Reduced to a towel rack. Nice Shump.
Luxury taxes loom large for Cavaliers, LeBron James ahead of NBA trade deadline
Updated 7:26 AM; Posted 6:00 AM
By Joe Vardon, Cleveland.com
jvardon@cleveland.com
CLEVELAND, Ohio -- When LeBron James and Dan Gilbert met in the summer of 2014 to discuss James' return to the Cavaliers, the luxury tax was a topic of discussion.
Would Gilbert be willing to pay it to ensure the Cavs are a championship contender, James wanted to know?
Yes, no problem, was Gilbert's position.
The luxury tax is again an issue, and it is of great importance to both sides as the Cavs barrel toward Thursday's trade deadline.
With a $134 million payroll this season, the Cavs are way over the NBA's $119.3 million luxury-tax line. Because they've been over the line for several years in a row (Gilbert promised, remember), the Cavs will owe $43 million in tax penalties this summer.
If James is not here next season, sources said, Gilbert will not want to pay anything in tax penalties. In that case -- a James departure via free agency -- the Cavs may strip down and start over, and we'll break that down momentarily.
James wants to see the commitment to winning now from Gilbert. He wants to see players brought in via trade this week who will help the Cavs win this season, get back to the Finals, and challenge the Warriors (or, heck, the Rockets) for a title. He cares not their future contract situations.
In the coming days when (if) the Cavs make a move or two, pay close attention to the players they sound, those they receive in return, and their contracts. It will tell a great deal about where Gilbert sees his franchise going, and in turn will dictate how James interprets Gilbert's desire to keep him.
Both men can make a case about Gilbert's luxury tax promise from four seasons ago.
Gilbert can argue, correctly, that he has paid through the nose since James returned. He spent $54 million in tax penalties the year the Cavs won it all in 2016, and last year paid another $45 million in taxes. No owner has spent more on player salaries and taxes than Gilbert the last three seasons.
James can say, correctly, that tax considerations have impacted roster decisions made by the front office the last two years.
Last season, the Cavs chose to open the year with rookie Kay Felder and inexperienced Jordan McRae and DeAndre Liggins at the bottom of the roster, rather than fill those spots with veterans whose minimum contracts would cost more in salary and taxes.
Last summer, rather than use the team's full, $5.2 million mid-level exception to sign Jamal Crawford, they gave half of it to rookie Cedi Osman and saved the other half. They let a nearly $5 million trade exception expire last month, in part because it would cost the Cavs millions in salary and tax penalties to waive one of their current players in order to make room.
James has a $35.6 million player's option on his contract next season. While he's never exercised a contract option and is expected to again opt out and become a free agent, opting out shouldn't be assumed.
For instance, a new one-year deal with a player's option would mean roughly the same salary for James in 2018-19 than if he exercised the option.
If James walks as a free agent, the Cavs would go from $122 million in committed salaries for next season to about $87 million. The salary cap for next year will likely be $101 million.
Without James, the Cavs would have seven players under contract heading into the offseason. Iman Shumpert has an $11 million player's option in his contract. Isaiah Thomas, Dwyane Wade, Derrick Rose, Jeff Green, Jose Calderon, and Channing Frye are all on expiring contracts. Only Thomas ($6.3 million) and Frye ($7.3 million) make more than the veteran minimum.
Kevin Love, who will make $24.1 million next year, has a $25.6 million option for 2019-20. League sources believe the Cavs would try to move Love without James here, but no team sources have confirmed it.
Tristan Thompson has two more years and $36 million left on his contract. Jae Crowder has two seasons and $15 million remaining.
J.R. Smith is guaranteed $14.7 million next season, but the team can get out of the final year of the contract for 2019-20. Kyle Korver's $7.56 million salary is guaranteed next season, partially guaranteed the following year.
Osman will make $2.8 million and Ante Zizic $1.9 million next season. As it stands, the Cavs have two first-round picks in the June draft.
That's the lay of the land for the Cavs' payroll. What they do to change it this week may tell what changes are coming this summer.
"I've suffered a great many tragedies in my life....most of them never happened". Mark Twain