The NBA today announced the important dates and salary cap numbers to set the parameters for what will be a hectic and compacted offseason. The newly appointed front office, headed by President of Basketball Operations Daryl Morey will have a big job on their hands to turn things around quickly and get a competitive team on the floor for the projected December 22 opening night.
Prior to the stoppage of the season, the most recent forecast from the league was that the 2020/21 salary cap would be $115 million, with the luxury tax line to be around $139 million. After the massive contracts given to Tobias Harris and Al Horford and Ben Simmons’ max extension the Sixers were never going to be a cap space team this year. The ownership group gave an indication that they were prepared to be a luxury tax paying team. When making these signings they obviously didn’t expect to be dealing with the effects of a global pandemic on the teams revenue. This coupled with the reduction of the luxury tax level by $6.4m could make a material difference to how the Sixers approach the offseason. Here are the list of contracted players for the 2020/21 season.
|Pick 21 Cap Hold||$2,478,840|
|Total (12 players)||$151,208,452|
The Sixers currently have 11 players under contract for the 2020/21 season, including the non-guaranteed contracts of Furkan Korkmaz and Norvel Pelle. Korkmaz is a lock to have his deal guaranteed after an improved offensive season, and the decision on what they do with Pelle is inconsequential for this discussion (he will either be on the roster, or cut and replaced by another player earning the minimum salary. If you add in the cap hold for the number 21 draft pick, that is over $151m salary with only 12 players on the roster. As a taxpaying team, the Sixers have access to the tax payer mid-level exception (was $5,718,000 in 2019/20 and is expected to remain the same) and the minimum salary expection to sign any free agents.
If they do sign a player to the tax-payer MLE and then perhaps sign one of their second round draft picks to a minimum salary contract and carry only 14 player on the roster, it would bring the payroll to around $157.8m – over $25m over the tax line which would result in a tax bill of in excess of $64m (approximately $23m more tax than it would have been if the tax line remained at the projected $139m).
The way the luxury tax works, the further a team is in the tax, the higher the rate. For every dollar spent on salary when a team is more than $25m into the tax, the tax rate is a whopping 425%. Just adding a veteran minimum contract player for the 15th spot on the roster would cost a combined $8.5m in cash (salary + tax).
The Sixers ownership group have not taken the cheap option in putting together their new look coaching and front office teams together (it has been reported that Morey will earn circa $10m per season). After years of having amongst the lowest payrolls in the league (sometimes barely reaching the salary floor) through the Hinkie era and selling draft picks, it looks like now they are ready to open their wallets. Interestingly, Yaron Weitzman (author of ‘Tanking to the Top’) mentioned on a recent Lowe Post podcast that he felt the Sixers ownership recognised an opportunity to take advantage of current situation and spend, when other teams are trying to pull back on costs. Obviously there is a limit in how far they will take it.
There is a snippet in a recent ESPN article by Tim Bontemps and Adrian Wojnarowski that mentions something that may work in the Sixers favour to reduce this tax bill “Sources also said that, in an attempt to ease the tax burdens of teams that had been planning on the salary cap and luxury tax continuing to steadily rise, the NBA will reduce the luxury tax bill for teams at the end of the 2021 season by the percentage amount that the league’s Basketball Related Income declines from initial projections.”
The league also released some information about what we may expect for the 2021/22 seasons and beyond to assist teams in their planning.
WHAT CAN WE EXPECT FROM THE SIXERS OFFSEASON?
The team has four expiring contracts, Kyle O’Quinn, Raul Neto, Alec Burks and Glenn Robinson. As each of those players signed one season minimum exception contracts, they are considered ‘non-bird’ free agents. The most the Sixers can offer them using ‘non-bird’ right is 120% of their previous seasons salary. It is unlikely at O’Quinn and Neto would be back, and the 120% rise will be nowhere near enough for Burks or Robinson who will have bigger offers from other teams. The Sixers could of course offer part (or all) of their $5.7m taxpayer mid-level expection for either player.
The Sixers were dealt a blow on August 12 when 6’5″ Serbian point guard Vasilije Micic recommitted to play another season with Anadolu Efes in the Euroleague. Micic, whom the Sixers drafted in 2014 and hold his NBA rights, is an excellent pick and roll operator who shot 40% from three point range as the starting point guard for the best team in Europe last season. Micic would have filled a need for the Sixers as a ball-handler who can shoot, and may have been a good target for some/all of the mid-level exception. It is a very week free agency class and with the Sixers lack of spending power it is unlikely they will find a real difference maker this year. I will break down the options closer to the free agency period.
The Sixers have 5 draft picks this year including the 21st pick (from Oklahoma City) in the first round, as well as 34,36,49 and 58. It is not touted as a strong draft, but there should be some prospects who are able to contribute as rotation players available when the Sixers are on the board (I am looking at you Desmond Bane). My colleague Rob Manoff have worked together and written a series of articles about some of the prospects that may be available when the Sixers are on the clock. It is fair to assume that Philadelphia will not want to bring five new rookies into the team next year so expect the Sixers to use some of those picks in trade. Hopefully they do this to improve the team, rather than just selling them for cash as has been the want of this ownership group over the last two seasons. Signing a couple of their second round draft picks to minimum salary contracts will also help to reduce the luxury tax burden (second round draftees minimum salary counts for less than a veteran minimum salary when calculating the luxury tax) and may actually provide more of a saving than selling the picks for cash. It is also likely that the team would want to sign some of these second round draft picks using part of the Mid-level expection which would allow the team to sign them for three years, and therefore have their full bird rights when they become restricted free agents. Doing this however would reduce the amount the Sixers have available for veteran free agents and will be an interesting strategic decision.
The Sixers main avenue to improve their team this offseason is via trade. While some have suggested radical steps like trading one of our cornerstone players in Embiid or Simmons. I firmly reject this idea as I think it would be unwise to trade either of these players without giving them an opportunity to play under a new coach, with a new plan and a better constructed roster. There may be a time where trading either Embiid or Simmons is a good idea, but it is not this offseason.
The clear square peg in a round hole this season is Al Horford. The fit between Embiid and Horford has not worked. It would be fine if he was earning a $12-$15m contract and you were playing him 15 minutes a night as Embiid’s backup, but he has $81m owing over the next three seasons. This is a terrible use of resources and I believe the first priority should be to move off Horford’s contract, and replacing him with a player that better fits the Sixers roster, even if it means giving up some future assets. Daryl Morey, the NBA’s most prolific trader, will be working the phones frantically to put his stamp on the roster. I would expect the Sixers to be very active when the transaction window opens next week.