Answer: Very.
The NBA tonight completed its annual audit, and released the salary cap and luxury tax numbers for the 2009/10 season.
The National Basketball Association today announced that the Salary Cap for the 2009-10 season will be $57.7 million. The tax level for the 2009-10 season has been set at $69.92 million. Any team whose team salary exceeds that figure will pay a $1 tax for each $1 by which it exceeds $69.92 million.
The 2008-09 Salary Cap was $58.68 million and the tax level was $71.15 million. Although league-wide revenue increased 2.5% this past season, the decrease in the Salary Cap and tax level for the 2009-10 season is the result of the formula used to set the Cap and tax under the terms of the collective bargaining agreement.
The salary cap number is irrelevant to the Bulls. They're over it, and they were always going to be. But the tax figure is important to them. Like, really important.
The Bulls have never paid the luxury tax. They're not going to do it this year, either. If they were going to do so, we could be awash with assets by now, with Ben Gordon agreeing to re-sign, an MLE and an LLE to use in free agency, having bought 24 additional draft picks and using the Thabo Sefolosha trade exception to acquire a useful bench player for a future conditional second rounder. But, since none of that has happened, you know the drill - they're not paying it.
That's why these new figures represent a problem - the Bulls might not want to pay it, but without even making a single move in free agency, they're damn close to doing so.
Currently, the Bulls committed salary for next season stands like this:
Brad Miller - $12,250,000
Luol Deng - $10,365,000
Kirk Hinrich - $9,500,000
Jerome James - $6,600,000
Tim Thomas - $6,466,600
John Salmons - $6,429,151
Derrick Rose - $5,184,480
Tyrus Thomas - $4,743,598
Joakim Noah - $2,445,680
Linton Johnson - $1,033,342
Anthony Roberson - $855,189
DeMarcus Nelson - $736,420
Total: $66,609,460
Anthony Roberson's salary is fully unguaranteed, as are those of DeMarcus Nelson and Linton Johnson, so waiving those three frees up an extra $2.6 million in wiggle room under the tax. But the minimum number of players on a roster is 13, and waiving them drops the Bulls down to only 11 men once they've signed their draft picks. Therefore, if you waive those three, you need to replace them. And since they're all earning the minimum (Nelson as a second year player, Roberson as a fourth year player, Johnson as a sixth year player), it's hard to find cheaper options.
Added to that guaranteed salary will be the rookie scale salaries of James Johnson and Taj Gibson. The rookie scale contracts to which they will sign are barely negotiable, and can be found here. The only room for negiotiation from that number is the percentage of it that they get; players can receive a maximum of 120% of the scale amount, down to a minimum of 80%.
It is customary for first rounders to receive the maximum 120% of the scale. Indeed, since the 2005 draft, the only players who haven't have been Sergio Rodriguez (drafted 27th in 2006 by Portland; signed for 100%), Ian Mahinmi (drafted 28th in 2005 by San Antonio; signed for 80%), George Hill (drafted 26th in 2008 by San Antonio; signed for 120% in the first two years before dropping to 80%), and Donte Greene (drafted 28th in 2008 by Houston; signed for 100%, with unlikely incentives that could boost it to the full 120%). And you'll notice how late in the first round those players were drafted.
Potentially, such a custom may be reviewed in the light of the global recession, and the desperate need that many teams have to save money in this upcoming season. Maybe this year, more teams will sign their picks to 100% of the scale, or less. That's just a theory until it happens, though.
Therefore, we'll assume for the purposes of this rant that both Johnson and Gibson will sign for 120% of the scale amount. That then makes the Bulls committed salary for next year look like this:
Brad Miller - $12,250,000
Luol Deng - $10,365,000
Kirk Hinrich - $9,500,000
Jerome James - $6,600,000
Tim Thomas - $6,466,600
John Salmons - $6,429,151
Derrick Rose - $5,184,480
Tyrus Thomas - $4,743,598
Joakim Noah - $2,445,680
James Johnson - $1,594,080
Taj Gibson - $1,039,800
Linton Johnson - $1,033,342
Anthony Roberson - $855,189
DeMarcus Nelson - $736,420
Total: $69,243,340
Finally, as reported here, the Bulls extended Aaron Gray a qualifying offer at the start of the month. The rule with qualifying offers is that they have to be at least the same percentage of guaranteed money as the final season of the previous contract, and, as Gray signed a fully guaranteed two year minimum salary contract after being drafted, the amount of salary in the qualifying offer is also 100%.
Gray hasn't accepted the qualifying offer, but there's a good chance that he will. After all, $1 million is about the market value for a situational centre who can rebound well, but whose offense is inefficient and whose defence is about as effective as stopping a train with a fishing rod. It's not likely than anyone else will give him any more than that. The qualifying offer can be retracted until July 23rd without the Bulls needing Gray's consent, but after that, Gray has to agree to them doing that. And there's no incentive for him to do so.
Expect, then, to be adding Gray's $1,000,497 to the cap. That brings the Bulls total up to $70,243,837 for 15 players. That is a puny but significant $323,837 above the luxury tax threshold, an even more significant amount when you consider that DeMarcus Nelson would actually count as $825,497 for luxury tax purposes (due to a dull technicality in the tax calculations that has no obvious purpose). Even without Johnson, that puny amount of wiggle room has the Bulls unwillingly bumping their financial testicles against the tax threshold, grinding like a Glaswegian whore not lacking in self-confidence, and it's not even enough for a second year player's minimum salary ($736,420) to round out the roster.
It's not good.
It's fun to speculate moves that could help us open up more wiggle room. It's entirely possible, for example, that Memphis would trade Marko Jaric and the partially guaranteed salary of Greg Buckner to the Bulls for Jerome James and Tim Thomas. Waiving Buckner would then open up nearly $5 million in room under the tax for this season, which frees them up to utilise their MLE and hunt down Ben Gordon replacements, an extra big man, one more defensive guard, or whatever they want.
But do we really want that? Making that trade adds $8.4 million to the Bulls 2010 cap number. That's the trade-off that exists - to save short term money, the Bulls would have to take on long term money. And that's the exact opposite of the intent signalled by the trade deadline deal with Sacramento.
Is it worth cutting into the potential 2010 cap room just so that we can upgrade from Jannero Pargo to Von Wafer, from Aaron Gray to Zaza Pachulia, from DeMarcus Nelson to Keith Bogans? No, not really. As nice as it would be to find ways to open up more wiggle room under the tax year, it's going to cost Chicago an asset, because everyone else wants to do the same. The Grizzlies scenario is but one example of the problem here - we can't cut costs easily, because everyone else wants to do it too. And as such, free agency options are extremely limited.
Expect a dull summer.
Filed under: Uncategorized
Tags: Bad Times, chicago bulls, luxury tax
.....and that's why they didn't re-sign Ben Gordon.
lottery
Awesome Mark.......
Projections will factor - hence the Thabo trade. There's an element of luck to it, too, but yes, people make projections from a long way off. And Irwin Mandel appears to be quite good at it.
Stopping a train with a fishing rod?
Interesting simile.
Is Aaron Gray that bad on defense?
He defends the spot he's standing in reasonably well. But he doesn't move to new spots at all well. He's very slow, and his help defense is lacking. He can't get in front of penetrating guards, can't help or switch on the pick and roll, and can be (and is) isolated by big men quicker than he. So yeah, it's pretty bad.