Could the Clippers have avoided the luxury tax? Maybe, maybe not

Maddie Meyer

The Clippers will pay the luxury tax for the first time in franchise history this season. They got close to getting under the line with trade deadline deals, but that's not really the point.

The invaluable Mark Deeks, the NBA salaries guru of ShamSports, writes salary cap columns for SB Nation periodically. Today he has a fascinating post about the trade deadline machinations of the Los Angeles Clippers, and concludes that the team could have avoided paying the luxury tax this season had they simply waived Willie Green way back in July. It's a good point, and allowing Green's contract to become guaranteed for the season was almost certainly a mistake in retrospect. However, I'm not convinced that it would have made a difference in the end concerning the Clippers and the luxury tax.

(Be sure to check out the comments section of Mark's post for some back and forth between the two of us on the subject.)

This has been a point of debate at Clips Nation all season of course. Lucas Hann and I have gone back and forth many times on how and whether the Clippers could get under the luxury tax. He has argued the same as Deeks -- get rid of Green's salary and it's all possible. I've never felt like it was that simple.

Let's start with the deadline deals. Because the Clippers traded Antawn Jamison and Byron Mullens for nothing in return, the moves were reported as salary dumps, which are usually done to get under the tax threshold. In that light, the moves look pretty inane -- why dump salary when you don't even achieve the goal attached to dumping salary, getting under the luxury tax? There are benefits to paying LESS tax of course -- but the real payoff is getting under that magic line, where you go from being a tax payer to being a tax collector. The Nets alone will owe a couple or three million to every non-tax paying NBA team this season; the Clippers will not be getting that dividend check.

But the Clippers didn't move Mullens and Jamison to get under the tax -- they moved them to get rid of basketball deadwood and free up roster spots (and possibly a little room from the hard cap, though that was probably not an issue). Bear in mind also that all of this was happening simultaneous to the negotiations with the New York Knicks -- we don't know the final configuration of that deal since it never came to fruition, but taking on a bit more or a bit less salary in a Knicks trade could have been significant in conjunction with shedding the salaries of Mullens and Jamison. The bottom line is, those guys served no basketball purpose to the Clippers, and there were several advantages to getting rid of them even if it didn't get them south of the tax line. The biggest advantage is that the Clippers now have roster spots to use on free agents, including a few interesting ones who will be bought out between now and the March 1. Glen Davis is the first of these, but there will be more. Doc Rivers certainly knew that was going to be the case; he has a long history of March signings from his Celtics days, including guys like Sam Cassell and Stephon Marbury. They haven't always worked out, but it's a card he likes to play.

Back to the luxury tax question, here's my main point: once the Clippers used the full mid-level exception on Matt Barnes and Darren Collison, there was almost no way for them to avoid paying the luxury tax this season. Green was clearly a mistake in retrospect, but a mistake they could have easily fixed by paying Philadelphia (or another team) to take him off their hands they way they did with Mullens and Jamison. It didn't help when Maalik Wayns got injured in pre-season, which meant that paying a significant portion of his contract  was unavoidable.

Taking all of the 'expendable' Clippers out of the equation, you are left with nine players -- Chris Paul, Blake Griffin, DeAndre Jordan, J.J. Redick, Jamal Crawford, Jared Dudley, Matt Barnes, Darren Collison and Reggie Bullock -- making a combined $68,370,481. Those nine contracts -- you could argue whether some of those guys are overpaid, but that's not the point -- are for the primary rotation players and rookie Bullock who is both inexpensive and potentially good. You can't get rid of any of those players without hurting the team, and their combined salaries alone leave the Clippers just $3,377,519 shy of the luxury tax threshold, set at $71,748,000.

Teams are required to carry 13 contracts and the veteran's minimum is $854,389. In other words, just filling out the roster to the minimum level using veteran's minimum contracts would have taken the Clippers over the tax line -- even without Green.

This is not to say it would have been impossible to get under the line while retaining the top nine Clippers. For one thing, rookie minimum contracts cost less than veteran minimum contracts, so you could do that. Or you could nickle and dime the problem, using 10 day contracts to meet the 13 player minimum while dropping to 12 for a week or two at a time, as Deeks points out in his piece.

And in fact the Clippers have stumbled onto a great cap strategy here that I personally had not previously recognized. By transferring the full salaries of players like Mullens and Jamison to other teams with cap space, and replacing those players with pro-rated minimum players, the Clippers salary obligation for cap and luxury tax purposes for some players will actually be well below the veteran's minimum. Look at Hedo Turkoglu's tax number for the Clippers -- it's $473,357, more than $400K less than the number for Ryan Hollins. The pro-rated expense for a veteran's min deal for Glen Davis, with just 25 games left to the season, will be less still, probably under $300K total. That's a great strategy for saving about a half a million dollars per roster spot at the end of the bench. Carry some min guys, dump them down the stretch, and replace them with pro-rated min guys.

Had the Clippers planned to do that from day one of the season, they might -- might -- have been able to squeeze under the tax line, even assuming they add in a couple guys now for the playoffs. The expense for Wayns was unavoidable -- but spending less on Green's roster spot and not wasting money on the likes of Stephen Jackson, Darius Morris and Sasha Vujacic would have made it very close, even adding back in contracts for two bodies down the stretch and entering the playoffs with 14 contracts.

But that's Monday morning quarterbacking of the most minute kind. I lamented the Jackson signing at the time, hoping the Clippers wouldn't come to rue the $255K they spent (which wound up providing 107 minutes and 15 points). Green was a mistake; Jackson was a mistake. But the Clippers were only going to avoid the luxury tax this season by pitching a perfect game on their final four or five contracts, and they prioritized winning over avoiding the tax, which is really what every fanbase wants. Stephen Jackson didn't end up helping, but he might have, and they gave him a try; I can't bring myself to complain about that.

To me, it seems the Clippers looked at the situation after they had spent the MLE and decided, much as I did, that the tax line was an unachievable goal and they would only concern themselves with the hard cap. In the end, I believe it was the correct decision. It may have ramifications this summer (though they'll have another chance to get under the tax threshold before losing the MLE for next season) and in future seasons if the repeater tax becomes a problem, but in the first Doc Rivers season, they decided to ignore the luxury tax and prioritize wins. I'm more than OK with that.

[Note by Steve Perrin, 02/21/14 2:46 PM PST ]

A couple of quick updates. In a Chat on NBAInsiders today, (the new home of the former HoopsWorld) CBA guru Larry Coon fielded a couple of Clippers questions, that repeat, in a little less detail, what we've already covered. He does however remind us that teams under the $4M apron can use the full MLE.

For next season they're already committed to $73.7 million, so they'll just have their mid-level and bi-annual exceptions. Darren Collison has an option, so they may have to deal with his free agency (either re-signing him or replacing him). Other than that, only Ryan Hollins & Hedo Turkoglu are unsigned. They'll also have their own first round pick (somewhere around #25). So it looks like they may be able to spend their full mid-level exception (if the team ends up more than $4 million over the tax line, they can only spend the smaller, taxpayer mid-level).

Now there's a Catch-22 here -- you  have the full MLE if you're below the apron, but that calculation is done AFTER you spend the MLE. So if the apron is $4M above the tax line, and the MLE is $5.5M, you actually have to be $1.5M below the tax line to actually SPEND the full MLE. Either way, if Collison opts out, they'll have more or less the full MLE, even after signing their first rounder by my math.

Also, Mark Deeks had a few reactions to this post on Twitter, the most significant of which was this:

He's correct there. If they'd dumped Jamison AND Mullens AND Green at the deadline, they could have signed two vets, carried 13 contracts, and been under the tax line with the savings delta between full season deals and pro-rated deals. Would they have been viewed as smart or cheap in that event? It's impossible to know.

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