NBA Roundtable

2010 Tax Concerns: Los Angeles Lakers

In Free Agency, General NBA, Trade Talk on April 20, 2010 at 8:26 am

Los Angeles Lakers Salaries

Contracts Above $5 Million

  • Kobe Bryant – $24.81 million
  • Pau Gasol – $17.82 million
  • Andrew Bynum – $13.7 million
  • Lamar Odom – $8.2 million
  • Ron Artest – $6.32 million
  • Sasha Vujacic – $5.48 million
  • Luke Walton – $5.26 million

A sub-total of $81.59 million for seven players. Kobe Bryant, Pau Gasol and Ron Artest each have four years left on their contracts. Artest has a player option on his final year. Lamar Odom has three more seasons but the final season is only partially guaranteed ($2.4 million of $8.2 million). Andrew Bynum and Luke Walton also have three years remaining on their deals too. Bynum’s final year is a team option.

Rest Of Team’s Salaries

  • None

Other Costs

  • No Draft Pick — sent to Memphis (Pau Gasol trade)
  • Player Option — Shannon Brown has a player option for $2.15 million and is expected to opt out this summer and test free agency. He wants to stay with the Lakers.
  • Minimum Roster Size — League mandates say that a team must have a minimum of 13 bodies on their roster. That means the Lakers will need at least six more players which will come at a cost of about $5.1 million.

A sub-total of $5.1 million.

Which gives us an overall total of $86.69 million.

Luxury Tax Threshold

David Stern recently announced

NBA commissioner David Stern said on Friday that the league is projecting the cap to come in at about $56.1 million. The actual number won’t be determined until early July, before teams can begin officially signing players.

Though that figure would still be lower than this season’s $57.7 million cap, it’s far better than estimates from last summer, when the league sent a memo to teams warning them of a potential sharp drop to between $50.4 million to $53.6 million.

The luxury tax threshold for a $56.1 million cap is $68 million.

Lakers vs Luxury Tax Line

That puts the Lakers over the luxury tax threshold hold by $18.7 million.

Summer Options

The MLE

I think there are two main scenarios for LA

  • Knocked out of playoffs — spend the MLE
  • Win the Western Conference and make the Finals again — do not spend the MLE

Spending the MLE would add another $11 million onto their payroll.

I think the Lakers only spend more money, likely on a new point guard, if they do not feel like they are able to win without that player. The sunk cost of Kobe, Gasol & Co. being too great to pass on spending another $10 million if it is the difference between another title or not.

Roster Size

LA typically have 14 or 15 players on their roster so they’ll likely go beyond the minimum required level.

Lakers’ Own Free Agents

  • Jordan Farmar — restricted free agent — I don’t think the Lakers are happy enough with Farmar’s play within the Triangle to keep him around. Not unless they get a good bargain (under $2.5 million). So Farmar is likely gone.
  • Shannon Brown — I can see the Lakers re-signing Brown. An uncertain market place for Brown since his point guard skills are limited and since he is undersized and below average for a two guard. Unlikely to get a big offer. Also, he could be the big defensive point guard that the Lakers are looking for … especially if they are wary of costs and are only willing to spend $1.5-to-$3 million on a player.
  • Josh Powell + DJ Mbenga — Both players will be available for the minimum and LA will have some interest in keeping them around.
  • Adam Morrison — finished with the Lakers … finished with the NBA?

Noteworthy Free Agents

  • Roger Mason Jr — Roger Mason’s sharp shooting would be the perfect complement, at point guard, to the Lakers starting lineup. He would likely be available at a competitive price ($2-3 million) which allows LA to keep control of their payroll and/or choose to spend the remainder of the MLE on a new backup guard should they wish.
  • Steve Blake — his point guard skills would be understated in the Triangle but he would be a steady + quality performer for the Lakers.
  • Mike Miller — If LA wanted to make a splash, sign a big name for the MLE, Miller is the best bet. His skill-set would be superb in the Triangle offense.
  • Nate Robinson — Phil Jackson has been highly complimentary of Nate’s explosive game on multiple occasions in the past. Not an ideal fit but I wouldn’t rule Nate out.
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  1. Hehe, now that I’m reading you I’m not gonna leave you alone 😉

    4 things :

    – I think you meant “player option” for Shannon Brown, as he is the one who decides to leave or stay.

    – on roster charge, it is the second time I see this mistake (Denver) : teams have to have 13 players on their roster, but the charge counts only when it has less that 12 players.

    – you count a 2-year veteran minimum salary for each free roster spot charge. But only a rookie minimum salary should be taken into account, as Larry Coon FAQ states and as he does in the New York Knicks link I gave you yesterday (http://forums.realgm.com/boards/viewtopic.php?f=4&t=992597&sid=53b7e9000977324b51980036f65b40c5)

    – you don’t talk about Fisher, who’s gonna be Unrestricted Free Agent next summer ? Because if we consider Farmer is renounced and Brown only good out of bench, maybe they could consider keeping him at low costs (much lower than the $5m he gets right now). But I agree they still must search for a starting PG. So if he’s too greedy, they may leave him alone.

    Anyway thanks for that very interesting information and great analysis. I agree on the rest of what you said.

  2. Hey Julien,

    Yeah, that should read player option and not team option for Shannon Brown. I’ll change that.

    Roster Size + Minimum Contracts

    It is two different situations.

    (1) The salary cap rules say you have to account for 12 players and must place a cap hold in the place of an empty roster spot.

    (2) League rules mandate that teams must have at least 13 players on their roster.

    You are trying to get two different types of figures to base your decisions on … not explaining, let’s see:

    Cap Space Teams

    The cap hold is worth the rookie minimum contract ($475k). This is the figure that teams below the cap have to use for empty roster spots + the figure that allows them to free up as much cash as possible to spend on free agents.

    With a team below the cap, you are trying to get that figure + then spend the cash + then fill out the rest of the roster. A team who is below the cap and then spends their cap space will always finish a few million over the cap by the end of the summer because they’ll be signing players to veteran minimum contracts instead of the rookie minimum contracts + they will sign 13-15 players instead of the 12 they have accounted for in the initial figure.

    So, a team that is below the cap will finish comfortably above the cap by the time they’re done in free agency. So for a cap of $56.1 million, you’d expect a team with cap space who spends their cap space to finish with a payroll of about $58-60 million after they have signed their minimum contract players.

    To come full circle … I/we are not interested in that end figure here. We are interested in how much cap space they can create to try and see what types of players they’ll be able to target in free agency. We want the initial figure because that tells us more about their plans and what type of personnel decisions they are able to make or are going to make this summer.

    Luxury Tax Teams

    I typically use the veterans minimum (2+ years) figure ($850k) for teams over the luxury tax … because these teams generally sign veterans over rookies. Teams in luxury tax land normally have playoff aspirations and want to fill their roster with reliable + quality talent and signing veterans is the better way to achieve that.

    Look at the Denver Nuggets this season, they have Anthony Carter + Joey Graham + Malik Allen + Johan Petro. The year before they had Carter, Petro, Chris Andersen and Dahntay Jones. The Nuggets filled out their bench with reliable veteran players on the minimum instead of inexperienced/unreliable rookie players. They target these types of players instead of rookie minimum contracts because the added cost — including the tax consequences — is still great value because it allows them to improve their team more.

    So putting teams down for veteran players on minimum contracts to round out the roster gives us a more accurate final figure to work with.

    We’re trying to find a end result — an end payroll figure — to base our decisions on. On how much financial trouble these teams are in and what type of personnel changes they might be forced to make or not make based on that result.

    Salary Cap Analysis + How It Effects Personnel Decisions

    Summary — We are trying to find the figure that a team uses to base their personnel decisions on (1) On what types of players they can reasonably acquire [enough cap space for max contract?], or, (2) what types of players they are not able to sign [to use their MLE or not] or keep [trade in a salary dump].

    The teams below the cap you use the starting figure — the cap space

    The teams above the cap you estimate the end figure — expected payroll + luxury tax charges = total cost

  3. Hi Dave

    It’s very nice of you to answer me, especially on this : I was mistaken, since as you say we are talking about luxury tax teams and not cap space teams. We are answering two different questions : how big will the payroll be including taxes / what is the leeway they have to recruit under salary cap.

    So I agree on all you said.

    Still, you think they do not intend to do anything with Fisher ?

  4. Hey Julien,

    There should be a separate post on Fisher coming shortly. I scheduled the post it’s for something in the next few hours. I’ll link to it here once it publishes — link.

    I think the Lakers are more likely than not to waive goodbye to Fisher. Not a certainty but a 67% chance. If they do re-sign Fisher it’ll be in a much reduced role, either as the backup point guard or the third string point guard (my preference).

    Financially, Fisher is only worth the league minimum and that is his most likely paycheck … but the Lakers may pay him slightly more than that should they choose to keep him.

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