Fear the Tax Collector

Evolving standards for judging NBA trades



Long Lake, MN native and Wisconsin alumnus Jon Leuer is at the center of a deal which would send him to the Memphis Grizzlies.

If the rumored trade between the Cleveland Cavaliers and Memphis Grizzlies is finalized later today, it will be an intriguing start to the NBA’s season-within-a-season which occurs before the trade deadline (on February 21st). Speaking in basketball terms, the deal’s lopsided. It looks like this:

Cavaliers receive: unsecured payday loans  

Mareese Speights, $4.2 million

Wayne Ellington, $2 million

Josh Selby, unsecured payday loan $762,000

(Protected) first-round pick

Grizzlies receive:

Jon Leuer, $762,000

The loans for people with ccjs Grizzlies are in 4th place in the West and are dark horse title contenders. For them to trade their seventh and ninth men in their rotation (in terms of minutes played) for a developmental player and a non-lottery pick is superficially puzzling. When the salary cap – and more importantly, luxury tax – implications are kept in mind, the trade is certainly justifiable, if not prudent.

The Grizzlies’ predicament begins with the fact that more than $50 million in 2013-14 money is tied up in their core three players – Rudy Gay, Zach Randolph and Marc Gasol. Add point guard Mike Conley’s $7.5 million salary and the Grizzlies are already close to this year’s cap number of $58.044 million. After a team’s salary rises above $70.3 million, the luxury tax kicks in. While the tax isn’t as cumbersome in 2012-13, next year the price for being above the luxury tax threshold jumps to $1.50 for every dollar spent from the current rate of every $1.00 for every dollar.

The problem, then, comes with Mareese Speights’ contract. He holds a player option for next season at $4.5 million, which he’d likely exercise. This year, that’d cost an extra $4.5 million – next season, it’d be $6.75 million. Furthermore, the penalties increase for every $5 million increment a team exceeds the tax threshold – and with Speights, the Grizzlies would already be close to their first $5 million. As their roster was constructed, they’d have $62.5 million devoted to five players (Gay, Randolph, Gasol, Conley and Speights) with just $12.5 million to spend on the other ten roster spots before incurring nasty luxury tax penalties.

Marc Gasol
Marc Gasol is one of the NBA’s most gifted big men – can he lead Memphis to the Finals?

So it appears as though these penalties, originally thought to prevent big market teams from simply outspending the small market teams, taxes be damned, cut both ways. Memphis is one of the NBA’s smallest markets, but happens to have stars; financial priorities are overriding pure basketball objectives because the tax implications are too prohibitive. Will this type of trade become commonplace in the NBA? If so, fans and pundits must re-evaluate the traditional terms of what a “fair” or “unfair” trade constitutes. It’s more important than ever to find serviceable role players at favorable salaries, because exceeding the tax threshold will land General Managers in hot water with the guys who sign their checks (the owners).

The Spurs’ scouting and international signing success, and the Thunder’s drafting savvy, will not be ideals, but standards. If a team isn’t successful at doing both, they won’t be able to field a winning roster, unless they can talk their owner into spending $1.50, $2.00 or even $2.50 for every $1.00 in tax money on a regular basis… which seems unlikely for most of the league’s markets.

Because of his salary (a 1.059 million option for next year), players like Leuer will be hotter commodities than previously thought – and the Grizzlies have to hope he can be a serviceable back-end-of-the-rotation contributor for that price. As a Badger hoops fan and a Minnesota resident, my biased view is that he will turn into a serviceable role player. He was blocked in Cleveland by Anderson Varejao (a terrific center) and other young bigs with better pedigrees who need minutes (Tristan Thompson and Tyler Zeller). Hopefully, more opportunities come his way in Memphis.

The Grizzlies’ roster is worse than it was prior to the deal – but there was a good reason for them to do it. Salary dumps have long been a part of NBA business, but this is different. It isn’t just overpaid stars that are being moved when their team is underperforming best bridging loan and wants to rebuild – the new reality will involve bench players, contract terms and tax rates.

General Mangers and owners must become smarter in how they construct rosters and make trades – it only seems fair that fans would have to become smarter to put them in their proper context. This trade gets Memphis under this year’s tax threshold and helps them avoid the penalty next season, giving them some flexibility. If fans dislike this move, but also hate that the Lakers, Celtics, Heat and Knicks can outspend everyone else, that’s inconsistency on their part. Starting next season – cheapest secured loans starting now, in fact – the most intelligent teams, as opposed to the richest, will have a clear upper hand.

That doesn’t sound so bad, does it?


BreakTheHuddle covers the MASH-unit otherwise known as the Minnesota Timberwolves. He’s also a fan of the beleaguered Minnesota Twins and the 13-time World Champion Green Bay Packers. Leave a comment below, follow him on Twitter @BreakTheHuddle or email him at BreakTheHuddle@gmail.com.

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