NBA Roundtable

2010 Tax Concerns: Boston Celtics

In Draft, Free Agency, General NBA, Trade Talk on June 30, 2010 at 5:59 am

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Boston Celtics Salaries

Contracts Above $5 Million

  • Kevin Garnett – $18.83 million
  • Rajon Rondo – $9.09 million

A sub-total of $27.92 million for two players. Kevin Garnett has two years left on his contract while Rondo has four years left on his deal.

Rest Of Team’s Salaries

  • Kendrick Perkins – $4.89 million
  • Glen Davis – $3 million

A sub-total of $7.89 million for two players. Both Kendrick Perkins and Glen Davis will be entering the last year of their respective contracts. Perkins is due for a large pay increase next summer.

Other Costs

  • Draft Pick — The Celtics have the #19 selection in the first round and that comes with a cap hold of $1.18 million.
  • Open Roster Spots – Boston has seven open roster slots totaling a cap hold of $3.3 million.

A sub-total of $4.51 million.

Which gives us an overall total of $40.32 million.

Salary Cap

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.

Celtics Cap Space

Boston is currently under the salary cap line by $15.78 million.

Changes Afoot

Max Contract?

The Celtics are short $790k of being able to offer a max contract to a LeBron James or anyone in his free agency bracket.

What Happened?

How is this possible? How did Boston suddenly find themselves with a lot of salary cap flexibility?

That cleared $27 million off the Celtics books and put them far enough below the cap to do some damage if they so wished.

Two Options

Option One

  • Renounce all free agents
  • Attempt to acquire a young star caliber player to put alongside Rajon Rondo and Kendrick Perkins for the next 5-10 years
  • Those three players in combination with Kevin Garnett and Glen Davis would allow the Celtics to remain near the top of the East next season.
  • Also, Garnett’s soon to be expiring contract gives Boston a major asset to use to try and acquire another star caliber talent down the road.

Option Two

  • Re-sign key free agents
  • Use Sheed as a trade asset to acquire a player from a team looking to make a salary dump
  • Spend the MLE
  • Try to contend one last time with this core of players

Cap Space + Major Signing

It is unlikely that LeBron, Wade or Bosh view Boston as an ideal destination if the Celtics are forced to part with Paul Pierce + Ray Allen + Sheed + TA + Nate Robinson. Not much point in joining a team who’s core has just been gutted.

Also, with Garnett on his last legs, he won’t be viewed as anything more than a short term contributor so the long term health of the franchise will still be a question mark. Especially relative to the potential of the Chicago Bulls, New Jersey Nets, Miami Heat and New York Knicks. I also think that Joe Johnson will fall in a similar bracket.

That would leave Boston stuck in a crowd trying to convince Rudy Gay, Amare Stoudemire, Carlos Boozer (too old?) or David Lee to join their team.

The Celtics Free Agents

The Celtics have several free agents

  • Ray Allen
  • Nate Robinson
  • Tony Allen
  • Marquis Daniels
  • Brian Scalabrine
  • Shelden Williams
  • Michael Finley

The Celtics have full bird rights on Paul Pierce, Ray Allen and Tony Allen which allows the Celtics to sign each player to a contract without needing to use their MLE.

They have non-bird rights on Nate Robinson and Marquis Daniels. This means that they can sign those players to contracts up to 120% of their previous pay level without needing their mid-level exception. So, that means they are able to pay Nate Robinson up to $4.8 million and Marquis Daniels up to $2.39 million.

Boston also has non-bird rights to Shelden Williams and Michael Finley, as well as full bird rights to Brian Scalabrine, but all three of those players should be available for a minimum contract so this is unimportant here.

Likely Price Ranges

  • Paul Pierce ~ $15 million
  • Ray Allen ~ $7-10 million
  • Tony Allen ~ $3 million

Nate Robinson and Marquis Daniels are unlikely to be signed due to the recent draft day selection of Avery Bradley and Daniels’ underwhelming performance last season.

The other three free agents will be available on minimum contracts. Michael Finley has stated his desire to return but it is unclear whether or not the Celtics are interested. Brian Scalabrine wants to return and will likely be asked to come back. Shelden Williams could go either way.

Okay, so let’s say Boston signs the three players above and three minimum contract players who may or may not be from last year’s team. That would add a total of $24.63 to $27.63 million onto the Celtics payroll depending on Ray Allen’s contract.

Those added contracts would lift Boston’s payroll to $64.94 million to $67.94 million.

Luxury Tax Threshold

At this point, Boston would either be

  • $64.94 million – under the tax threshold by $3 million
  • $67.94 million – right at threshold

With 12 players on their roster (let’s assume Harangody is the 12th).

Trading Rasheed Wallace

Rasheed Wallace would have been owed $6.32 million next season so the Celtics can accept up to $8 million in return for his retiring contract in a trade. That trade would offer instant cap flexibility to the other team similar to a squad who are beneath the cap.

Any players who Boston may be able to target?

  • Anderson Varejao – If LeBron goes, Cleveland may try to clear house and glue guy like Varejao may be made available. His five year deal may be seen as cumbersome towards rebuilding (although I do disagree)
  • Michael Beasley – If Miami want to cut more cap space
  • Charlotte Bobcats may be willing to trade one of their big men for some cap relief. Nazr Mohammed is the obvious target.
  • Marvin Williams – Would Atlanta part with Marvin if Joe left via free agency?

Another option for Boston is to combine Rasheed with Perkins and possibly Glen Davis and to be then able to bring back $17.86 million in contracts. Some targets there:

  • Emeka Okafor
  • Andris Biedrins

Anyway, let’s put aside wild speculation for now and assume Boston trades Wallace for someone with a comparable roster to him. That is another $6-8 million on the books.

Midlevel Exception

The Celtics most likely targets are

  • Mike Miller
  • Udonis Haslem
  • Travis Outlaw

Also — Tyrus Thomas, Josh Childress, Anthony Morrow, Ronnie Brewer

As well as some partial MLE contracts – Amir Johnson (old Ainge favourite), Shaquille O’Neal, Jermaine O’Neal, Darko Milicic, Kwame Brown

Injury Variable

  • Kendrick Perkins has a serious injury and will be out until at least December. The Celtics will need someone to stand in for him and provide real cover.
  • With Rasheed Wallace also leaving, the Celtics could be left bare up front.

A lot of who Boston decides to pursue in free agency will be impacted by the Rasheed Wallace trade opportunities because of Boston’s desperate need for big men. They may be forced to look away from Mike Miller (their top target) in order to sign a big man.

Luxury Tax

  • Salaries – $65-68 million
  • Sheed Trade – $6-8 million
  • MLE – $5.5 million
  • Another minimum contract signing – $825k

That gives us a new total of $77.3 million to $79.3 million. That would put the Celtics above the tax threshold by roughly $10 million and give them a final payroll in the region of $86 to $92 million.

Old Players, Long Contracts

2012/13

  • Paul Pierce ~~ 4 years $50 million
  • Ray Allen ~~ 2 years $20 million
  • MLE ~~ 5 years $30 million
  • Sheed Trade ~~ let’s say two years left on deal

That would add about $20 to $21 million onto the Celtics 2012/13 payroll. Combine that with Perkins possible extension and the Celtics have $28 to $29 million more in salaries.

Rondo and Bradley will also be on the books for $12.6 million. Another two draft picks will likely add another $2.5 million. Also, there is a possible BBD extension which could add another $3-5 million but let’s ignore that for the time being.

That gives us a first estimate of $43 million for seven players. Add cap holds, that brings us up to $45.5 million.

That would leave Boston with roughly $10 million in cap space to add to an underwhelming core of Rajon Rondo (26), Perkins (28), Pierce (35), Miller (32) and some mid to late first round picks.

Reaction -The Celtics could seriously inhibit any chances of rebuilding around Rajon Rondo. At that point in his career, and with Boston at least three years away from putting another contract on the floor, it puts Rajon Rondo’s future in Boston in serious doubt. Both for Rondo and for the Celtics.

Boston should be focused on building another title contender around Rondo and as such should simply refuse to acquire any contract that lasts beyond 2012 that doesn’t fit into their long term picture. Including and especially (given size of contract) Paul Pierce.

Conclusion

The Boston Celtics should be wary of the long term ramifications of their decisions this summer.

The Celtics should use this opportunity to try and sign a young star talent to put alongside Rondo and Perkins. To help build a core for the future. It’s their best path if they wish to put another perennial contender on the floor in the near future.

That said, I expect Boston to re-up their own guys and give this one last run.

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  1. Well this is certainly some interesting information, thanks for contributing!

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