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The Luxury Tax Implications of the C.J. Wilcox Trade

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This is more than a basketball move.

Mark D. Smith-USA TODAY Sports

Editor's note: This article contains incorrect information.  My figures were based upon projected salaries for Austin Rivers and Jamal Crawford which were just shy of the actual numbers.  I am leaving this article up for the record but posting this notice so that anyone who finds it knows that the information is inaccurate.  A more detailed explanation of these errors, and a more accurate explanation of the Clippers' tax situation, can be found here.--Lucas Hann

Right now, before the rumored C.J. Wilcox trade is completed, the Clippers sit in taxpayer territory.  Their current roster is full--15 players, 15 contracts.  The total amount of those contracts is just under $114 million, which leaves the Clippers just about $700,000 over the luxury tax line.  Their repeater tax penalties total to $1.7 million for that amount.  It isn't the end of the world, but it would be nice to save that money, get the revenue check from the other tax teams, and improve their repeater tax status long-term.

So, how does the Wilcox trade help?  Well, Wilcox's outgoing salary is $1,209,600, and Devyn Marble's incoming salary is $980,431.  That's already savings of $225,000 in salary payments and over $500,000 in tax penalties--not bad.  However, Marble's salary doesn't become guaranteed until July 15th--that means that if the Clippers complete this trade and cut Marble immediately, they'll owe him nothing, reducing that $980,431 cap hit to $0, and opening up a roster spot.

That puts the Clippers at 14 players with $509,000 to work with underneath the luxury tax (less than David Michineau's rookie minimum, meaning they still have to stash him).  Essentially, they could choose between signing a player for the veteran's minimum and saying to hell with the tax, or, they could sit tight at 14 and leave a roster spot open for in-season moves.

When a player is signed mid-season, their salary and cap hit is pro-rated.  The veteran's minimum salary is $980,431 for 82 games, so $509,000 gets you about a half-season of a minimum-salaried player, which is enough to pick up a player who is bought out after the trade deadline.

The Clippers can also cut Branden Dawson's non-guaranteed salary and replace him with a veteran's minimum player.  A minimum contract has a cap hit of about $100k more than Dawson's second-year deal, meaning the Clippers would now be able to add a buyout guy for approximately the last 32 games of the season.

That's what I think is most likely going to happen.  The Clippers will finalize arrangements to stash David Michineau, they'll move Wilcox for Marble, they'll cut Marble and Dawson.  Then, they can add a 2/3/4 wing player for depth and small-ball versatility options, and keep a roster spot open for in-season moves.  Once the deadline rolls around, they can add a buyout player to round out the roster (and shore up whatever hole is opened by injury or disappointment).  And after all of this, they'll avoid paying the repeater tax this season.