Show me the money: The state of the Warriors salary cap going forward

Late last week, news reached our ears by way of a patented ‘Shamsbomb’ on new projections for the salary cap over the next two years.

So where does that leave the Warriors going forward?

Well, earlier in the off-season I tried my hand at demonstrating what kinds of choices the Warriors would have to make to keep the core four guys — Stephen Curry, Kevin Durant, Draymond Green and Klay Thompson — together for the long haul.

With all the activity over the summer it feels like a good moment to revisit this. As before this is in no way a prediction; it’s more a thought exercise to demonstrate what it would cost for the Warriors to keep the core four, plus a couple of pieces around them.

If you’re viewing via a mobile, the full sheet can be downloaded as a PDF here.

Choices

So within this are a ton of choices I have made. They’re all contestable of course, but I’ve tried to make them as realistic as one can just to show what kinds of choices need to, and could, be made.

• As I outlined in my recent preseason preview piece, I’ve assumed Kevon Looney’s option is not picked up and Patrick McCaw gets a contract around the league average salary.

• Shaun Livingston only has $2M guaranteed in 2019-20. I’ve assumed they waive him and stretch that remaining money.

• Andre Iguodala is traded in third year of his contract along with the 2019 first rounder to avoid taking back salary. Iguodala’s final year is worth just over $17M, when he’ll be 35 years old. Keeping him would put the Warriors up three brackets, adding around $78.75M to the tax bill on top of the $65M they are already due to pay.

• Both Thompson and Green take a slight discount on the contracts they could sign, starting at $27.5M rather than just over $30M.

• Durant signs a four-year max deal this off-season (as Danny Leroux outlined in his review of Durant’s free agent options, this could be a 3+1 with a player option at the end).

• One of Damian Jones or Jordan Bell turns out to be a decent rotation player, and they pay him a contract around the room exception, which currently starts at just over $4.5M. I’ve a much better feeling about Bell, so have gone for him.

• Obviously there will be decisions to be made on David West, Javale McGee, Zaza Pachulia, and Nick Young. But for argument’s sake I have taken the view that it’s veteran minimum contracts only for the future.

Show me the money

So how will the Warriors afford this? Well the first thing to say is that NBA teams are going to be paying never-before-seen levels of salaries and tax.

For example, after Russell Westbrook signed his extension, the small-market Oklahoma City Thunder will be paying out a total tax and salary bill of over $300m next year if Paul George and Carmelo Anthony stay. That’s the same ownership group who cheaped out of paying a much lower sum for James Harden’s extension, breaking up a potential dynasty.

Are Lacob & Co. going to be outspent by the Thunder? Particularly when there might only be one year where they get into that territory?

Known knowns

It’s difficult to know exactly how much money NBA teams have at their disposal. All we can do is to piece together the different sources of income that are available.

For the Warriors there are some ‘known knowns’. Per Zach Lowe they made a profit of $92m last year, after revenue sharing. That was third in the league.

They have just signed a $20 million per year sponsorship deal with Rakuten, but per the Zach Lowe article they will actually only receive $5 million themselves due to various sharing mechanisms.

Overall, they paid out around $100 million in salaries last year, so in total they should be able to get to $200 million on these sources of income alone.

Known unknowns

There are also ‘known unknowns’. We know that the Chase Center will open in 2019-20, the same year they hit the dreaded ‘repeater tax’, which will add a huge boost to profits. How much is the unknown. But Tim Kawakami had some thoughts on this earlier in the summer.

There are two other big boosts of income coming soon. As Iguodala deftly pointed out, a new TV deal is in the offing in the next couple of years. That is likely to bring in a ton of money.

Then there is the ‘personal seat licensing’ at the Chase Center. This is kind of like a loan, but basically interest free over 30 years. The main point is that it brings in a huge influx of cash just when things start getting pricey; reports indicate this could be as much as $300 million!

Time will tell

Even with all that money coming in, nobody can really know at what point Lacob, et al. will say that’s too rich for his blood. But so far, as I outlined in my piece on the Klay trade rumours, the decision making has focused on improving the team whatever the cost.

This is what it looks like to get the team through the mega-contract squeeze. After 2021-2022 both Curry and Durant, if they choose to re-sign, could take less to help the team duck back under the tax line and get some much needed financial relief.

Ultimately only time will tell what will happen. But with all the money due to come in, and some smart cap choices, we could be set to enjoy this team for some years yet.

Some technical points

In terms of future contracts and exception scales, they are based on the actual cap figures each year so I’ve estimated those (and rounded for ease). Future picks are 30th because the Warriors are the GOAT. I’ve not included the two-way contracts as they can only be on the main squad for 45 days so it’s a fairly negligible cost.

Minimum salaries get a little tricky. These are based on the number of years a player has played in the league. So to avoid teams keeping their costs down by only signing younger players, only the salary up to the two-year minimum ($1,471,382 this year) counts towards the cap. The rest is reimbursed by the league.

To avoid confusion, I’ve included the full salary for West, McGee, and Omri Casspi this year in the spreadsheet, but thereafter all veteran minimums are at the two-year minimum. This doesn’t sound like much but when you are in a tax bracket where every $1 counts as around $5 (i.e. the higher levels repeater tax) it adds up pretty quickly.

So for example this year, this difference is just over $2M. By saving this money the Warriors hover just over the threshold for the next tax bracket, and in fact this overall saves them almost $10M in tax and salary payments. Remember, that’s basically two-years’ Rakuten income, so these small margins do matter.

This is likely no accident. So, for argument’s sake, where the team is hovering slightly above a tax threshold I’ve taken the view that the Warriors are going to find a creative way to stay the right side of the line. This could be, for example, by signing a couple of younger players on cheaper veteran minimum contracts rather than those who qualify for the full veteran minimum contracts.

With thanks to Larry Coon’s Salary Cap FAQ and www.basketball-reference.com for this year’s figures.