The cost cutting of the Cleveland Cavaliers payroll for the 2017-18 season began on Friday when Adrian Wojnarowski of ESPN.com reported the team dealt away Richard Jefferson, Kay Felder, a pair of second round picks and $3 million in cash for the draft rights to Dimitrios Agravanis and guard Sergey Gladyr, two guys who will never see the light of day in the NBA. The move was the first of a number of payroll reduction moves that are on the horizon for a contender that’s set to deal with an ugly tax bill again this year.
On the surface, the trade isn’t much to get worked up over. The Cavs obviously had to dump a few guaranteed contracts in October to get down to the 15-man roster limit ahead of opening night. However, most teams around the league would simply cut a player outright when they have an extra guaranteed deal on the books like the Celtics did with R.J. Hunter last October. Danny Ainge tried to shop Hunter around to other teams before he was cut, but he was not going to sweeten the pot with an asset (like a second-round pick) just to get rid of Hunter’s salary off Boston’s books. Instead, the Celtics swallowed the dead money and cut Hunter while also maintaining their draft assets.
That wasn’t the case in Cleveland this week. The Cavs were far more motivated to get the salaries of Jefferson and Felder off their books entirely and that’s for good reason. Cleveland is dealing with a monster payroll this year and is also facing repeater tax penalties for the first time since re-signing LeBron James. The Cavs triggered those repeater penalties by going over the luxury tax threshold in at least three of the past four seasons.
The salary cap has been set at $99.093 million for the 2017-18 season, and the luxury tax threshold for the 2017-18 season is $119.266 million. Since the Cavs’ current payroll was close to $140 million before the Jefferson trade, owner Dan Gilbert was paying an extra $4.50 in tax penalties for every dollar spent on payroll, as shown in this luxury tax chart by Larry Coon’s CBA FAQ.
Jefferson and Felder made roughly a combined $3 million in guaranteed salary this year, so in order to avoid paying an extra $14+ million in luxury tax penalties to the league for two guys that weren’t even going to be on the team, the Cavs had to dump them somewhere. They also had to sweeten the pot quite a bit for the Hawks to take on the dead weight. Not only did Cleveland send along the money to cover both salaries, but they also had to give the Hawks a couple of second round picks for their trouble.
Ultimately, that’s a pretty steep price to just dump $3 million in salary, but it’s also the sign of life in a new NBA where teams with extra salary cap room are hard to find. Only four teams (Chicago, Dallas, Phoenix, Philadelphia) have over $2 million in salary cap space available right now, a sharp contrast to past seasons when the salary cap had skyrocketed and open space was plentiful.
Even after those moves, the Cavs are still staring at a $40+ million luxury tax bill on top of a $135 million payroll for 2017-18. That’s easily the highest combined number in the league (since they are the only team paying a repeater tax penalty), and that’s good news if you are a Celtics fan because more cost cutting will be on the way.
The problem for Cavs general manager Koby Altman is that there aren’t a lot of easy ways to trim the fat. Nearly half of his roster is on veteran’s minimum deals already, while role players like Iman Shumpert ($10.3 million) and J.R. Smith ($13.7 million) are on inflated contracts for today’s cap climate. Most teams won’t want to take a guy like Smith without a sweetener. The same goes for Channing Frye ($7.4 million).
The Cavs added a big piece to their draft asset collection with the 2018 Nets first round pick from Boston in the Kyrie Irving deal, but their cupboard is pretty bare beyond that. The team had already dealt their 2019 first round pick to the Hawks for Kyle Korver last season, and countless other second round picks have also been shipped away in past years.
All of this is encouraging from Boston’s perspective for both the short and long term. The Cavs are going to have to continually balance trying to add useful talent with managing their budget and the tax bill. They will likely make some moves on the edges to save money that could hurt the team overall on the court. That’s a maneuver that didn’t go over well with LeBron James in Miami when owner Mickey Arison used those same tactics.
Additionally, if James elects to sign back with the Cavs next season, coming up with the money to retain Isaiah Thomas will be a lot tougher with $113 million in salary already committed to just eight players and the repeater tax looming.
Meanwhile, the Celtics are well situated with plenty of draft assets and a payroll that won’t have to deal with luxury tax woes until next season. The repeater tax won’t be a concern until at least 2021. Boston managed to balance their budget well for the next two seasons with their deals this summer, bringing in high-value contracts (Kyrie Irving) and cost controlled assets (Marcus Morris) to even out the big max deals handed to Al Horford and Gordon Hayward.
Ainge will continue to have the freedom to be aggressive in adding salary in trades for now, while Altman will be restricted in what the Cavs’ payroll can handle. It may not matter too much for this season, but the high tax bills will make it tougher for Cleveland to keep their core in place down the line, which may prevent LeBron from wanting to stay for the long haul.
Other NBA nuggets
- Former Celtic Gerald Green was waived by the Bucks on Saturday as Milwaukee opted to keep their roster at 14. It’s a tough break for the swingman who started eight games for the C’s last postseason. He will hopefully get another shot elsewhere.
- MVP candidate Kawhi Leonard won’t be ready for the start of the regular season as he continues his recovery from quadriceps tendinopathy. Playing with an aging core in a loaded Western Conference will prove to be a stiff challenge for the Spurs without Leonard.
- It still doesn’t make any sense to me why the Sixers gave Joel Embiid, a guy who has played just 31 NBA games, a max extension this past week. I know only half of it is guaranteed, but why not wait to see if the guy can actually play more than half an NBA season before investing $148 million in him?
- Some other notable names cut ahead of this weekend’s roster trim down deadline: Isaiah Canaan, Beno Udrih, Jefferson (cut by Hawks after trade), Kris Humphries, Trey Burke, Kendrick Perkins, Brandon Rush, Anthony Morrow.
- Did you know a player could get suspended for regular season games based off of preseason ones? That’s what happened to C.J. McCollum on Saturday. The guard will miss the Blazers’ season opener after being suspended by the league for leaving the bench during an altercation during a preseason game earlier this week.