The NBA has set the luxury tax threshold for teams at $170.8 million this year. That means that teams over that threshold will pay extra tax money for their salaries. Teams generally prefer to stay under the luxury tax threshold unless they are a championship contender. Even playoff teams that are close to the cap, often look to avoid it if possible. Fun fact: the Indiana Pacers are just $127.000 below the tax threshold.
Top 5 Teams that Might Make a Financial Trade
It is rare to become a title contender without paying the luxury tax. For context, 13 of the last 17 NBA champions have paid the luxury tax the year they won the title. The Golden State Warriors were one of the most expensive teams in the league for years. Of course, you can also say the same for the Los Angeles Clippers, but they never reached the Finals. The New Orleans Pelicans always avoid paying a tax penalty. Are they going to do the same this year? Let’s take a look at some luxury tax teams and whether they can get below.
New Orleans Pelicans
The Pelicans seemingly avoid paying the luxury tax at all costs. Last season, for example, they traded guard Kira Lewis Jr and a second-round pick for cash considerations. That move helped them avoid the penalty and get below the luxury tax threshold.
This year, the Pelicans have $172.6 million in salaries, which is almost two million over the luxury tax threshold. As one of the worst teams in the league, it doesn’t make sense for them to pay taxes. There were reports a month ago that many Pelicans players are available for trade. Nothing has materialized since, but keep an eye on the team making fringe moves. Some of the players they can trade to get below the tax include Jose Alvarado, Daniel Theis, Javonte Green, and Jeremiah Robinson-Earl.
Cleveland Cavaliers
At $173.3 million, the Cavs are almost $3 million over the luxury tax threshold. The difference between the Cavs and the Pelicans is that the former is the No.1 seed in the East and is on pace to win 70 games. They are a championship contender, but making a small change will not hurt. Cleveland has players they can trade for financial reasons, such as their rookie Jaylon Tyson. Do not expect them to trade contributors like Sam Merill and Ty Jerome, who are providing amazing value for their cheap contracts. Craig Porter Jr. and Tristan Thompson are two other names to watch for.
Los Angeles Clippers
The Clippers have already shown that despite their billionaire owner, they will adhere to NBA salary rules. They are $2.5 million over the salary cap, which is peanuts for their owner, Steve Ballmer. He admitted that the new CBA prevented him from spending money when he let Paul George walk in the summer. The good news for the Clippers is they have a few players they can trade to get under the luxury tax threshold, including Bones Hyland, Nicolas Batum, Amir Coffrey, and Kobe Brown.
Philadelphia 76ers
Daryl Morey is one of the most aggressive general managers in the league. He is always trying to get better. But the Sixers are in a tough position. They might not make it to the play-in seeds despite all the moves they made in the summer. Injuries have plagued their season, and they now have to face a few tough decisions.
One of them, is whether to trade some players to get under the first apron. They cannot avoid being one of the luxury tax teams unless they make a big trade. A small move can help them avoid the first apron, which will open up a lot more possibilities for them in the summer. The NBA has set the first apron at $178.1 million this year. The Sixers have a payroll of $181.5 million, and a fringe move can get them under it.
Two names to watch for are Eric Gordon and Andre Drummond. Both are solid vets, but if they are not part of the future beyond this season, the Sixers might try to trade them. KJ Martin has been in a lot of trade talks he could also be moved. As we get closer to the trade deadline, the Sixers will have a better understanding of where the team is going. They are in the middle of a tough stretch of games. If they are out of the play-in by the end of February 3rd, financial trades will make more sense.
Boston Celtics
The Boston Celtics are among the most expensive luxury tax teams in the league. They have little ways to get under the second apron, but a single move can save them $16 million. That move is likely trading away Jaden Springer. His name has been around in trade rumors for a while, all because the Celtics might want to save some money. With the sale of the team looming, the Celtics might decide to cut salaries in every possible way. They are a championship contender with or without Springer.
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