Projecting the Blazers' Luxury Tax and Salary Cap Situation at the Trade Deadline

It was just before training camp when news broke that the league had secured a massive new TV deal. Rumors had swirled for awhile but it was the first time anyone had reported an actual number and the implication was clear. The league would never be the same once the money hit, increasing the salary cap to unprecedented levels.

For the Blazers, the question became whether this spike would open up new possibilities to improve the team as fans openly questioned if the core was good enough to win a championship. Yes, the team had won a round in the playoffs, but their defense was still shaky and the Blazers failed to attract any big names over the summer. Turns out, the new money won't do the Blazers much good as Lillard's extension eats up the majority of the cap increase. That put extra pressure on this group to prove they were good enough in order to justify re-signing everyone this summer.

Anyone who is still wondering if the Blazers' core is worthy hasn't been paying attention. Top 10 offense, top 5 defense, their fair share of injuries and a 36-17 record at the All-Star break is quite the resume. Sure, the West is still so ridiculous that to say a championship is "likely" is a stretch but the potential is there. We have firmly moved from questioning the core to the fringes of the team, from asking if we should strategically let guys leave to being terrified someone will steal them away, from wondering if the championship window is open to debating how long it will stay that way.

With that shift, GM Neil Olshey's job changed dramatically. It no longer makes sense to focus on maintaining flexibility and it all comes down to maximizing the next 3-6 year championship window. Unfortunately for him, it may be an even tougher job, dependent on many things outside of his control. I'm not sure any team has a more unpredictable salary cap picture than the Blazers right now and there are numerous things that could break in a variety of ways.

How Money Crazed is the League Going to Get?

The new TV deal may not mean a whole lot for the Blazers but it has everyone else drooling over their big boards, salivating at the thought of all the players they'll be able to add. Teams like that may be thinking they can overpay for a guy right now, watch as his deal gets relatively cheaper as the cap rises, and still be able to go after a max contract guy in a year or two. It's the perfect time to be going after free agents and one of the worst if you're trying to re-sign your own guys.

This isn't a big deal with Aldridge. He's getting the max, no matter what the salary cap number is. But what about Wesley Matthews or Robin Lopez? Over the summer, I projected Wesley at $8 mil/yr and Robin at $12 mil/yr. Since that time, they're both having career years (again) and Bill Simmons recently called Matthews a "market max" guy in his latest trade value column. This novel term refers to a guy who wouldn't normally get a max offer but will attract one in the roaring and uncertain economy of today's NBA. If that's true, someone is offering Ironman $16 million dollars this summer, double what I thought was reasonable 5 months ago. Who knows what Lopez will get but something near the max could be possible.

Combined, I think the two of them could make anywhere from $22-32 million. Nobody knows how teams are going to react to the new TV money, so a $10 million range is about as precise as I can be. No doubt, Olshey and his team have their numbers more refined but these things are not just outside of Olshey's control, they also have very little precedent making it exceedingly difficult to project. It's not a stretch to argue this is the most difficult it's ever been to predict a player's market value.

And we haven't even talked about Nicolas Batum and Meyers Leonard who will be free agents the following summer.

Will Lillard Get the "Super Max"?

Derrick Rose and Damian Lillard are the two signature NBA athletes for Adidas. They've done events together, even appearing in a commercial where they stoically drop metal balls onto high-tech, overpriced slabs of foam. Rose had one of the most meteoric rises the league has ever seen, so much so that he got a new rule added to the Collective Bargaining Agreement. Young players that garner sufficient league honors during their first four years are now eligible for a "super max" contract, permitting them to make more money than they otherwise could.

The heir apparent, Lillard needs to make one more All-NBA team or win the MVP (not completely out of the question) in the next two seasons. He was third All-NBA team last year and is playing even better so it's tempting to just assume he'll be selected again. Then you remember how many other young guards are also having career years on great teams and it gets complicated. Like it or not, Curry, Harden, Paul, and Westbrook are all locks. Based on the All-Star selections and buzz you might pencil in Klay Thompson fourth. That leaves Jeff Teague, Kyle Lowry, Jimmy Butler, Mike Conley, John Wall, and Damian Lillard for the final spot, and I might be forgetting a few. Dang.

This might be the most difficult it's ever been to predict All-NBA selections (I'm sensing a pattern here). Getting it wrong will swing Lillard's starting salary about $5 million, roughly equivalent to the mid-level exception. Try working that into your project plan.

What's All This Smoothing Business?

In an attempt to relieve some of this upheaval, the league is reportedly considering "smoothing" the new TV money so it's added to the salary cap gradually rather than in one single year. Apparently, the Player's Union was not impressed by the league's proposal and rejected it during the All Star break so this might be dead. However, the two sides still have plenty of time to negotiate adding a level of uncertainty to the system itself, not just how people will behave within the system.

Oh, and by the way, that whole system might be completely gone in two years when the players can opt out of the current Collective Bargaining Agreement. Just something to keep in mind as Olshey tries to make complex, long term plans for a multi-million dollar basketball operation.

What Does Paul Allen Think Of All This?

Neil Olshey: Hey Paul. I've been making a lot of calls and there's this guy we really like. He costs about $7 million a year and, based on our projections, that could put us anywhere from under the tax to $10 million over next year. We might be able to duck under the tax the following year, but it all depends on what the league does and if Lillard wins this one award. If we can't, we're probably in the tax for the rest of Aldrdge's contract and paying repeater rates for at least a couple seasons. But those might not exist if the CBA is renegotiated so it's probably fine. What do you think?

Paul Allen: Uhh...

Not exactly the ideal pitch when asking someone to spend $10 million and put themselves at risk of spending much more. It's pretty much impossible to project the Blazer's luxury situation over the next few years but Olshey and company have to do it anyway.

So why don't we join them. I mean, if we're going to be armchair general managers, let's at least not be lazy about it.

This year's simple. Given that trades have to match salaries, it's basically impossible for the Blazers to get in the tax. In the short term, it's just a question of talent.

Next season, it gets a bit more complicated. If Rolo and We$ get the full $32 million combined, it's all over and the Blazers will be forced into the tax by just filling out the roster. Anyone they trade for and keep will count dollar for dollar in the luxury tax. If they can re-sign Matthews and Lopez for something like $26 million combined then they might have some wiggle room. With that assumption, trading expiring contracts for Wilson Chandler would put them just a few million over. That would give the team the option of cutting Kaman, who only has $1 million of his $5 million contract guaranteed for next year, if they needed to avoid the tax for one more season.

Dipping into the tax even a few million could be significant because, unlike most teams, the Blazers might not be able to duck back under the following year when the TV money hits. Lillard will be up for his extension and due for a $16-21 million raise depending on if he qualifies for the "super max" extension. If he does and the Blazers decide to re-sign Batum, Leonard, and Chandler, they would again find themselves perilously close to the tax and probably a few million over. After that, the Blazers are almost certainly going to be tax payers and in line to pay the hefty "repeater rates" in 2018. That could make even simple transactions prohibitively expensive during the last few years of Aldridge's contract and limit the team's ability to adjust during the last few years of the championship window.

Consequences go beyond just the weight of Paul Allen's wallet. Teams that go significantly into the luxury tax lose the full Mid-Level Exception and can no longer do sign and trades. No way the Blazers get Chris Kaman last summer if they only have the $3 million "taxpayer" exception to offer. And that's the key thing to remember. You're not just trading away picks and players if you go after a guy like Chandler. You're also trading away the ability to use tools like the full MLE if you keep them beyond this year.

The alternative is to do nothing and go into the summer with the full MLE. Going that route, it's possible to stay under the luxury tax next year (assuming Wesley and Robin don't get ridiculous offers) but you have to wonder who the Blazers can get with that money. After a quick glance at the free agent list, Gerald Green and Demarre Carroll are the only non-restricted wing players that are the least bit intriguing. Even going this cheaper route, the Blazers run up against the luxury tax eventually.

Amid all of this uncertainty, there starts to be a fairly clear picture. Two years from now, regardless of what the team does before tomorrow's deadline, the Blazers are going to be in the luxury tax. They can either stay under the luxury tax these next two seasons, delay paying repeater penalties, and use the mid-level exception this summer. This exposes them to the least amount of risk and gives the most flexibility to improve the team during the last few years of the championship window. Or they can go all in signing as many quality players now and using their bird rights to keep them long term. This puts the Blazers deeper into the luxury tax with little flexibility to improve or adjust after this year.

Wilson Chandler's contract is particularly appealing because only $2 million is guaranteed next year. That allows them to go all in and then essentially reset to the more conservative option if it doesn't work out. As a result, giving up a first round pick and expiring contracts seems like a no brainer but it would be really tough to part with CJ McCollum or, to a lesser extent, Meyers Leonard.

Just in terms of cap management, projecting CJ as a key bench player is the only reason the Blazer's aren't deep into the luxury tax. His contract is right around $3 million the next two years. Good luck replacing those minutes for that amount in the new NBA economy. The same thing is true with Meyers although he only has one year left on his rookie contract so trading him wouldn't have as much of an impact. This also highlights the promise of a guy like Allen Crabbe or the potential value of late first round pick for a team like the Blazers. If avoiding the luxury tax completely is a priority, then getting one these things to turn into a rotation player is probably necessary.

It's a crazy time to be a general manager right now and the fact that the Blazers are right on the cusp of something special magnifies all of the team's decisions from here on out. I've got a lot of faith in Neil Olshey but it's tough to imagine a more difficult set of circumstances for a GM. Gun to my head I think the Blazers should go all in on talent and trade for the best player they can get but that comes with an entire dump truck full of caveats.

Thank goodness I've got this comfy armchair to sit in.