Tax Payer MLE Options

Swedgin

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Must be good to be an NBA player:

Heads - we win big when revenue goes UP
Tales - we break even when revenues go DOWN

Except they're not.

When the league proposed smoothing to the players, they offered (basically) nothing in return. Had the Union acquiesced to smoothing it would have been changing the rules in a way that directly and immediately negatively impacted many of its members, and could not have pointed to any clear and immediate benefit it received in exchange. No Union takes that kind of deal.

This time around, the Union and (most of) the teams will benefit from an artificially high cap and tax line. To get that higher cap, the Union is going to have to agree to a much much larger escrow. The salaries reported on cap sheets for this year will not reflect what players actually receive. Everyone will take a hair cut in what they actually take home.
 
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the moops

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Reporters out west and in the northeast say that confidently. But keeping the cap flat only really helps the teams in those markets. In the real world revenues were off by a billion and a half and a lot of smaller market teams are going to have to host games with no/few fans for the foreseeable future. I'm betting that the Clevelands of the world aren't excited about losing a bunch of money to help out the Warriors and Nets.
The Clevelands of the world dont have nearly the sway though
 

benhogan

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This time around, the Union and (most of) the teams will benefit from an artificially high cap and tax line. To get that higher cap, the Union is going to have to agree to a much much larger escrow. The salaries reported on cap sheets for this year will not reflect what players actually receive. Everyone will take a hair cut in what they actually take home.
OK, that makes sense and will be a form of smoothing down. So they'll take the Escrow from the current 10% to something like 25%? Basically, a cut in pay because there is very little chance they get up to the previously estimated revenue figures to support the flat Cap.

Do you believe the Union Head will be cool with this, fight this, or has no choice?
 

lexrageorge

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OK, that makes sense and will be a form of smoothing down. So they'll take the Escrow from the current 10% to something like 25%? Basically, a cut in pay because there is very little chance they get up to the previously estimated revenue figures to support the flat Cap.

Do you believe the Union Head will be cool with this, fight this, or has no choice?
My guess is that the other options will be far less appealing; with the possibility of empty arenas for a good portion of the 2021 season, a lockout becomes a lot less costly to the owners on a marginal basis. Both sides will have to compromise a bit on the amount of escrow.
 

NomarsFool

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It seems like a significant issue is who "pays"? In one scenario, all the players who are free agents this offseason will find little to no market for their services. In the other scenario, all the players will take a haircut. It will be interesting to see which way the union goes.
 

Swedgin

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OK, that makes sense and will be a form of smoothing down. So they'll take the Escrow from the current 10% to something like 25%? Basically, a cut in pay because there is very little chance they get up to the previously estimated revenue figures to support the flat Cap.

Do you believe the Union Head will be cool with this, fight this, or has no choice?
The reporting on the cap/tax issues has been uniform in that in an increase in the escrow is part of the deal. From the Union's perspective it is a no brainer. If the Union refused to discuss an escrow change, the owners have two options, both of which are both devastating to the players 1) let the cap be set by BRI or 2) opt out of the CBA. Silver and Roberts are by all appearances smart, reasonable, competent leaders. Having either #1 or #2 is bad for both sides and would be a tremendous failure on their part. There has been no reporting that the negotiations are on a path toward either outcome.

I assume the negotiating points are not whether the escrow increases but rather by 1) how much and 2) will the owners agree to spread the "cost" out to some future years (effectively giving the players a loan). If I am the Union, I am arguing that the Owners are in a far better position to handle this "act of god" than the players. They have more wealth, access to credit and (for the most part) own an asset (an NBA team) which has appreciated exponentially since they purchased it.

It seems like a significant issue is who "pays"? In one scenario, all the players who are free agents this offseason will find little to no market for their services. In the other scenario, all the players will take a haircut. It will be interesting to see which way the union goes.
Not really. If the cap is not artificially adjusted and instead set by BRI, then the impact is going to be far broader than this years FA class. If the cap and tax line plummet by 25/30% teams will cut their rosters to the bone. A host of guys who would otherwise have team options picked up/deals guaranteed (e.g. Theis) would now be dumped into free agency as well. Moreover, the cap catastrophe would not be limited to one year. The revenue for upcoming year is going to suck too. So 2021-2022 would see a massively depressed cap as well and second free agency class (and team option/non-guaranteed deals) would be devastated.
 

benhogan

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I assume the negotiating points are not whether the escrow increases but rather by 1) how much and 2) will the owners agree to spread the "cost" out to some future years (effectively giving the players a loan). If I am the Union, I am arguing that the Owners are in a far better position to handle this "act of god" than the players. They have more wealth, access to credit and (for the most part) own an asset (an NBA team) which has appreciated exponentially since they purchased it.



Not really. If the cap is not artificially adjusted and instead set by BRI, then the impact is going to be far broader than this years FA class. If the cap and tax line plummet by 25/30% teams will cut their rosters to the bone. A host of guys who would otherwise have team options picked up/deals guaranteed (e.g. Theis) would now be dumped into free agency as well. Moreover, the cap catastrophe would not be limited to one year. The revenue for upcoming year is going to suck too. So 2021-2022 would see a massively depressed cap as well and second free agency class (and team option/non-guaranteed deals) would be devastated.
I'd hope the escrow would progressively tax the higher earners and not be flat across all player contracts. Because if the Players Union is going to argue that the owners should take a disproportionally higher hit due to their wealth. Then the wealthier players should take a bigger % hit than the lower-paid players.
(IE GH should pay a higher escrow % than Marcus Smart)
 
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NomarsFool

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I'd hope the escrow would progressively tax the higher earners and not be flat across all player contracts. Because if the Players Union is going to argue that the owners should take a disproportionally higher hit due to their wealth. Then the wealthier players should take a bigger % hit than the lower-paid players.
(IE GH should pay a higher escrow % than Marcus Smart)
I think that would be extremely unlikely. They did flat escrows before, didn't they? Unfortunately, just like in life, the rich players are also the most powerful ones.
 

the moops

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Stealing this from somewhere (forget where).

But is it a bad thing if Hayward just opts out and signs elsewhere? Gets the Celtics out of the tax completely and they would have the full mid level instead of taxpayer. With nobody with cap space and and uncertain future, seems like the full MLE would get you someone really good who wants to 1) play for a contender, and 2) sign a short term (1+1) deal to see how the landscape changes over the next year or two.

Not sure who would be willing to take the MLE for a year or two. Gallo? Harris? Grant? Ibaka? Millsap?
 

Cellar-Door

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Stealing this from somewhere (forget where).

But is it a bad thing if Hayward just opts out and signs elsewhere? Gets the Celtics out of the tax completely and they would have the full mid level instead of taxpayer. With nobody with cap space and and uncertain future, seems like the full MLE would get you someone really good who wants to 1) play for a contender, and 2) sign a short term (1+1) deal to see how the landscape changes over the next year or two.

Not sure who would be willing to take the MLE for a year or two. Gallo? Harris? Grant? Ibaka? Millsap?
It would be pretty bad yes. You would be replacing Hayward with a worse player and be hard capped for the season. It wouldn't be a disaster.

Also... if the market is so bad that players are settling for the MLE...which of the 3 teams with cap space is giving Hayward the huge deal he'd need to opt out of 1/34M?

That's the thing with Hayward, the teams that would likely want him most don't have cap space. Could do a sign and trade opt out, which would hard cap the team getting him, but they might be okay with that if they feel good about the rest of the roster.
 

nighthob

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Stealing this from somewhere (forget where).

But is it a bad thing if Hayward just opts out and signs elsewhere? Gets the Celtics out of the tax completely and they would have the full mid level instead of taxpayer. With nobody with cap space and and uncertain future, seems like the full MLE would get you someone really good who wants to 1) play for a contender, and 2) sign a short term (1+1) deal to see how the landscape changes over the next year or two.

Not sure who would be willing to take the MLE for a year or two. Gallo? Harris? Grant? Ibaka? Millsap?
That seems to be what Lowe was hinting at, that Hayward might just opt out to choose his next destination. I think Gallo would be ideal as the stretchy 4 to replace Hayward (since they have Granite to help carry Gallo's minutes). Gallo also fits better as the fourth option.
 

Cellar-Door

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That seems to be what Lowe was hinting at, that Hayward might just opt out to choose his next destination. I think Gallo would be ideal as the stretchy 4 to replace Hayward (since they have Granite to help carry Gallo's minutes). Gallo also fits better as the fourth option.
I don't see any way Gallo is a better fit. He's a much worse defender, and a much worse playmaker, the Celtics desperately need another playmaker on the bench considering Hayward is the second best on the team already.
Gallo is far more a Kanter replacement of we're desperate for bench scoring go dominate the ball and get me some buckets role than Hayward
 

PedroKsBambino

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I like Gallo, but I like Hayward more for reasons Cellar-Door notes. I think he's an option in a scenario where you trade Gordon for picks and payroll flexibility....but I'm not an advocate of that approach.
 

Swedgin

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Based on the reporting the deal between the PA and the League seems to be done. Escrow will go up to 18 for this year and next. The cap 109 this year and will be approx 112 next year. The tax line would be no lower than 132.6 this year and 135.25 net year.

So for the Celtics that means if they keep GH, Kanter and all 3 picks, waive Green, don't resign Wanamaker and decline Semi's option, they will be 13 million into the tax, which equals a tax bill of approximately $23.6 million. As we have discussed before they could get out of the tax entirely by moving GH or could substantially reduce the tax bill by moving Kanter, Poirer and Edwards into another teams space by using one of the picks.

For the following year, after signing Tatum to the max and assuming Danny picks up the options on Grant Williams, Time Lord and Langford, the Celtics would be about 9 million under the tax line. (this assume we retain all with the three picks from this year and next year's selection.) Theis and GH would be free agents. Carsen Edwards would be expiring.
 

JakeRae

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Based on the reporting the deal between the PA and the League seems to be done. Escrow will go up to 18 for this year and next. The cap 109 this year and will be approx 112 next year. The tax line would be no lower than 132.6 this year and 135.25 net year.

So for the Celtics that means if they keep GH, Kanter and all 3 picks, waive Green, don't resign Wanamaker and decline Semi's option, they will be 13 million into the tax, which equals a tax bill of approximately $23.6 million. As we have discussed before they could get out of the tax entirely by moving GH or could substantially reduce the tax bill by moving Kanter, Poirer and Edwards into another teams space by using one of the picks.

For the following year, after signing Tatum to the max and assuming Danny picks up the options on Grant Williams, Time Lord and Langford, the Celtics would be about 9 million under the tax line. (this assume we retain all with the three picks from this year and next year's selection.) Theis and GH would be free agents. Carsen Edwards would be expiring.
I recall learning earlier in this thread that an agreement like this was impossible. Are you sure the reporting is accurate?
 

benhogan

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I recall learning earlier in this thread that an agreement like this was impossible. Are you sure the reporting is accurate?
A flat cap with the escrow climbing from 10% was always in play...the crux of the problem is when teams were constructed in the Summer of 2019 the cap (in 2020-21 season) was expected to be $116MM.

Revenues will crater and teams will post record losses. Some owners may not be excited about paying taxes when no one is attending games or watching on TV.

I'd expect plenty of sellers of players/contracts between now and the '21 trade deadline with a flat cap. YMMV
 
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luckiestman

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Thanks for those answers. Seems like there could be some type of compromise where the penalty is based of the previously forecasted cap or at least the severity of the penalty.

you guys can hire me for your negotiation team anytime you want.
 

benhogan

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The reporting on the cap/tax issues has been uniform in that in an increase in the escrow is part of the deal. From the Union's perspective it is a no brainer. If the Union refused to discuss an escrow change, the owners have two options, both of which are both devastating to the players 1) let the cap be set by BRI or 2) opt out of the CBA. Silver and Roberts are by all appearances smart, reasonable, competent leaders. Having either #1 or #2 is bad for both sides and would be a tremendous failure on their part. There has been no reporting that the negotiations are on a path toward either outcome.

I assume the negotiating points are not whether the escrow increases but rather by 1) how much and 2) will the owners agree to spread the "cost" out to some future years (effectively giving the players a loan). If I am the Union, I am arguing that the Owners are in a far better position to handle this "act of god" than the players. They have more wealth, access to credit and (for the most part) own an asset (an NBA team) which has appreciated exponentially since they purchased it.



Not really. If the cap is not artificially adjusted and instead set by BRI, then the impact is going to be far broader than this years FA class. If the cap and tax line plummet by 25/30% teams will cut their rosters to the bone. A host of guys who would otherwise have team options picked up/deals guaranteed (e.g. Theis) would now be dumped into free agency as well. Moreover, the cap catastrophe would not be limited to one year. The revenue for upcoming year is going to suck too. So 2021-2022 would see a massively depressed cap as well and second free agency class (and team option/non-guaranteed deals) would be devastated.
good work here, seems like you nailed it (along with luckiestman)
 

Swedgin

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good work here, seems like you nailed it (along with luckiestman)
Thanks. I did not foresee the tax reduction/BRI wrinkle. That is a such an elegant solution. Raising the tax line, creates a problem for smaller market teams that are counting on getting tax distributions. Leaving it as is really hampers player movement. This is a perfect middle ground. Does not remove teams from the tax entirely, but has the potential of reducing the pain a good deal.

FWIW, I still think Ainge looks to dump some salary to trim the bill.
 

pjheff

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FWIW, I still think Ainge looks to dump some salary to trim the bill.
Where? Do you see him allowing Wanamaker to walk, hoping Kanter opts out, and not exercising Ojeleye's option, or do you envision deeper cuts?
 

PedroKsBambino

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Thanks. I did not foresee the tax reduction/BRI wrinkle. That is a such an elegant solution. Raising the tax line, creates a problem for smaller market teams that are counting on getting tax distributions. Leaving it as is really hampers player movement. This is a perfect middle ground. Does not remove teams from the tax entirely, but has the potential of reducing the pain a good deal.

FWIW, I still think Ainge looks to dump some salary to trim the bill.
Agreed, it was well crafted. The NBA is very sophisticated, and this is why several of us were pushing back on the idea that there wouldn't be any adjustments...it made too much sense to find a middle ground (and they did).
 

Cellar-Door

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Bad news in the CP3 trade, many assumed it would happen officially later to let Suns get under the cap, but it is happening now.
Likely means they plan to make Baynes a good sized offer and take him out of the MLE market.
Shame as I thought he was the best MLE option for us.