NBA Roundtable

2010 Tax Concerns: Orlando Magic

In Free Agency, General NBA, Trade Talk on April 23, 2010 at 7:42 am

Orlando Magic Salaries

Contracts Above $5 Million

  • Rashard Lewis – $19.57 million
  • Vince Carter – $17.52 million
  • Dwight Howard – $16.65 million
  • Jameer Nelson – $8.1 million
  • Marcin Gortat – $6.32 million
  • Mickael Pietrus – $5.3 million

A sub-total of $73.46 million for six players.

That total brings us over the luxury tax by $5.5 million already. Vince Carter and Rashard Lewis will earn a combined $37.1 million next season. Wow, on both counts.

Vince Carter has two more seasons on his contract but only $4 million of his near $19 million deal on his final season is guaranteed. Rashard Lewis has three years left on his contract as does Jameer Nelson and Dwight Howard. Jameer and Dwight both have player options on their final seasons. Mickael Pietrus has two years left on his deal but can opt out after next season. Marcin Gortat has four years left on his contract.

Rest Of Team’s Salaries

  • Brandon Bass – $4 million
  • Ryan Anderson – $1.41 million

A sub-total of $5.41 million for two players. Ryan Anderson will be entering the third season of his rookie scale contract while Bass has three years left on his contract.

Other Costs

  • Draft Pick — Orlando owns the #29 pick and that pick comes with a cap hold in the neighbourhood of $830k.
  • Player Option — Matt Barnes — Barnes has a player option for $1.6 million and is reportedly negotiating over a contract extension. Let’s put him down for the $1.6 million for the time being.
  • Minimum Roster Size — League mandates say that a team must have a minimum of 13 bodies on their roster. Orlando has ten players on their books already, and most of it’s rotation already in place, so the cost of three more players is about $2.55 million.
  • Fran Vasquez — Vazquez is a former lottery pick of the Magic’s and is eligible to come over but I have heard no indication of him doing so … so I am not going to include him here. He would have a contract of about $1.77 million should he join the Magic.

A sub-total of $4.98 million.

Which gives us an overall total of $83.85 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.

Magic vs Luxury Tax Line

Orlando is over the luxury tax threshold by $15.85 million.

Summer Options

Orlando has a couple of free agents

  • JJ Redick
  • Minimum contract players — Jason Williams, Adonal Foyle and Anthony Johnson

JJ Redick is the player of note since the cost of signing any of the other players will be equal to the cost of acquiring new minimum contract players.

JJ Redick is a restricted free agent so the Magic will have the right to match offers … but more importantly, that status, will likely hurt Redick’s ability to get offers and gives the Magic a good chance at keeping Redick at a reasonable price tag. I am thinking around $3 million per annum but it could rise to $4 million per year.

Orlando is likely to retain Redick at that price range. He is a valued player, young and fits their system very well. At a good price, he is a player they’ll want to keep around.

Trading Gortat

The expectation since Otis Smith matched Dallas’ offer to Gortat last summer has been that Smith would wait (for BYC status to expire) until the end of this season and then try to trade Gortat during the summer. That plan is still being green-lighted. Smith will look into trade possibilities with Gortat and will make a deal if he sees an offer he likes.

Orlando needs to be careful here because they get a lot of value out of a backup center who is as good an anchor as Gortat is. It helps them maintain their style of play while Howard rests during games + allows Gortat to step in when Howard is in foul trouble without losing the Magic too much in the process. It will be difficult for Orlando to find a backup center as good as Gortat in either a trade or in free agency. Ergo, it’s only worthwhile trading Gortat if they get an excellent offer.

Orlando will be looking for a backup point guard or a starting small forward in the trade.

Mid-level Exception

Orlando is unlikely to use their MLE given their already massive luxury tax costs.

They will be more willing to do so if they decline to match a JJ Redick offer.

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