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  1. #1
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    How a cap reduction can affect the league? Which teams are affected most?

    Cap is expected to significantly decline for the next season as a consequence of the financial hit the league has taken from the pandemic. Some teams are affected more than others, especially those which have been renewing or have recently added expensive contracts.

    The lux tax threshold may be set as low as 130M (-2.7M less than the current season) and seats may remain empty for at least the start of the season.

    In a season where paying the lux tax (not to mention repeaters tax) looks to be a stupid thing to do, it may cause radical change of the scheduled policies for many teams.

    The teams which look to be affected the most:

    - GSW managed to close the books this season just under the lux tax threshold, but have just built a new arena which is projected to stay empty for at least the start of the season too... They may have to dump lots of salary, or they will be eligible for huge taxation and they'll additionally become repeaters tax eligible just one season later.

    - The Sixers have signed Simmons and Harris to max contracts, there looks to be no way to be able and upgrade the roster and are already well over the lux tax threshold. They have a very difficult financial future ahead, especially if they will be eliminated earlier than the ECF this season.

    -The Nets are already over the cap for the next season and have (Joe) Harris becoming FA after the Orlando games, There is no way to avoid the lux tax unless they let Harris go and additionally dump the salary of one out of Dinwiddie, LeVert or Prince. Financial future looks to be terrible.

    Suggest/predict the moves for those or for any other team in the league.

  2. #2
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    All that said, there might be contending teams which may benefit out of the league reducing the cap limits.

    -The Celtics are a team which will be paying the lux for the next season, but then, they have Hayward's contract expiring which will get them into stellar financial situation thereafter and will have three 1st round picks this summer while they are only looking to add a clutch big in order to end up with a roster which can challenge the best of the competition for a title.

    -The Bucks are also in a very good financial position. They have a mostly secured roster with only the contracts of Sterling Brown and Pat Connaughton to renew this season, which are expected to be cheap and will have a projected to be 18th-19th 1st round pick coming from Indy in order to replace the rumoured to retire Korver. They can easily end up under the lux tax while retaining the entire roster and could perhaps take advantage of the situation and upgrade the roster further if they trade one out of their two clutch point guards (Bledsoe or Hill) for valuable return.

  3. #3
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    I have a question.

    Does the verbage in the contract matter? For example, if Ben Simmons signed a max deal with the wording "max deal" in there somewhere, would his salary drop to the new max? Or are they signed in dollar amounts to protect against things like this? That verbage could have a significant impact on salary levels for teams.

  4. #4
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    It'll be up to the board of governors and NBPA to figure out how much it will decline and if they will suspend the luxury tax for a season or not, considering it's an unprecedented situation.

  5. #5
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    Quote Originally Posted by mike_noodles View Post
    I have a question.

    Does the verbage in the contract matter? For example, if Ben Simmons signed a max deal with the wording "max deal" in there somewhere, would his salary drop to the new max? Or are they signed in dollar amounts to protect against things like this? That verbage could have a significant impact on salary levels for teams.
    Max contracts are % based on the salary, same with rookie contracts. But for his example, Harris and Horford aren't on max deals and still have huge contracts, so that'll kill the 76ers salary cap situation.

  6. #6
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    Quote Originally Posted by mike_noodles View Post
    I have a question.

    Does the verbage in the contract matter? For example, if Ben Simmons signed a max deal with the wording "max deal" in there somewhere, would his salary drop to the new max? Or are they signed in dollar amounts to protect against things like this? That verbage could have a significant impact on salary levels for teams.
    I'm no capologist, but IIRC a real max deal will climb if the cap jumps up so it must go down if the cap goes down too.

  7. #7
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    Quote Originally Posted by mike_noodles View Post
    I have a question.

    Does the verbage in the contract matter? For example, if Ben Simmons signed a max deal with the wording "max deal" in there somewhere, would his salary drop to the new max? Or are they signed in dollar amounts to protect against things like this? That verbage could have a significant impact on salary levels for teams.
    Contracts which have already being signed cannot change.

  8. #8
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    Quote Originally Posted by Scoots View Post
    I'm no capologist, but IIRC a real max deal will climb if the cap jumps up so it must go down if the cap goes down too.
    This is correct, it's the contract eligibility that doesn't change, but the eligibility is a constant percentage of the cap which will be announced by the league.

    However, this will apply for new contracts only, the ones already agreed and signed with the previous projections stay as they are because they were made under the current cap + 8% per season rule.

  9. #9
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    Quote Originally Posted by NBA all the way View Post
    It'll be up to the board of governors and NBPA to figure out how much it will decline and if they will suspend the luxury tax for a season or not, considering it's an unprecedented situation.
    There is no way to postpone the lux tax threshold, even if some teams will suggest this, all the rest will vote against it, because it means millions out of their pockets gifted to the competition who already got the best of the players!

  10. #10
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    Quote Originally Posted by mouseslept View Post
    Contracts which have already being signed cannot change.
    Good point, you're right, for the ones that have been inked. But not for Ben Simmons and others like him who have only agreed to terms.

    https://www.phillyvoice.com/sixers-r...an-luxury-tax/

    "Let's use Ben Simmons' upcoming extension as an example of this phenomenon.

    When he agreed to the extension last summer, his deal was billed as a five-year, $170 million max extension. For all intents and purposes, that was an honest depiction/estimate of the deal's worth at the time. It's more accurate, but more of a mouthful to say Simmons agreed to a five year, 25-percent-of-the-cap extension that kicks in beginning in the 2020-21 season... I can hear you saying, "if all deals are a percentage of the cap, then this doesn't seem like a concern. The rest of the team's deals will scale accordingly."

    Unfortunately for Philadelphia, that is not the case. Salaries that were agreed to and on the books based on past salary cap numbers will not just scale down with the league cap (barring a dramatic rule change the players would never agree to). If a player signed a deal beginning in 2019-20, for example, the numbers that are on the books are what they are."

  11. #11
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    Quote Originally Posted by NBA all the way View Post
    Good point, you're right, for the ones that have been inked. But not for Ben Simmons and others like him who have only agreed to terms.

    https://www.phillyvoice.com/sixers-r...an-luxury-tax/

    "Let's use Ben Simmons' upcoming extension as an example of this phenomenon.

    When he agreed to the extension last summer, his deal was billed as a five-year, $170 million max extension. For all intents and purposes, that was an honest depiction/estimate of the deal's worth at the time. It's more accurate, but more of a mouthful to say Simmons agreed to a five year, 25-percent-of-the-cap extension that kicks in beginning in the 2020-21 season... I can hear you saying, "if all deals are a percentage of the cap, then this doesn't seem like a concern. The rest of the team's deals will scale accordingly."

    Unfortunately for Philadelphia, that is not the case. Salaries that were agreed to and on the books based on past salary cap numbers will not just scale down with the league cap (barring a dramatic rule change the players would never agree to). If a player signed a deal beginning in 2019-20, for example, the numbers that are on the books are what they are."
    I fully agree with you in all, but I believe Simmons contract was signed, it's not just an agreement on the max projected for the next season.

    However, even if it is just an agreement which hasn't just yet transformed to a signed contract, it won't make much of a difference to the Sixers cap situation anyway. His salary will only be reduced by some 3-400K... no big deal, the Sixers have much more serious problems than this, the Nets too.

  12. #12
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    Quote Originally Posted by mouseslept View Post
    There is no way to postpone the lux tax threshold, even if some teams will suggest this, all the rest will vote against it, because it means millions out of their pockets gifted to the competition who already got the best of the players!
    Yes there is.

    https://sportsnaut.com/2020/05/repor...-pandemic/amp/

    "Now, a top NBA executive is projecting that 25 teams could wind up in the luxury tax next season. According to The Athleticís John Hollinger, the executive predicts that a majority of organizations will exceed the luxury tax in the 2020-í21 season."

    If almost 85% of the teams in the league are set to be in the luxury tax next season, trust me they will freeze it where it is or suspend it all together. A compromise will be made.

  13. #13
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    Quote Originally Posted by mouseslept View Post
    I fully agree with you in all, but I believe Simmons contract was signed, it's not just an agreement on the max projected for the next season.

    However, even if it is just an agreement which hasn't just yet transformed to a signed contract, it won't make much of a difference to the Sixers cap situation anyway. His salary will only be reduced by some 3-400K... no big deal, the Sixers have much more serious problems than this, the Nets too.
    Wut? 400K how do you figure?

    His first year salary was set to be 25% of $117 million. Now worse case it could be 25% of $95 million.

    That's $29,250,000 versus $23,750,000. That is way more than a few hundred grand.

  14. #14
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    No way near 85% of the teams will be above the lux tax threshold next season, it's just a bad article made to create non existing impressions.

    It's only the Nets, the Sixers and the Celtics in the East which will be lux tax eligible, but surprise-surprise the Celtics would vote against postponing the eligibility because it suits them just fine to pay the lux tax for one season but end up with prime contending team! Out of the West, GSW is really screwed and the Rockets don't look good either, but I don't see anybody else in the red zone and nothing would make them happier than having the Rockets and GSW "in the corner" and the Lakers (who perhaps would vote in favor) not being able to move.

    No way more than 5, 6 to the most, teams would vote in favour...

    No way! The Bucks would threaten to leave the league if this was to apply after all the work they've put into it and after losing Brogdon and the picks in order to get into the stellar financial situation they now are just before the renewal of Giannis!

  15. #15
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    Quote Originally Posted by mouseslept View Post
    No way near 85% of the teams will be above the lux tax threshold next season, it's just a bad article made to create non existing impressions.

    It's only the Nets, the Sixers and the Celtics in the East which will be lux tax eligible, but surprise-surprise the Celtics would vote against postponing the eligibility because it suits them just fine to pay the lux tax for one season but end up with prime contending team! Out of the West, GSW is really screwed and the Rockets don't look good either, but I don't see anybody else in the red zone and nothing would make them happier than having the Rockets and GSW "in the corner" and the Lakers (who perhaps would vote in favor) not being able to move.

    No way more than 5, 6 to the most, teams would vote in favour...

    No way! The Bucks would threaten to leave the league if this was to apply after all the work they've put into it and after losing Brogdon and the picks in order to get into the stellar financial situation they now are just before the renewal of Giannis!
    Based on what cap number did you come up with the 5 or 6 teams? $117 million (last summer projection for 20-21), $115 million (January prediction, after losing China revenue for 20-21), $109 million (current cap), $102 million (roughly last season's cap) or you have no figure you're going on and just speaking out the side of your neck?

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