The Cleveland Cavaliers had a fabulous run to the NBA Finals and put on a great show despite missing two of their All-Star starters, so it shouldn’t have come as a surprise that general manager David Griffin has been insisting he is bringing everyone back for next season. This same group would easily be favored to return to the Finals and likely favored to win it all. However, what isn’t being addressed is, can he afford it?
With a payroll over $81 million in 2014-15, the Cavaliers are a luxury tax team and they’ll be a tax team again in 2015-16. It’s worth keeping in mind that if they can’t get under the tax line in 2016-17, they’ll pay the dreaded repeater tax and if Griffin does what he says he will this summer, that’s a very real possibility.
Even ignoring the ‘distant’ future concerns of two years from now, the luxury tax bill Griffin is considering can only be described as staggering. The Cavs will likely owe the league well over $70 million in tax if Griffin re-signs his key free agents, so those rumors about using Brandan Haywood’s $10.5 million non-guaranteed deal to bring in yet another player for depth – at a luxury tax cost of about $4.75 per dollar or $47.5 million – seem to ring just a little hollow.
The Cavs will be entering July with a guaranteed payroll of about $34 million. The recently opted out LeBron James and Kevin Love are expected to immediately re-sign and soak up $41 million more to bring the Cavs over the anticipated new salary cap, so Griffin really doesn’t have any room to go after players that aren’t on his current roster beyond veteran’s minimum deals. His exceptions will be limited as he will be over the apron this year, so getting upgrades over the talent he already has is bordering on fantasy.
With escalating luxury tax rates at $5 million increments over the anticipated $81.6 million tax line, Griffin is going to feel the pinch with each deal he makes for his own players.
Griffin needs to bring Matt Dellavedova, Iman Shumpert and J.R. Smith back for depth if nothing else and if he can pull this off at under $20 million per season for the package, he’ll have done well. That brings the roster to 10 players and into the third luxury tax tier at $2.50 per dollar over the tax line. Add in a couple of minimum salary vets and Griffin is looking at Thompson driving his luxury tax bracket into the sixth level or $4.25 per dollar paid.
So what does re-signing Thompson really mean to the Cavs if this team wants to keep their roster together for another run?
Thompson will get a max offer from someone (as a young rising Canadian player, it isn’t hard to see that offer coming from Toronto). Conservatively starting at $15.5 million per season, the luxury tax bill for keeping this young rebounding energy guy in Cleveland could look something like this: $16.25 million for the first $5 million, $18.75 million for the next $5 million and $21.25 million for the last $5 million in salary. Adding the luxury tax bill up and Griffin could be paying over $70 million in salary and luxury tax in order to keep Thompson next season.
Thompson is an important piece of the Cavaliers puzzle, but Kevin Love is going to start at power forward, so is it worth $70 million to have a really good backup?
While Griffin could decide that Shumpert and Smith are the guys he isn’t going to bring back instead of Thompson, that would leave a huge hole in his successful starting lineup and depth on the wing. Those players were key to the Cavs turning around a terrible start to the season last year. Dellavedova is going to get a raise, but he isn’t the guy to try to save money on either – not that it’s likely Griffin could find a better fit at his anticipated price range.
Opting for Thompson over Love isn’t much of an answer either. Love wants to come back and the Cavs gave up rookie of the year Andrew Wiggins to get him. Griffin has to re-sign Love at the max and hope Love doesn’t want the one year plus an option year like James is expected to sign.
Griffin really doesn’t have that many options and he isn’t about to be “saved” by the rising salary cap a year from now either. Assuming James opts out again to get his next deal starting at $30 million and Timofey Mozgov gets his well-deserved raise in line with Thompson’s deal, the Cavs will still be at least $15 million over the tax line in 2016-17 and paying the repeater tax for a tax bill of about $43 million.
If he lets Thompson walk this summer, Griffin can probably get under the tax in two years, cut $55 million of this coming season’s luxury tax bill and keep everyone except Thompson on the roster. That’s $100 million the Cavs wouldn’t have to send to the League offices and even Cavaliers wealthy owner Dan Gilbert has to think about spending an extra $100 million to keep a backup power forward.
James wants to win badly and he’ll push Gilbert to open up his checkbook to build the best team possible, but even James understands what a $100 million means – if nothing else, James has shown he has the makings of a very good businessman – some of it learned the hard way.
Nothing is for sure and maybe Gilbert convinces himself that it’s worth it to try and rival the Nets in setting new records for luxury tax payments. However, as the Nets illustrated, there are no guarantees and trying to buy a championship has gotten a lot more expensive under the new CBA.
Can the Cavs afford to keep Thompson? We’ll know in about two weeks and teams like Toronto will be lurking.
“We wanted to have some flexibility, open up a little bit of space and just to keep our options open as we go into free agency,” Ujiri said. “Draft season is over now and now it’s free agency.”
It’s easy to say the Golden State Warriors will bite the NBA’s Luxury Tax bullet this July to re-sign one the League’s burgeoning star players, but with eight guaranteed contracts totaling $77.5 million already on the books, keeping power forward Draymond Green will likely prove to be a very expensive option next season.