Next season's salary cap will rise to $70 million next season, a jump of nearly $3 million, Adrian Wojnarowski of Yahoo Sports reported last night.
The NBA salary cap has risen to $70M for the 2015-'16 season, league sources tell Yahoo Sports.— Adrian Wojnarowski (@WojYahooNBA) July 9, 2015
Also, next season's luxury tax level will be set at $84.7 million, Wojnawrowski reported.
The NBA's team tax level will be $84.7M, league sources tell Yahoo Sports.— Adrian Wojnarowski (@WojYahooNBA) July 9, 2015
This slightly changes what we thought about the David Lee trade and its financial implications for the Warriors. Lee became increasingly expendable throughout last season as a highly-paid, sparingly used benchwarmer. The Warriors would finish with a franchise-record 67 victories -- and Lee's replacement in the starting lineup, Draymond Green played a starring and ubiquitous role, finishing second in both Most Improved Player and Defensive Player of the Year and signing a new five-year deal this offseason.
Make no mistake: Lee did influence the turnaround of the NBA Finals for Steve Kerr and the Warriors, helping the squad play small for nearly the entirety of the final three games and win the title.
However, owners Joe Lacob and Peter Guber did not want to pay Lee $15.5 million next season to have the same benchwarmer role as this past season, as it was a waste of money and his ability. So the Warriors agreed to help move Lee, now in the last of a six-year, $80 million deal signed in 2010, to a new team in order to help him get the minutes he deserved -- and get out of his mammoth contact.
The Warriors agreed yesterday to trade Lee to the Boston Celtics for veteran forward Gerald Wallace, who is on a one-year, $10.1 million contract.
Before Lee came off the books, Golden State had a payroll about $102.5 million committed to 15 players for next season, including Kevin Looney's contract worth 120% of the scale, and a moderate cap hold for restricted free agent center Ognjen Kuzmic. According to Wojnarowski's reporting of the new luxury tax figures, this would have put the Warriors as $18.8 million deep into the luxury tax threshold for next season, in the second-toughest tax bracket (not, as was previously assumed before Woj's report, the toughest bracket).
Under Lacob and Guber, Golden State hasn't yet paid a cent of luxury tax bills. This $102.5 million would have cost them just over $41.1 million in luxury tax payments, meaning the Warriors would have paid about $143.6 million on total player payroll for next season.
In trading Lee for Wallace, the Warriors save about $5.4 million in tax payments and drop from the second-toughest tax bracket to the middle bracket.
As such, Golden State's luxury tax bill for next season will be drastically lowered.
I've got the Warriors at $97M in payroll for 15 players. With the tax line set at $84.7M, that projects to a $22M tax bill for GSWs.— Tim Kawakami (@timkawakami) July 9, 2015
With Gerald Wallace in place of Lee, not only is their tax bill significantly lowered but also Golden State can now use what is called the stretch provision on Wallace's contract; this would spread his contract equally over three seasons. Wallace's deal can be stretched was signed after the current Collective Bargaining Agreement (CBA) was signed in 2011, whereas Lee's deal cannot be stretched as it was signed before the current CBA.
If the Warriors do indeed stretch Wallace's contract, he would be signed for, essentially, $3.368 million each of the next three seasons instead of one year at $10.1 million. The Warriors in this scenario would pay just a projected $11 million in tax payments, and drop another luxury tax bracket. However, despite this making financial sense, as the Warriors would just about halve their tax payments if they stretch Wallace, Golden State has been reported as reluctant to do so. The Warriors do not want to take on additional salary past this season, as the cap is set to explode next offseason with the new TV deal kicking in.
The Warriors plan to keep newcomer forward Gerald Wallace, sources told Yahoo Sports.— Marc J. Spears (@SpearsNBAYahoo) July 7, 2015
The Warriors have until August 31, writes Sam Amick of USA Today, to decide whether or not to stretch Wallace's deal.
As for stretch provision re: Wallace, option available to Warriors until Aug. 31. Could look to trade him for another cheaper deal b4 then.— Sam Amick (@sam_amick) July 7, 2015
It remains to be seen whether the Warriors will stretch Wallace or trade him for a younger, cheaper option. In any case, the franchise will save at least $19 million in tax payments for next season.
For more reaction and analysis about the Warriors' latest trade, check out our David Lee storystream.