clock menu more-arrow no yes

Filed under:

The financial ramifications of signing Pat McCaw

New, comments

The Warriors have a lot to consider with McCaw’s offer sheet, including the enormous cost of matching it.

Golden State Warriors v Los Angeles Lakers Photo by Harry How/Getty Images

In case you missed it, Patrick McCaw signed an offer sheet with the Cleveland Cavaliers. The contract is for two years and $6 million, but interestingly enough, it is fully non-guaranteed.

Once the Golden State Warriors receive the offer sheet, they will have two days to match it; they can choose to either sign McCaw to the same contract, or they can let him go, at which point the contract with the Cavs becomes official.

There’s a lot to consider beyond the obvious: The contract, the player, and the chemistry. In addition to those, there’s the financial ramifications that come from signing McCaw, beyond the $6 million involved in the contract.

Because the Warriors are over the tax, any additional contracts they sign don’t just result in salary payments, but tax payments as well. And since they’re comfortable over the tax, those payments are large.

A tax payment of roughly $11.3 million means that matching McCaw’s offer sheet would cost the team about $14.3 million just for this year. If they choose to keep McCaw under contract next year, that would be another $3 million in salary, plus what would likely be another hefty tax payment.

That said, it’s worth noting that since McCaw’s contract is non-guaranteed, he can be signed and waived. January 7 is the date at which the wing’s contract would become guaranteed, so the team would have over a week to try and figure things out before cutting their costs. The prorated portion of his contract at that point would be about $220,000, which would come with a tax penalty of about $825,000, per Danny Leroux.

That’s still a significant chunk of change, but if the Warriors want to explore options in that time (such as trading someone else for salary relief, or just seeing how McCaw fits in the locker room), that’s a cheaper way to do so.

The contract being non-guaranteed certainly gives the Warriors more options, but they’re certainly playing with an enormous sum of money here. If they have any intention of keeping McCaw around, it will most likely come at a very high cost, which makes matching the offer sheet seem even more unlikely.