history of avoiding the tax is probably more to do with team future resale than basketball.  Seeing how often it is focused on even when the team has good teams and should keep players or sign players to flip a following off season , they let guys walk.

[Vermont Green]

I think the criticism of the Celtic's financial management is a bit over the top.  Do people want us to be the Knicks?

I suspect that they want the team to go into the luxury tax to sign good players.  For instance, if Dennis Schroder was willing to sign for the Taxpayer MLE, would we do it without moving other salary as a precondition?  We’d be above the tax but below the apron.  Does that seem unreasonable?

The hypothetical on Schroder, I would potentially sign Schroder but if I did that, I would want to trade Smart for a PF.  We would have all season to get the salary back down or if the PF we get is good enough, then go over the tax.

I don't think this is the season to go "all in" though.  With Tatum and Brown, we can be more patient than that.  Make smart moves, get the financial house in order to the extent you can, but if something really worthwhile falls to you, be willing to do it even if it means tax.

[Roy H.]

I think they have paid it when were competitive.  When we are not they do not pay it.

They’ve paid it once since 2012, for like $3 million.

[timpiker]

I think they have paid it when were competitive.  When we are not they do not pay it.

Yes!  So answer me this Batman, which comes 1st?  The Chicken or the Egg ?

[Moranis]

I think they have paid it when were competitive.  When we are not they do not pay it.

Yes!  So answer me this Batman, which comes 1st?  The Chicken or the Egg ?

The competitive team comes first (or simultaneously).  Paying the tax isn't going to make a team a contender that doesn't have the pieces to be a contender.  Boston is a mid-level playoff team whether it pays the tax or not unless the tax paying comes from a serious upgrade in talent.  Guys like Fournier, Schroder, etc. aren't a serious upgrade in talent so it just doesn't make sense to pay the tax for this team.  If the team can acquire someone like Beal (while keeping Tatum and Brown), then sure, it should pay the tax, but short of that it is just isn't a sound strategy to pay the tax in a year when you aren't the contender, especially if that harms the financial flexibility next summer. 

[Roy H.]

I think they have paid it when were competitive.  When we are not they do not pay it.

Yes!  So answer me this Batman, which comes 1st?  The Chicken or the Egg ?

The competitive team comes first (or simultaneously).  Paying the tax isn't going to make a team a contender that doesn't have the pieces to be a contender.  Boston is a mid-level playoff team whether it pays the tax or not unless the tax paying comes from a serious upgrade in talent.  Guys like Fournier, Schroder, etc. aren't a serious upgrade in talent so it just doesn't make sense to pay the tax for this team.  If the team can acquire someone like Beal (while keeping Tatum and Brown), then sure, it should pay the tax, but short of that it is just isn't a sound strategy to pay the tax in a year when you aren't the contender, especially if that harms the financial flexibility next summer.

What realistic harm comes to this team if we pay the tax for somebody on a one year deal though?

Let’s say that the team completes a sign and trade or uses the MLE, and spends up to the apron. That costs Wyc about an extra $11 million in tax after penalties.

To get a good player on a bargain contract, it seems silly to pinch pennies. If that good player helps us win a playoff series, he has paid for his entire salary. Plus, it makes us a more attractive team to free agents, and makes Tatum and Jalen feel like there not wasting their careers.

[Moranis]

I think they have paid it when were competitive.  When we are not they do not pay it.

Yes!  So answer me this Batman, which comes 1st?  The Chicken or the Egg ?

The competitive team comes first (or simultaneously).  Paying the tax isn't going to make a team a contender that doesn't have the pieces to be a contender.  Boston is a mid-level playoff team whether it pays the tax or not unless the tax paying comes from a serious upgrade in talent.  Guys like Fournier, Schroder, etc. aren't a serious upgrade in talent so it just doesn't make sense to pay the tax for this team.  If the team can acquire someone like Beal (while keeping Tatum and Brown), then sure, it should pay the tax, but short of that it is just isn't a sound strategy to pay the tax in a year when you aren't the contender, especially if that harms the financial flexibility next summer.

What realistic harm comes to this team if we pay the tax for somebody on a one year deal though?

Let’s say that the team completes a sign and trade or uses the MLE, and spends up to the apron. That costs Wyc about an extra $11 million in tax after penalties.

To get a good player on a bargain contract, it seems silly to pinch pennies. If that good player helps us win a playoff series, he has paid for his entire salary. Plus, it makes us a more attractive team to free agents, and makes Tatum and Jalen feel like there not wasting their careers.

The tax gets significantly more punitive the longer the team is in the tax.  Doing a sign and trade, as you say, also puts the hard cap on the team.  What if Beal demands a trade at the deadline, but Boston can't acquire him because they are hard capped. 

And since when is winning a playoff series the goal.  The goal should be a championship.  Over paying mediocre players just to win a couple of extra games, is penny wise, but pound foolish.  It is that thinking that has been the Knicks for the last 25 years.  You can't do that, it just isn't the sound basketball or business decision.  The more flexibility you have the better.  The less long term big contracts to mediocre players you have, the better. 

The simple reality is Boston isn't a contender and shouldn't act like it is one.  That was Ainge's biggest failure over the last few years.  He just didn't set the team up to truly contend while also hamstrung it with big bad contracts.

[Vermont Green]

What realistic harm comes to this team if we pay the tax for somebody on a one year deal though?

Let’s say that the team completes a sign and trade or uses the MLE, and spends up to the apron. That costs Wyc about an extra $11 million in tax after penalties.

To get a good player on a bargain contract, it seems silly to pinch pennies. If that good player helps us win a playoff series, he has paid for his entire salary. Plus, it makes us a more attractive team to free agents, and makes Tatum and Jalen feel like there not wasting their careers.

My understanding is that there is a repeater provision to the tax that kicks in if you have have paid the tax 3 out of the last 4 seasons.  If we pay the tax this season, it starts the clock on this added tax penalty.  My take on this is that paying the tax is inevitable if they are going to put winning players around Tatum and Brown but why start the clock this season.  That is the "harm".  I think this is good financial management on their part.  It is to be seen what they are willing to do but even this year, it may make sense to cross the tax line for the right player.  But is it really worth "starting the clock" for Schroder on a one year deal and potentially hamstringing us 4 years from now when one key player may be the difference between a title or not?