Skip to content

The Inbounds: How to avoid the luxury tax and influence the playoffs, a Chicago Bulls story

Aug 2, 2012, 9:00 AM EDT

76ers Bulls Basketball AP

Welcome to The Inbounds, touching on a big idea of the day. It could be news, it could be history, it could be a tangent, it could be love. OK, it’s probably not love. Enjoy.

There’s something obscenely obvious in the fact that we, the media (but not really because most NBA media think Bird rights have something to do with trash talk about a three-point shot), the basketball twitter intelligentsia, fans,  whoever rail on the Chicago Bulls for doing precisely what we rail on other teams for not doing.

They don’t overspend. They don’t overpay for a non-contender, and they work diligently to get the best deal possible in every negotiation. Those are all good things, right? We acknowledge that the concept of overpaying is inherently bad? You can’t say the Miami Heat overpay for anyone, it’s not just that they win but the production they get from any given player relative to their position and standing is worth the investment made. The Spurs have made a killing off of getting their top guys to buy in to the point they actually take paycuts and then getting value guys on value deals to plug in around them. These values are good. You can argue the opposite, that if your owner is willing to swallow that luxury tax, the money doesn’t matter, at least not to fans, but it’s difficult to say that avoiding overspending is bad.

And yet it’s pretty conclusive that everyone finds the way the Bulls do business… distasteful.

And I’m not talking recently. Not like Jerry Reinsdorf just walked in off the dot-com craze. The man’s been cracking walnuts since Jordan. Let me re-emphasize this. We’re talking about a guy who busted spherical objects regarding the greatest player of all time, in his prime, his All-Defense perfect sidekick and arguably the greatest coach of all time, just to save a few bucks.

This is not some small-market, struggling franchise we’re talking about. Reinsdorf’s not selling his car(s) to pay his mortgage (since, you know, real estate is his bag, that would be especially shocking).  The Bulls have consistently been in the top five for attendance regardless of how good they’ve been, and in the top three for profit according to Forbes for several years. They make money hand over horns. It’s a major-market team with a cool color scheme who happens to be identified with the greatest player of all time. So yeah, they do pretty well. But that hasn’t stopped them from making fiscal responsibility their No. 1 priority at all times.

And we’re seeing it today. From Tom Thibodeau’s contract to whether to match Omer Asik, to all of a sudden, yes, signing Marquis Teague, there’s always something the Bulls are doing to scratch out a few more dollars. What’s up with Teague, you ask? Take it away, Mark Deeks:

Nevertheless, however small the 2012/13 saving will be in the context of overall payroll expenditure, it seems to have been deemed sufficient. As mentioned above, the Bulls are over the luxury tax as of today. They have $71,837,061 committed to only 11 players, not including Nate Robinson, nor Teague. They’ve never been above it before, and they surely don’t intend to be above it this time – it doesn’t take a great deal of foresight to see the Bulls trading Rip Hamilton at the deadline, with enough cash to offset his remaining salary, at a time that Derrick Rose is able to play again, and after Rip has (theoretically) rebuilt his value as a player. This is pretty much guaranteed to happen. And it will be much easier to achieve the less they sign Teague for. The cheaper he comes, the more dead weight salary Chicago can take back for Rip, the easier he’ll be to deal.

via ShamSports.com: NBA News That Doesn’t Really Matter: Marquis Teague is still unsigned, and you’re probably not going to like why.

So to make sure the have room to ditch Rip Hamilton in order to avoid the luxury tax, they’re working down the total amount of Marquis Teague’s rookie contract.

It’s here that we have to address the Boozer issue. The Bulls do in fact employ Carlos Boozer on a pre-2012 max contract. So you can say that they a. committed to a max deal for a free agent in order to contend b. overpaid for a player and continue to do so and c. have not amnestied him to get under the tax, despite two opportunities to do so. But you have to understand, when Boozer was given that contract, it was market value. It wasn’t a great deal, but it also wasn’t a disaster. It will look worse as time goes on because of the new CBA, and there’s no way to spin it was a good deal, but it was also not a bad deal. (It did, however, almost immediately morph into a bad deal. So there’s that.)

And the discussion of amnestying Boozer loses the point a little bit. If you’re trying to avoid the luxury tax, you want to save money, right? Well, even if you amnesty Boozer, and someone takes some portion of his deal on the amnesty waiver (which someone would), the Bulls are still paying for the remainder of that contract, plus the money to bring in players to replace him. Off the league’s books isn’t off Chicago. What’s the point in amnestying Boozer to save money when amnestying him if you wind up spending in total what you’d spend in the luxury tax anyway, paying him off and then replacing him?

(It should be noted the one huge counter to all this, the relative ease to which Derrick Rose was signed to his extension, only re-enforces the point. It’s not that the Bulls don’t spend the money on what they should, it’s that they tend to carry any opportunity to squeeze blood from stone to the furthest possible moment and then go on with it. Rose’s structure was determined by the CBA and there was little to carp on, hence why the deal got done smoothly. They’re still a team with a high payroll, just one that constantly is working to scrape the crust off the top.)

The Bulls are a classic example of what we expect from big-market owners. We expect them to break the bank to build a winner, to use the resources at their disposal to abuse the inherent advantages and develop a contender. The Bulls have instead tried to develop a contender with considerate, you can even say frugal spending, and have done a pretty decent job at it. But they’re judged on a big-market curve and it’s there that they fail.

Which is not to say that I’m advocating in favor of the Chicago Way, here. (They put one of your guys in the hospital, you trade Kyle Korver to the morgue!) The fans and city have provided them with one of the most successful franchises in sports. They’re asking for the team not to waste Derrick Rose’s career, to pay what they need to to contend, to not use circumstance (Rose’s injury, the new CBA, age, health, etc.) to justify spending cuts, which is a classic Bulls move. That’s pretty reasonable. Bulls fans wouldn’t be upset if the team was bad and they cut spending. They’d be happy. Fans want cheap losers to allow for improvements to make expensive winners.

The fact may be that despite all the punitive efforts of the new CBA, the new NBA model may dictate that for big-market franchises to compete at the level to which they have become accustomed to, they’re going to have to time when they want to bite that bullet. And Reinsdorf has repeatedly dangled that carrot. Somewhere, someday down the line, he may pay that luxury tax. But until then, he’s going to keep maneuvering to suck the most money out of late-first-round rookies, swapping out bench units when they become available to reach market value, tip-toeing around paying a top-three coach in the league what he’s worth, and making mountains of cash off the process.

It’s infuriating. It’s genius. It’s frustrating. It’s sustainable. It’s a bad way to run a team. It’s a great way to run a business. And they’ll still manage to succeed enough to put the criticism at bay when the ball is tipped. Thank God for Derrick Rose.

  1. trybe29dr - Aug 2, 2012 at 10:14 AM

    Dont dont overspend but they dont sign any players that can take them to the next level either…its like they enjoy mediocrity

  2. borderline1988 - Aug 2, 2012 at 10:14 AM

    All this talk about ‘building thorugh the draft’ is nonsense. You have to get lucky with those draft picks…where would the Bulls be if they received the 2nd pick overall and Beasley would be the centre piece instead?

    The only way to compete for a championship in today’s NBA is to either be a major city that’s attractive to free agents, or get extremely lucky in the draft after tanking a few seasons.

    I like Reinsdorf’s approach. He got Boozer and it turned out to be a disaster. Signing B-stars to max contracts is the surest way to failure. Either go for the gold, or just be happy to compete in the playoffs and make good money. Rose is toast for this season anyways, and you don’t know if he can recover long-term to be an MVP-calibre player again. Might as well avoid the luxury tax and keep your options open for next summer.

  3. glink123 - Aug 2, 2012 at 10:43 AM

    Gotta give Bulls mgmt a little more credit here. They dumped Brand, Chandler, Curry, Crawford, Pippen, Grant, etc all before everyone else in the league realized they were either ready for retirement, or not going to fulfill potential, and didn’t overspend just to keep the player. Reinsdorf is consistent. He paid Jordan $100 million over the final 3 years of his Bulls career. He pays Pippen $500k to be a Bulls “ambassador”. Gave Cartright a coaching chance. Has Paxson as his GM. Say what you want, but he’s fair.

  4. thereekshow - Aug 2, 2012 at 10:45 AM

    Are you really calling the Bulls mediocre? For a team that has had the best record in the NBA the last two years it seems a little naive and misguided to say that. And Boozer’s deal wasn’t a disaster or bad decision, because at the time, as per the article, that was his market value. If the Bulls didn’t sign him to that contract, I can guarantee you someone else would’ve coughed up the money to do so.

    With the team and mentality that Reinsdorf and Thibs have created, they are now obviously expected to win. Fans and observers are going to get down on them for what they think is “taking the year off”, but in reality, that is the safest way to ensure they will be successful down the road. Matt I love how you put it, “It’s a bad way to run a team. It’s a great way to run a business.” It’s definitely a slippery slope, but given the position they are currently in, this is definitely the best approach.

  5. chicitybulls - Aug 2, 2012 at 11:08 AM

    Excellent article Matt. Too bad your collegue Kurt can’t comprehend this approach by the Bulls and continue to write articles about how bad this summer is for the Bulls. It’s not his fault he’s not smart enough to understand (or even spell) but it is your bosses that’s to blame. We need more articles from you. Great job sir.

Leave Comment

You must be logged in to leave a comment. Not a member? Register now!

Featured video

Will LeBron get booed Christmas Day in Miami?
Top 10 NBA Player Searches
  1. K. Love (3583)
  2. D. Rose (2844)
  3. K. Bryant (2466)
  4. L. James (2403)
  5. K. Irving (2198)
  1. T. Young (2017)
  2. A. Davis (1973)
  3. R. Allen (1801)
  4. S. Marion (1710)
  5. E. Okafor (1675)