Trade limitations in the tax: Why Marcus Smart’s contract is so pivotal

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Bob DeChaira/USA Today Sports

The Celtics have positioned themselves firmly in luxury tax territory this summer with their moves to round out the 15-man roster. First, they rewarded Marcus Smart with a four-year deal worth an average annual value of $12.5 million instead of playing hardball with the point guard with all the leverage in the world. That signing sent the Celtics over the luxury tax line by a couple million dollars, and the team added to that number this month by signing Jabari Bird to a two-year contract that includes a fully-guaranteed deal for the 2018-19 season.

For now, the Celtics are $3.85 million over the 2018-19 luxury tax threshold of $123.7 million, according to cap expert and friend of the site, Ryan Bernardoni. There is no guarantee the C’s will be a tax-paying team this year, since a variety of moves could get them under the tax threshold. However, none of those moves (trading Marcus Morris for no returning salary, etc.) would be beneficial for the Celtics from a basketball standpoint. Given the team’s title aspirations, any action that would hurt the team’s depth seems unlikely.

So we know that Celtics ownership is willing to be hit a bit harder in the wallet with a luxury tax bill this year. However, there are other limitations that impact luxury tax teams beyond just the added expense from the payroll. The team has fewer resources to work within trades and free agency once they enter tax territory.

In part one of our series, we covered some of the new limitations the C’s will have to work with in free agency while operating in tax territory. For our second installment, it’s time to look at the rules for tax teams and trades and why that Marcus Smart contract is so important for Boston moving forward.

Trade limitations of the Celtics payroll

Ainge has been dealing with a good problem to have during his masterful rebuild over the past few seasons when it comes to trades: too many cheap players on the roster

Boston’s roster consisted of max salary players (Al Horford, Gordon Hayward) all earning around $30 million each. Kyrie Irving is on a max deal at a far lesser scale at $19 million, and then there was everyone else. Last year, no one made more than $5.3 million across the roster, leaving a pretty wide gap in the middle-class earners’ bracket.

This type of gap is generally a great thing for team-building and payroll management. Most teams want to be stacked with All-Stars (who generally make a lot) and role players on the cheap. However, a franchise can run into trouble when trying to trade for more talent with this type of team structure.