The league’s salary cap has been set at $58,044,000, a tick higher than last season and about $2 million more than the league’s optimistic projections. The luxury tax line is set at $70,307,000. If a team’s payroll goes over that figure, it pays a dollar-for-dollar tax on the amount by which its payroll exceeds the tax line. Projections had the tax line coming about $5 million lower.
Your natural question is: What does this mean for the Celtics? Answer: Basically nothing. What it means most of all is that the C’s have a chance to cut their luxury bill significantly, and that’s a good thing if you care about the financial health of the franchise. But it does NOT change the fact that Boston has no cap room and won’t get any, barring some drastic choices.
We know for sure the following seven players will be on Boston’s cap next season: Paul Pierce, Kevin Garnett, Rajon Rondo, Kendrick Perkins, Glen Davis, Avery Bradley, Semih Erden. The combined salary for those seven players:
*This assumes a round number of $15 million for Pierce.
So we’re already approaching the cap.
In reality, though, Boston is actually well over the cap level because the league counts a team’s outgoing free agents against its cap number until the team either signs the free agent or renounces its rights to that free agent. These artificial charges on the team’s cap number are known as “cap holds.”
Ray Allen’s cap hold, for instance, is nearly $20 million, which gets added onto that $51.9 million figure above. That figure stays on Boston’s cap until they re-sign Allen or renounce his Bird Rights, meaning they would not be allowed to go over the cap to re-sign him. Boston is not going to do that second thing.
Repeat: Boston is over the cap right now.
Let’s go forward assuming a couple of things:
1) Rasheed Wallace retires and negotiates a buyout that costs Boston $2 million this season.
Now we’re up to: 53,954,929
2) Boston re-signs Ray Allen for a deal that pays him $9 million in 2011. That takes us to:
Good-bye salary cap. But the C’s still have about $7.3 million of wiggle room before they hit the luxury tax line. Unfortunately, they’ve only signed eight players so far, and the league requires they carry 13.
The mid-level exception is now set at $5,765,000. Let’s be optimistic and say the C’s use the full mid-level on two players, bringing our total roster to 10 guys.
That brings us to:
Uh oh. We’re getting close. Better sign Luke Harangody to the league minimum of $473,604, which brings us to 11 players and a total salary of $69,193,533.
Let’s finally assume Boston fills out the roster with two guys who come for the veteran’s minimum—one young guy (we’ll peg his salary at the 4th-year level of $915,852) and one 10-year vet ($1,352,181).
Grand total for all 13 guys:
That gives Boston a total tax bill of about $1.5 million. Not bad, especially considering the owners broke the bank last season and the 2011 bill could easily have been as high as $6-$10 million with the expected tax line.
My projection will likely end up being a bit optimistic—the team may end up paying Ray Allen or Sheed more, and they may elect to use Bird Rights on one of their pending free agents (Tony Allen? Nate Robinson?) instead of signing a minimum salary player.
Bottom line: It’s basically inevitable Boston will be a taxpayer again this year. We should appreciate the ownership team’s willingness to spend. Not every fan base is so fortunate.