Wyc Grousbeck: Luxury Tax Allergic

[Roy H.]

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?

We would pay the repeater tax if we were in the tax 4 out of 5 reasons.  It seems pretty unlikely that we exceed the tax next season due to our “flexibility “. 

The entire justification for staying under the tax last year was to reset the repeater penalty. I guess the team can just use this excuse ad infinitum until JT demands a trade.

[Moranis]

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?

We would pay the repeater tax if we were in the tax 4 out of 5 reasons.  It seems pretty unlikely that we exceed the tax next season due to our “flexibility “. 

The entire justification for staying under the tax last year was to reset the repeater penalty. I guess the team can just use this excuse ad infinitum until JT demands a trade.

If the team actually uses the flexibility then it will almost certainly pay the tax and will continue to do so for years.  That is the point of the flexibility. 

Whether the team would be paying the tax or not, I would not have given Fournier the contract he got.  It is a bad contract.  The team suspected someone would overpay him, which is why it acquired Richardson.  There is no one else out there in free agency worth paying the tax for.  It isn't about being cheap, it is about being smart.

[LilRip]

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.

While I want to win a championship, I disagree on it being a bad business decision. For example, the longer your team plays and the more home games you have, the more revenues you generate. The deeper you go in the playoffs, the more ad revenues you generate. The more focused the media is on your team (by virtue of less teams left), the more opportunity you have in selling a narrative which can translate to more merch, sales and future coverage.

So a championship is great but there’s business value in being in the playoffs and winning more series’s, even if it doesn’t always translate to a championship.

[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?

We would pay the repeater tax if we were in the tax 4 out of 5 reasons.  It seems pretty unlikely that we exceed the tax next season due to our “flexibility “. 

The entire justification for staying under the tax last year was to reset the repeater penalty. I guess the team can just use this excuse ad infinitum until JT demands a trade.

I had seen 3 years out of 4, maybe it has been updated to 4 of 5.  Either way, no one is suggesting using this this excuse "ad infinitum" (I guess that is one of those Latin Legal terms which means for a long time?).  Just not this season for a Schroder rental.  I would understand paying the tax this year to lock up a really good player and certainly next season but also only for the right player in the right context.  It is kind of hyperbolic to just throw up your arms (I am imagining you doing that) and say "if they won't pay the tax for Schroder now then they will never pay the tax".

And that's before the repeater tax, which triggers if a team pays the tax in three out of four seasons. The repeater tax is an even crueler mistress and has scared away plenty of owners from flirting with her. And for very good reason, which was the intent all along:

$2.50 per $1 up to $5 million (incremental max: $12.5 million)
$2.75 from $5-10 million (incremental max: $13.75 million)
$3.50 from $10-15 million (incremental max: $17.5 million)
$4.25 from $15-20 million (incremental max: $21.25 million)
$4.75 from $20-25 million (incremental max: $23.75 million)
For every additional $5 million over the tax threshold is to be added 50 cents per dollar.

[Roy H.]

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?

We would pay the repeater tax if we were in the tax 4 out of 5 reasons.  It seems pretty unlikely that we exceed the tax next season due to our “flexibility “. 

The entire justification for staying under the tax last year was to reset the repeater penalty. I guess the team can just use this excuse ad infinitum until JT demands a trade.

I had seen 3 years out of 4, maybe it has been updated to 4 of 5.  Either way, no one is suggesting using this this excuse "ad infinitum" (I guess that is one of those Latin Legal terms which means for a long time?).  Just not this season for a Schroder rental.  I would understand paying the tax this year to lock up a really good player and certainly next season but also only for the right player in the right context.  It is kind of hyperbolic to just throw up your arms (I am imagining you doing that) and say "if they won't pay the tax for Schroder now then they will never pay the tax".

And that's before the repeater tax, which triggers if a team pays the tax in three out of four seasons. The repeater tax is an even crueler mistress and has scared away plenty of owners from flirting with her. And for very good reason, which was the intent all along:

$2.50 per $1 up to $5 million (incremental max: $12.5 million)
$2.75 from $5-10 million (incremental max: $13.75 million)
$3.50 from $10-15 million (incremental max: $17.5 million)
$4.25 from $15-20 million (incremental max: $21.25 million)
$4.75 from $20-25 million (incremental max: $23.75 million)
For every additional $5 million over the tax threshold is to be added 50 cents per dollar.

It triggers if a team has been in the tax three out of four years. A team doesn’t actually pay it until the fourth out of five seasons (I.e., The season after the tax triggers, if the team still remains in the tax.)

[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?

We would pay the repeater tax if we were in the tax 4 out of 5 reasons.  It seems pretty unlikely that we exceed the tax next season due to our “flexibility “. 

The entire justification for staying under the tax last year was to reset the repeater penalty. I guess the team can just use this excuse ad infinitum until JT demands a trade.

I had seen 3 years out of 4, maybe it has been updated to 4 of 5.  Either way, no one is suggesting using this this excuse "ad infinitum" (I guess that is one of those Latin Legal terms which means for a long time?).  Just not this season for a Schroder rental.  I would understand paying the tax this year to lock up a really good player and certainly next season but also only for the right player in the right context.  It is kind of hyperbolic to just throw up your arms (I am imagining you doing that) and say "if they won't pay the tax for Schroder now then they will never pay the tax".

And that's before the repeater tax, which triggers if a team pays the tax in three out of four seasons. The repeater tax is an even crueler mistress and has scared away plenty of owners from flirting with her. And for very good reason, which was the intent all along:

$2.50 per $1 up to $5 million (incremental max: $12.5 million)
$2.75 from $5-10 million (incremental max: $13.75 million)
$3.50 from $10-15 million (incremental max: $17.5 million)
$4.25 from $15-20 million (incremental max: $21.25 million)
$4.75 from $20-25 million (incremental max: $23.75 million)
For every additional $5 million over the tax threshold is to be added 50 cents per dollar.

It triggers if a team has been in the tax three out of four years. A team doesn’t actually pay it until the fourth out of five seasons (I.e., The season after the tax triggers, if the team still remains in the tax.)

OK, that makes sense, it doesn't change anything really in terms of what decisions are being made this season or whether these decisions indicate that the Celtics will never, ever, not for infinity, be willing to take on a player that will push the salary over the tax limit.   

[liam]

we just let go of Bane and Alperen Sengun for cost-cutting. Two good young players.

[Csfan1984]

we just let go of Bane and Alperen Sengun for cost-cutting. Two good young players.

Possibly more. They traded back instead of drafting Thybull/Clark and ended up with Grant and Edwards. Supposedly to fill the roster with cheaper costing talent.

[Roy H.]

we just let go of Bane and Alperen Sengun for cost-cutting. Two good young players.

Possibly more. They traded back instead of drafting Thybull/Clark and ended up with Grant and Edwards. Supposedly to fill the roster with cheaper costing talent.

That trade was to dump Baynes, clearing the path for Kemba.

It worked out poorly, but that one wasn’t about pinching pennies.

[Csfan1984]

we just let go of Bane and Alperen Sengun for cost-cutting. Two good young players.

Possibly more. They traded back instead of drafting Thybull/Clark and ended up with Grant and Edwards. Supposedly to fill the roster with cheaper costing talent.

That trade was to dump Baynes, clearing the path for Kemba.

It worked out poorly, but that one wasn’t about pinching pennies.

Never understood why a player has to sign for the absolute max. Can't they leave two or three million like KD did to keep a deeper roster and not have to deal a guy or move a draft pick?

[Roy H.]

we just let go of Bane and Alperen Sengun for cost-cutting. Two good young players.

Possibly more. They traded back instead of drafting Thybull/Clark and ended up with Grant and Edwards. Supposedly to fill the roster with cheaper costing talent.

That trade was to dump Baynes, clearing the path for Kemba.

It worked out poorly, but that one wasn’t about pinching pennies.

Never understood why a player has to sign for the absolute max. Can't they leave two or three million like KD did to keep a deeper roster and not have to deal a guy or move a draft pick?

It would be nice (and a few stars have actually done this), but at least for some players money equates to respect.  There's also pressure from the union to get as much as you can.

[liam]

we just let go of Bane and Alperen Sengun for cost-cutting. Two good young players.

Possibly more. They traded back instead of drafting Thybull/Clark and ended up with Grant and Edwards. Supposedly to fill the roster with cheaper costing talent.

Yeah, forgot that.

[jambr380]

we just let go of Bane and Alperen Sengun for cost-cutting. Two good young players.

We traded the #30 pick in the draft (literally one pick away from a 2nd round pick) for two future 2nd round picks so that we didn't need to add a 3rd guaranteed salary rookie in one off-season. We also had just drafted Nesmith - I doubt we would have drafted a player who projected to be very similar to Nesmith, but with a lower ceiling.

Not picking on you directly, but I constantly see people saying that we traded Bane to dump Kanter, when that was only a tiny part of it. In fact, I'm pretty sure Kanter only picked up his option after he knew we would deal him to POR - a place he really enjoyed playing in previously.

As for Sengun - I much prefer the two 1sts OKC got for that pick. OKC also did an incredible job getting out of $20M of Kemba's guaranteed salary (from $73M to $53M). It's easy to see why they followed through with the buy-out. Kemba wanted out and NYK was willing to give more than the minimum, allowing him to take less on the buy-out.

[liam]

we just let go of Bane and Alperen Sengun for cost-cutting. Two good young players.

We traded the #30 pick in the draft (literally one pick away from a 2nd round pick) for two future 2nd round picks so that we didn't need to add a 3rd guaranteed salary rookie in one off-season. We also had just drafted Nesmith - I doubt we would have drafted a player who projected to be very similar to Nesmith, but with a lower ceiling.

Not picking on you directly, but I constantly see people saying that we traded Bane to dump Kanter, when that was only a tiny part of it. In fact, I'm pretty sure Kanter only picked up his option after he knew we would deal him to POR - a place he really enjoyed playing in previously.

As for Sengun - I much prefer the two 1sts OKC got for that pick. OKC also did an incredible job getting out of $20M of Kemba's guaranteed salary (from $73M to $53M). It's easy to see why they followed through with the buy-out. Kemba wanted out and NYK was willing to give more than the minimum, allowing him to take less on the buy-out.

Those two second round picks rented Fournier for a month. I would've rather have Bane on rookie money. Sengun is going to be good. He got 15 and 15 in his first Summer League game.

[Who]

we just let go of Bane and Alperen Sengun for cost-cutting. Two good young players.

We traded the #30 pick in the draft (literally one pick away from a 2nd round pick) for two future 2nd round picks so that we didn't need to add a 3rd guaranteed salary rookie in one off-season. We also had just drafted Nesmith - I doubt we would have drafted a player who projected to be very similar to Nesmith, but with a lower ceiling.

Not picking on you directly, but I constantly see people saying that we traded Bane to dump Kanter, when that was only a tiny part of it. In fact, I'm pretty sure Kanter only picked up his option after he knew we would deal him to POR - a place he really enjoyed playing in previously.

As for Sengun - I much prefer the two 1sts OKC got for that pick. OKC also did an incredible job getting out of $20M of Kemba's guaranteed salary (from $73M to $53M). It's easy to see why they followed through with the buy-out. Kemba wanted out and NYK was willing to give more than the minimum, allowing him to take less on the buy-out.

Those two second round picks rented Fournier for a month. I would've rather have Bane on rookie money. Sengun is going to be good. He got 15 and 15 in his first Summer League game.

Man, I was just watching some highlights of Sengun's first game and he has a pass where he caught it in the post, then turned and faced and passed the ball through his defender's legs to a cutter cutting along the baseline alongside the ball. Any big man that can make that pass is a player.

Brains & Brawn