Apr 16, 2014, 9:22 AM EDT
Because Andrew Bynum signed with the Pacers, Chicago can set off a portion of his salary ($105,564 in this case) — an amount I didn’t account for. That leaves them $791,165 beneath the tax line – more than the $750,000 in leeway discussed below.
Noah ($500,000 for All-NBA first team) and Gibson ($500,00 for All-Defensive first team) could still send the Bulls into the tax. However, even if the Bulls hadn’t signed Ronnie Brewer, Lou Amundson, Mike James and Greg Smith, they still would have had more than $750,00 but less than $1 million in leeway.
So, Chicago can absorb a $500,00 Noah bonus for All-NBA first team and a $250,00 Gibson bonus for All-Defensive second team and avoid the tax. But if Noah and Gibson each get $500,000 bonuses, Chicago will pay the tax.
It’s the same situation regardless of whether the Bulls made their latest run of signings.
In sum, these signings won’t make the Bulls more likely to pay the luxury tax, but they’ll cost Chicago a few extra real dollars. In return, the Bulls get more trade flexibility — a definite win for them.
Original post: The Chicago Bulls, like every team, would like to avoid the luxury tax.
Not only are luxury-tax penalties already costlier than ever, repeater penalties loom. If a team might be willing to pay the tax only while contending, it’s especially prudent not to pay the tax when out of contention.
That’s what makes the Bulls’ situation so fascinating.
With all due respect to the marvelous job Tom Thibodeau, Joakim Noah and crew have done this season, Chicago is an extreme longshot to win the 2014 championship. But once Derrick Rose gets healthy, Nikola Mirotic signs, the Bulls use both their 2014 first-round picks (one from Charlotte) and exhaust their pending cap space… Chicago could get really good – and really expensive – in a hurry.
Yet, the Bulls have flirted with the luxury-tax line this season while still remaining pretty competitive. It’s a tight line to walk – wanting to keep salary low without completely blowing up the team (a dichotomy the Luol Deng trade accomplished).
Chicago caught a big break in that quest when they waived Erik Murphy and the Jazz claimed him, removing his salary from the Bulls’ books. That positioned Chicago to add up to three players and leave $750,000 in leeway under the luxury-tax line for performance incentives potentially due to Joakim Noah ($500,00 for All-NBA first team) and/or Taj Gibson ($500,00 for All-Defensive first team or $250,000 for All-Defensive second team).
The Bulls opted to go another way, though.
Chicago signed Ronnie Brewer, Lou Amundson and Mike James to minimum-salary multi-year contracts, according to Larry Coon. Amundson’s’ agent, Mike Bartelstein, confirmed his client’s contract was for two years. James’ agent, Bernie Lee, did the same for his client.
The multiple years matter, because the NBA pays a portion of the minimum salaries for veterans with at least three years experience and the league’s portion of the payments are not taxed – but only for one-year, 10-day and rest-of-season contracts. By signing those three to multi-year deals, Chicago assumed all payments and the increased tax burden that comes with them.
The Chicago Bulls signed free agent Greg Smith to a contract fully guaranteed for next season, a league source tells RealGM.—
Shams Charania (@ShamsCharania) April 14, 2014
Smith – like Brewer, Amundson and James – could prove useful in trades after the season. Smith is a talented young big man, and the other three have unguaranteed contracts, according to Coon. That allows their salaries to help a trade match, and then they could be released them without penalty.
All in all, the Bulls are now $685,601 below the luxury-tax line – meaning they can absorb only one of the bonuses potentially due to Noah and/or Gibson without paying the tax.
If the bonuses due to Noah and Gibson fall short of $750,000, the Bulls win. They’ll avoid the luxury tax and will have added potentially useful trade assets.
But if Noah and Gibson both hit their incentives, the Bulls will pay the tax, though they’ll still have tradable assets in Smith, Brewer, Amundson and James.
It’s a calculated risk that I think will work. I project Noah to make the All-NBA first team, but I don’t have Taj Gibson making an All-Defensive team.
However, the downside – paying the tax – is high enough that I don’t believe the multi-year deals were worth it. Had the Bulls waited until Saturday to sign Brewer, Amundson and James, Chicago would have kept its $750,000 luxury-tax leeway and still signed Smith, anyway.
Chicago is choosing to play with tax fire to better position itself for a trade later, perhaps a revealing strategy about the franchise’s long-term plans.
Jul 23, 2014, 10:59 PM EDT
We know how this movie is going to end, Donald Sterling will lose the Clippers, we just don’t know how we will get there yet.
Jul 23, 2014, 9:55 PM EDT
Aminu, who replaces Rashard Lewis, will have player option
Jul 23, 2014, 9:30 PM EDT
Houston’s other second rounder, Alessandro Gentile, to remain in Europe
Jul 23, 2014, 8:40 PM EDT
If you really want something and you can afford it, why not? But Ballmer overpaid big for the Clips.
Jul 23, 2014, 7:49 PM EDT
Does this mean Boston will trade Rajon Rondo?
Jul 23, 2014, 7:12 PM EDT
Sacramento reportedly plans to file waiver claim on Casspi
Jul 23, 2014, 5:38 PM EDT
If Kevin Love goes to Cleveland does that impact Ray Allen’s decision?
Jul 23, 2014, 5:09 PM EDT
Numbers show a substantial increase in popularity.
Jul 23, 2014, 4:25 PM EDT
Exum is a project but he also could be the point guard of the future in Utah.
Jul 23, 2014, 3:40 PM EDT
“I was about to get him kicked out of the camp,” Wade joked.
Jul 23, 2014, 2:56 PM EDT
Good pickup to add some depth at the point, something Dallas needed unless you’re expecting a monster bounce-back season for Raymond Felton.
Jul 23, 2014, 2:09 PM EDT
Is it better than the offer being put together by the Cavaliers?
Jul 23, 2014, 1:30 PM EDT
He was given community services, which he can complete in Dallas where he was traded.
Jul 23, 2014, 12:55 PM EDT
Waiters will continue to be rumored to be available until he proves he can fit in with Kyrie Irving.
Jul 23, 2014, 12:15 PM EDT
Dallas was counting on him for bench depth and now will be looking to replace that help in a depleted market.
Jul 23, 2014, 11:37 AM EDT
Minnesota wants to dump some bad contracts as part of the deal, and Cleveland isn’t taking them.
LeBron James sent cupcakes to Akron neighbors to apologize for commotion caused by his free agent decision
Jul 23, 2014, 11:01 AM EDT
People descended upon LeBron’s neighborhood as rumors swirled.
Jul 23, 2014, 10:21 AM EDT
Stackhouse coached against Hollins at adidas Eurocamp in Italy this summer.
Jul 23, 2014, 9:47 AM EDT
LeBron has used more than just physical gifts to become all-time great NBA player
Jul 23, 2014, 9:16 AM EDT
Pacers center needs confidence more than a skyhook
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