Well, let’s just assume that Oklahoma City wants to keep all their players through the 2013-2014 season. That means, Serge Ibaka, James Harddn, Eric Maynor all sign contracts. Oklahoma City gives in, gives max deals to Harden and Ibaka max contracts.
Now, with all those players getting deals. That’s going to put Oklahoma City at $86,354,945. I get it. That’s a HUGE number. The salary cap, which will be around $59 million (estimating), and the Luxury Tax is going to be around $71-72 million dollars. That puts the Thunder $15 million over.
So, for you that don’t understand, for the 2012-2013 season, for every $1 you’re over the luxury tax, you must pay $1 to the league. Oklahoma City is under the luxury tax this season at $65,823,081. So, we’re safe. However, the tax is set at $70.307 million this season. So, any money over that point, you have to start paying to the league.
In 2013-2014, the year we are focusing on, the tax gets worse for teams breaking the luxury tax. It increases to $1.50 for every $1 over the luxury tax. Oklahoma City will start out the 2013-14 season at $71,149,011. BEFORE any contract extensions from the three I’ve mentioned. So, back to where we were at…
If you give Harden and Ibaka their 125% max contracts. Then, you give Maynor a hefty (and this is pretty solid, and about league average) 50% increase, the Thunder’s salary cap would swell to $86,354,945. That’s just about $15 million over the luxury tax line. (We’re going to assume it’s going to be about $71 million for the 2013-14 season).
That means Oklahoma City is $15, 354,945 over the luxury tax line. Oklahoma City would be paying. There is specific brackets for each amount you’re over the cap. So, Oklahoma City would be in the $15 million to $19,999,999 group. Oklahoma City would have to pay the tax max incremental of each bracket. Therefore, they would pay the $7.5 million for being over the 0-$4,900,000. Then the $8.75 million for being over the $5-$9,999,999 bracket, then $12.5 milion for being over the $10-$14,999,999 bracket. Bringing their total tax to $28.75 million, making their total salary for the 2013-2014 season to $115,104,945.
So, what does all this mean. How does this really effect the Thunder. I thought Harden said he would take less money? Well, Harden hinted at doing that. He didn’t actually say that. That’s we’re assuming he’s going to get a max deal. Same thing with Ibaka. Oklahoma City is a small market though. We might think we’re big league (we are), but in terms of revenue and making money, we’re definitely small market. Nothing wrong with that though. We just don’t have the money laying around to be $44 million over the luxury tax line.
How do we get under that, or eliminate some of that tax? Well, unless one of the players decides he wants to play elsewhere, we’re going to have to get rid of someone. That someone might be Kendrick Perkins. Why Perkins? Well, going into the 2013-14 season, Perkins is guaranteed $8.5 million. Then in his final deal in 2014-2015, It’s $9.1 million. If you were to use the new amnesty clause against Perkins (we’ll explain the amnesty in a second), you’ll save yourself $8.5 million on the cap. You’re still owing Perkins all that cash, but it does not count against the salary cap.
Basically the amnesty clause allows you a get out of jail free card with one contract that was signed before the new CBA went into effect. Perkins fits this perfectly. I love the guy, but I think it’s coming to this if everyone wants to stay together.
So, when you amnesty Perkins, that brings the salary cap to $77,877,508. That’s a big difference. Oklahoma City would be in the second bracket. Meaning, Oklahoma pays the $7.5 million for being over $5 million. They would pay $1.75 for the remaining $2,877,508. Instead of being $44 million over the cap. They’re going to be just $12,535,639. Oklahoma City will save around $90,413,147. The Thunder now have saved $25 million.
Now, this is complete speculation. The numbers are generally right. (I used a calculator). Fact is, Oklahoma City doesn’t have the incoming revenue to pay all of the first total ($115 million). We’ll struggle to hit the $90 million. Honestly, it gets worse because, the following season, Oklahoma City starts to pay repeater fees (repeat violators).