The Portland Trail Blazers are clinging to a 19-19 record as the NBA Trade Season swings into high gear. The combination of high aspirations and mediocre performances would suggest that the Blazers will be active as the February 9th trade deadline approaches. The Blazers have young players, talent, and even an expiring contract or two to leverage as possible avenues for improvement. They need size and defense, among other things. Might a marriage be made in the coming month?
While deals are quite possible, two factors provide hidden speed bumps in Portland’s quest to complete a deal. Both are financial. Usually that’s the hardest part of the NBA trade puzzle for laypersons to understand, but both of these issues are clear and simple.
The first issue is our old friend, the Luxury Tax.
Blazers lie approximately $67,000 below the tax threshold for 2022-23. In a league where salaries are measured in millions, that’s a razor-thin margin. It’s to Portland’s credit that they managed to cut it so close. They’re making use of every available dollar without passing into tax territory. That also means they have zero dollars left to spend unless they want to cross the border into tax land.
Doing so would have a couple consequences.
At the end of the season, when all tax penalties are totaled, the luxury tax dollars collected from transgressors are split between non-taxpaying teams. Usually this amounts to a few million dollars. If the Blazers take on more salary in a trade than they send out, they won’t just have to pay a penalty themselves, they’ll lose out on that extra revenue. That cost would need to be accounted for in any consideration of trades in the coming months.
Going into the luxury tax also re-starts the clock on the “repeater tax’. That’s an added penalty for teams who cross the tax threshold in three of four consecutive seasons. The Blazers paid tax in 2018 and 2019, then slipped under in 2020. They had to be careful not to go over the line in 2021, though, else they would have triggered the repeater tax penalty. They succeeded, resetting the clock by posting two consecutive years without violation.
That would seem to leave them free and clear. Except they just signed Damian Lillard to a huge extension which runs four seasons beyond this one. Assuming they also extend Jerami Grant, they’re looking at a guaranteed tax overrun in the near future. It’s hard to see how they’d avoid it in the far future either, assuming Lillard stays with the team.
We can come up with scenarios in which the Blazers wiggle under the tax threshold in 2026, but even that’s not a sure thing. It’s nearly impossible to find any that keep them below that level in 2024 or 2025. That gives the Blazers big incentive to stay below the tax line in 2023. If they can avoid paying tax this year, they give themselves flexibility for the future. If they go above the line, they’re probably looking at having to stay under in 2026 AND 2027 to avoid paying a fortune. Since Lillard is scheduled to make $58.6 and $63.2 million during those two seasons, that’s neither an appealing nor realistic option.
For those reasons, any trade the Blazers consummate in the next month will need to bring in less salary than they send out, or at least fall dead even. If not, Portland will need to be sure that the move vaults them into contention clearly enough to justify paying tax—and likely repeater tax—penalties down the road. Since it’s hard to start from 19-19 and end at Championship Contender in a month, it’s pretty likely the Blazers will be limited in the amount of salary they’re willing to take on for the rest of this season.
Up Next... The Second Factor: Contracts