Saturday, July 28, 2012
The Celtics have paid to play
By Chris Forsberg
Jesse D. Garrabrant/NBAE/Getty ImagesThe Boston Celtics will enjoy their lowest luxury-tax payment since the start of the Big Three era next season. But don’t misconstrue it: The Celtics keenly managed the cap this summer in order to produce the most competitive roster possible, and this team has never been afraid to spend.
Celtics owner Wyc Grousbeck celebrates with the team during the 2007-08 campaign.
By staying within the luxury-tax apron ($4 million over the $70.3 million tax threshold), the Celtics were able to utilize the full value of the midlevel exception ($5 million) this offseason. That allowed them to lock up Jason Terry early in the free-agency process, helping to offset the eventual loss of Ray Allen. By utilizing the full midlevel, the Celtics were essentially hard-capped at $74.3 million this season, meaning their dollar-for-dollar tax bill next year won’t exceed $4 million.
For a team that’s paid $44.5 million in luxury-tax penalties over the past five seasons, that’s a nice break. Boston paid a whopping $14.9 million in luxury tax during the 2009-10 campaign and $7.4 million last year.
But a smaller bill shouldn’t be viewed as less of a commitment to winning. The Celtics haven’t been afraid to spend in a league in which others have often been reluctant.
Earlier this week, ShamSports.com released a fascinating glimpse at the history of luxury-tax payments since its inception during the 2001-02 season. Only four teams have paid more in luxury tax than the Celtics: the Mavericks (deep-pocked owner Mark Cuban hasn’t been afraid to build a competitor), Lakers (Kobe Bryant’s contract alone practically ensures they’ll always be in the tax), Knicks (paying for their own mistakes), and Blazers (Portland paid $80 million in the first two years of the tax with a bloated salary, but has spent only $8.2 million since).
As ShamSports pointed out, there are seven teams -- nearly a quarter of the league -- that have yet to pay the tax in the Bobcats, Bulls, Warriors, Clippers, Hornets, Sonics/Thunder and Wizards. For teams that wish to stay competitive, like Chicago and Oklahoma City, avoiding that tax will be hard to do moving forward.
The Celtics, meanwhile, are one of only three teams (Mavericks and Lakers the others) to pay the luxury tax in each of the past five seasons. That commitment to spending could leave Boston exposed to new “repeater” penalties that will be introduced during the 2014-15 season, driving up how much ownership will have to pay in order to allow the team to climb above the threshold.
Before that, tax rates will climb next season, and teams will now be subject to incremental rates. For instance, instead of paying a $7.4 million bill last season under the current dollar-for-dollar tax, the Celtics would have paid $9.2 million (a $7.5 million incremental maximum for the first $5 million spent, then $4.2 million for the remaining $2.4 million at a $1.75 tax rate).
The repeater rate will have teams like the Celtics paying even higher rates by 2014-15, when the incremental penalties start at $2.50 per dollar spent (and rise from there). This will further discourage teams from going above the cap, putting an even greater premium on cap management. It will also put a renewed focus on ownership that is willing to spend in order to get the parts necessary to win.
For the Celtics, being successful goes beyond the talent on the floor. It means having good coaching, smart front-office people and open-minded ownership. It all goes hand in hand.
Coach Doc Rivers has been a primary recruiter for the team this offseason as his sales pitches helped lure both Terry and Courtney Lee to Boston. The front office figured out creative ways to get both on the payroll at $5 million starting salaries.
As president of basketball operations Danny Ainge noted earlier this offseason: “I’m grateful for my staff -- [assistant general managers] Mike Zarren ... [and] Ryan McDonough, and [director of player personnel] Austin Ainge do a great job of helping us. And we're in constant communication with players around the league and we have great ownership that gives us support and gives us an opportunity to build a team.”
The Celtics signed many of their players to long-term deals this offseason and are already committed to roughly $70 million for their top 10 scheduled-to-return players in 2013-14. That means they'll be in the tax again and it might not be as easy to stay within the apron this time around, meaning the tax bill could jump up again.
In the NBA, it's the cost of winning, and the Celtics have been willing to pay it.