If the Nets are going so as to add a participant to this roster as-is, that deal might be going to come back in at lower than $10 million in annual wage.
Welcome to the 2023 NBA offseason, the place the Nets discover themselves as repeat tax offenders after three seasons chasing championships with Kevin Durant and Kyrie Irving on the payroll.
And with a projected $155.4 million in assured salaries for the 2023-24 season, the Nets don’t have a lot wiggle room earlier than incurring stiff luxurious tax penalties.
The Nets have been tax payers in 2020, 2021 and 2022, triggering the repeater tax for groups whose payroll skyrocketed above the tax threshold in three of the final 4 seasons.
Traditionally, the luxurious tax penalizes groups $1.50 for each greenback spent over the tax line, with that tax quantity growing each $5 million spent over the tax line.
As repeat tax offenders, nonetheless, the Nets can be paying $2.50 on the greenback for any transaction that takes them as much as $5 million over the tax threshold, with the tax growing $0.25 on the greenback for the subsequent $5 million spent and $0.75 on the greenback for every of the following $5 million spent.
It’s one thing the Nets should contemplate as they sit on the intersection of any Damian Lillard or James Harden mega deal this offseason. After dumping Joe Harris’ and Patty Mills’ contracts in cost-cutting strikes, it’s secure to say avoiding the luxurious tax is a precedence in Brooklyn this offseason.
Yet with two mega offers on the desk in Philly and Portland, the Nets are in a holding sample of kinds.
The group is armed with eight tradeable first-round picks in 2025, 2027 and 2029, and has a lot of simply tradable and coveted contracts that may be moved each to create cap area and purchase extra draft belongings. Brooklyn has positioned itself as the proper third occasion for any workforce, just like the Miami Heat, both in want of extra belongings to sweeten a deal or cap area aid to amass a star like Lillard, who’s owed $45 million in wage this season alone.
Here’s a sensible instance: The Nets have an $18.1 million commerce exception accessible after buying and selling Durant to the Phoenix Suns. Miami Heat sharpshooter Duncan Robinson has three years remaining on his contract and is owed $18.1 million subsequent season.
The Nets might comply with tackle Robinson’s contract and future draft compensation from the Heat in trade for a conditional second-round choose.
In this state of affairs, the Nets are usually not sending any outgoing wage and are buying a sharpshooter because of a commerce exception created from the Durant deal, whereas the Heat are creating room to tackle Lillard’s 2023-24 wage.
The subject right here, in fact, is the repeater tax: The Nets are already at $155.4 million in payroll and the luxurious tax threshold sits at $165.3 million. In this state of affairs, the Nets wouldn’t be taxed on the primary $9.86 million of Robinson’s contract. The remaining $8.3 million on Robinson’s contract, nonetheless, can be taxed on the repeater tax charge of $2.50 on the greenback for the primary $5 million and $2.75 on the greenback for the remaining $3.3 million.
That’s $21.575 million in taxes on high of Robinson’s owed $18.1 million deal.
Is Miami’s sharpshooter a $40 million participant? The reply is a powerful no.
And does he transfer the needle in Brooklyn’s try to make an additional playoff run after final season’s first-round sweep by the hands of the Philadelphia 76ers? Robinson did shoot 44.2% from deep throughout 23 playoff video games throughout Miami’s NBA Finals run, however he was hardly the explanation a depleted Heat workforce almost gritted its approach to a championship trophy.
Robinson-to-the-Nets is barely hypothetical — the Nets are usually not all for coming into the luxurious tax for the one-dimensional shooter — but it surely’s a real-world instance of how shrewd the entrance workplace have to be with its remaining wage cap exceptions.
Brooklyn owns the non-taxpayer mid-level exception of $12.4 million however can solely virtually spend $9.86 million of it on free brokers earlier than incurring tax penalties. The Nets even have the bi-annual exception of $4.5 million and personal two extra sizable commerce exceptions exterior of the exception generated from the Durant deal: a $19.9 million commerce exception from the Harris cope with the Pistons, plus an extra $6.8 million commerce exception from the Mills commerce to the Rockets.
The Nets, in fact, can all the time purchase a extra impactful participant, like Miami’s Tyler Herro, with out utilizing their commerce exceptions by matching Herro’s $27 million wage with outgoing participant contracts.
In the top, it’s about avoiding the repeater tax — particularly if it is a workforce that isn’t anticipated to make a deep playoff run this season, although Nets basic supervisor Sean Marks would be the first to say publicly he isn’t within the enterprise of placing limitations on any participant or group.
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Source: www.bostonherald.com