The NBA’s trade deadline is roughly one month away and rumors and speculation should begin pouring in. This season is set to have the largest luxury tax payments in NBA history. Several of the teams with such large tax payments could look to reduce their obligation, as well as clubs hovering slightly above the luxury tax that could get under it with a trade or two.
There are also several franchises that are up against the tax and could use a little more flexibility. For example, the Miami Heat and Toronto Raptors are $166,443 and $268,540 below the luxury tax, respectively. These teams are essentially frozen from signing a player to a standard contract or increasing their payroll in a trade. Some other teams that could use more flexibility below the luxury tax include the Atlanta Hawks, Chicago Bulls, Cleveland Cavaliers, Denver Nuggets, Indiana Pacers, and Washington Wizards.
There are only a handful of teams that can operate as a dumping ground for large contracts. These are significantly below the luxury tax, and have significant cap space or trade exceptions that, if utilized, wouldn’t put them over the tax.
Teams that are significantly over the luxury tax
The same seven teams who were taxpayers last year are significantly over the luxury tax again this season. Six of them currently have payments ranging between $30 million and $170 million. There’s a good chance that some of these teams, which include the Brooklyn Nets, Golden State Warriors, Los Angeles Clippers, Los Angeles Lakers, Milwaukee Bucks, and Utah Jazz, could look to reduce their payroll.
* The Nets and Warriors are at the top of their respective conferences so it seems unlikely that they’ll make a trade that gives them significant savings. They were comfortable paying for some of the most expensive teams in NBA history last season, so they could stand pat for the most part.
Everyone on the Warriors roster either plays a role towards their title pursuit this season or is a building block for the future. Meanwhile, Brooklyn could look to get off one or two of their minimum players that are out of the rotation to free up roster spots for the buyout market.
* The Clippers already saved $30 million in the Eric Bledsoe trade but are still set to have a $94 million luxury tax payment. They’ve been hovering around .500 largely thanks to the absences of Kawhi Leonard and Paul George. If they can’t get over the hump within the next month, they could reasonably look to shed some more salary, especially if George isn’t close to returning from his elbow injury.
* Some teams have already made several moves to reduce their luxury tax payments and create open roster spots. Milwaukee waived DeMarcus Cousins to save roughly $3 million. They could save some more money if they offload one or two of their minimum players.
* The Jazz traded Miye Oni to Oklahoma City to save $7 million. Despite those savings, they could significantly increase their payroll if they go through with trading for a defensive-minded wing. Joe Ingles could be a player the Jazz shop around for that player, as they’ve reportedly considered moving him in the offseason.
* The Lakers have already been proactive trying to offload minimum players not in the rotation such as Rajon Rondo, and they are reportedly working on moving DeAndre Jordan and Kent Bazemore.
Getting off Rondo saved the Lakers $7 million, and getting off both Jordan and Bazemore would save them another $7 million apiece. They would lose some of those savings when they sign replacements to rest-of-season deals, and those savings could be completely offset if they make a consolidation trade.
Teams that are slightly over the luxury tax
There are also several teams that are currently a little over the luxury tax such as the Boston Celtics, Philadelphia 76ers, and Portland Trail Blazers. These teams range from being $3 million and $6.3 million over the luxury tax and could get below the tax line with a single trade.
* The Celtics and Trail Blazers have struggled this year and with contention out of sight, it seems more likely than not that they will make the necessary trade to get under the luxury tax.
For Boston, it can be as simple as salary dumping Juancho Hernangomez or Dennis Schroeder. The Celtics could be motivated to trade Schroeder ahead of the trade deadline due to difficulties they may have this offseason to re-sign him with limited Bird rights.
* Portland can get below by trading two minimum players, but they would barely be below the threshold with just 12 players, and would get right above it when they sign a 13th and 14th player. It is probably more pragmatic for them to trade one of their eight players earning more than a minimum contract instead.
There are a lot of different ways the Trail Blazers’ trade deadline can go whether it’s trading a very large salary like C.J. McCollum, or an expiring mid-sized contract like Robert Covington or Jusuf Nurkic. A trade involving one Covington and Nurkic could easily get them below the luxury tax this season, while also getting rid of the obligation to re-sign them this offseason since they’re already pressed up towards the 2022-23 luxury tax.
* The Sixers’ commitment to the luxury tax could come down to whether they get an All-Star-caliber player or not for Ben Simmons. If they were to acquire a player on a maximum contract earning around the same or more than Simmons’, they may comfortably choose to stay over the luxury tax if title contention is within reach.
If they were to acquire several non-All-Stars earning less than Simmons, they could get below the luxury tax in that deal. Other alternatives to getting below the luxury tax could involve moving Tobias Harris or Danny Green.
Teams that can take on the most money
* Oklahoma City has a payroll of just $78.5 million but are technically over the $112.4 million salary cap because of the $35.6 million in combined free-agent cap holds and exceptions they still have access to. If the Thunder renounce all these cap holds and exceptions they would be able to generate up to $34 million in cap space. That would be enough to absorb some of the most expensive players in the league, which could come with more draft picks to add to their pile.
It’s also important to note that Oklahoma City is roughly $23 million below the $101.2 million salary floor. They don’t have to finish above the salary floor, and if they remain below it, the players on their roster would each get an equal distribution of deficit from the Thunder.
However, it seems unlikely based on their recent history that the Thunder will remain below the salary floor. In 2020-21, they slowly increased their payroll while being below the salary floor throughout the season. They finally got over it by signing Gabriel Deck towards the end of the season, who only appeared in 10 games and earned $3.9 million in that span. With several teams looking to offload money, expect the Thunder to get in on the action.
* Orlando is $22.9 million below the luxury tax and has a large $17.2 million trade exception they generated in last year’s trade deadline in the Evan Fournier trade to Boston. They can utilize most of that exception and they’d still have enough space to utilize another one of their trade exceptions ($4.3 million and $2 million). Seeing how the Magic are in a rebuilding stage this season, it would make sense for them to absorb some unwanted money with some draft picks or young players attached.
* New Orleans is also in a very similar position as Orlando as they are $20.3 million below the luxury tax and hold a $17.1 million trade exception from trading Steven Adams to Memphis. They also have an additional $3.9 million trade exception they could use as well.
Unlike the Magic, the Pelicans are trying to be as competitive as possible and ideally would like a player who can help them win now. The $17.1 million trade exception expires in July so there’s no rush to use it now, but perhaps a deal with enough draft equity could entice them.
* Another team that could look to add an impact player with their large trade exception is Dallas. They are $16.4 million below the luxury tax and have a $10.9 million trade exception they generated from trading Josh Richardson to Boston.