How the new NBA cap rules target the Warriors: Sam, Andy and Danny Leroux talk

your move, Joe Lacob

Salary cap expert Danny Leroux joined the Light Years podcast (subscribe at the link!) boys Sam Esfandiari and Andy Liu to discuss the new CBA and how it targets the Warriors. Sam and Andy have been friends of the site since the GSOM days and they’ve kindly given the okay to quote extensively from their podcasts.

Here’s the whole discussion, which is pretty thorough and interesting, followed by a couple of quotes.

Next year’s changes

Sam: Give us the high level overview of like what this means for this off-season, next off-season going forward. Like how bad of a situation are the Warriors in right now?

Danny: It's interesting because my thought had been the way they were gonna handle this was they were gonna make it really expensive to go really deep in the tax. They were just gonna make the bands more expensive…. and the owners and players did do that. But the part that's more interesting in this is… they actually made it harder for teams over that second apron to add new talent.

In terms of the second apron, there are a number of really interesting things that are gonna kick in over the year. … The only big one for this year is: teams that are that far over, I think 17 and a half million over the tax line, they don't get a taxpayer mid-level [exception]. That's what the Warriors used to sign DiVincenzo last year. So that's gone. … If you use [the mid-level exception] , then you can't go over the second apron for any reason. …

So really for the Warriors for this year, it's just that they lose the taxpayer mid-level and there's probably not much they can do to get it. But also if we're speaking practically here, I mean, they could get somebody who would help them, but it's not gonna transform the team necessarily. So it hurts, but it doesn't hurt that badly.

Can Lacob get under the double tax line?

Sam: 24-25 is when like the clock starts on potentially losing future picks and it getting potentially really restrictive with trades and some of the moves he can make. So for all intents and purposes, if Joe Lakob’s willing to eat the tax, they have like 12 months to get themselves under the line where they want to be. Is that the best way to think of it?

Danny: I would think of it as 18 [months] because the luxury tax doesn't count until the end of the year. So if you're a hundred billion over the tax and you traded a hundred billion salaries, you would pay no tax. So you can't really do that as a practical consideration, but you see teams duck the tax, or in this case it's gonna be starting to duck the double tax at different points in time.

But the practical consideration why you might wanna say 12 or 14 [months] is because as a practical matter. It's gonna be a lot harder now to dump salary in season because one of the things that changed is they, I don't have all the numbers on this, but they raised the floor. So what that means is teams aren't gonna come into the season like the Pacers did, like the Spurs did with like 30 million in space. So that means that you don't have those trade partners in January…. “Hey, you want to take $10 million, $15 million of my guy and not send anything back?” The Warriors haven't really done that, but that option's not gonna be on the table as much anymore.

Won’t hit the Warriors as much as some other teams

I think that it's actually going to affect the Warriors less than a team like the Clippers or that next team, whether it's the Celtics or the Nuggets, because this Warriors team is going to get cheaper just because their players aren't going to be players for that much longer.Also, they could leave of their own accord.

Let's say they could trade Jordan Poole for nothing. Maybe it can happen, maybe it can't. The primary thing they benefit from there is saving Joe Lacob money. … It's not going to give the Warriors $30 million to spend on other guys. It's not going to give them all these other things.

The trade exceptions are going to get dicey in a little bit. So really they do actually have more of a window here.

Three big decisions

Danny: There are three things that we're circling for the next 12 - 18 months.

One is Poole for obvious reasons, but the other two are actually more interesting.

And that's Draymond. How much do you bring 'em back? How much does it cost? What's the duration, what's the annual value there?

And then Klay. Klay's contract, I'm looking at my sheet, uh, 43.2 million for next year. But then nothing after that. And he might want less. That's actually a more complicated negotiation probably than Draymond for a bunch of different reasons. And they can extend him now, but only if the two sides can come to an agreement. And if I'm the Warriors, I'm saying, you know, I could bring you back. We could commit to it now, but it's gonna be at a discount. And if you don't want that, then we'll roll it into next year and see where things go. Yeah, that'll be an interesting one.

Bonus Comment from Sab

Sab writes:

New CBA goes into effect July 1.

"Beginning this summer, teams above the second apron will lose access to the taxpayer mid-level exception, and they'll be limited to taking back no more than 110 percent of the salary that they send out in trades (as opposed to 125 percent in the current CBA), according to Yossi Gozlan of HoopsHype."

https://www.forbes.com/sites/bryantoporek/2023/06/09/nbas-new-collective-bargaining-agreement-might-create-an-avalanche-of-player-movement/?sh=1b1dce951b16