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.
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.
Sep 23, 2014, 12:50 PM EDT
Not a lot of people will see the building from above, and it’s early in the process, but…. that’s not pretty.
Sep 23, 2014, 12:15 PM EDT
The many times Toronto and Kyle Lowry could have blown it with each other
Sep 23, 2014, 11:38 AM EDT
He’s already the best midrange shooter in the game.
Sep 23, 2014, 11:00 AM EDT
Heat guard getting style from fictional Miami serial killer
Sep 23, 2014, 10:00 AM EDT
Pacers ready for season without Paul George, Lance Stephenson
Sep 23, 2014, 9:30 AM EDT
Lamb, after playing for Bucks and Magic, likely to fall out of NBA following training camp
Sep 23, 2014, 9:00 AM EDT
Reed, previously a member of Kings and Grizzlies, in line to compete for roster spot
Sep 23, 2014, 8:30 AM EDT
He’s better than Charles Barkley already at this.
NBA’s rookie transition program presents information in a compelling way in order to promote real discussion
Sep 23, 2014, 8:00 AM EDT
Initially uncomfortable information is presented in order to create a dialogue on real-life scenarios, which helps prepare rookies for their initial steps into the NBA life.
Sep 23, 2014, 2:25 AM EDT
Monday tipped-off a series of NBA Cares and charitable events around the New York area tied to the All-Star Game.
Sep 23, 2014, 12:15 AM EDT
Wyc Grousbeck also says he wants Boston to keep point guard long term
Sep 22, 2014, 11:20 PM EDT
Before every game he is throwing the panda head into the crowd.
Sep 22, 2014, 10:33 PM EDT
Charlotte also adds Justin Cobbs, who went undrafted out of Cal
Sep 22, 2014, 9:45 PM EDT
Mohammed gives Chicago 14 players
Sep 22, 2014, 8:30 PM EDT
Ellington, who played for Scott with Cavaliers, received partially guaranteed contract
Sep 22, 2014, 7:40 PM EDT
It’s not going to change anytime soon, either.
Sep 22, 2014, 6:44 PM EDT
David Stockton, an undrafted free agent out of Gonzaga, also worked out for Thunder
Sep 22, 2014, 5:59 PM EDT
He didn’t take anything seriously, so he was vintage Howard.
Sep 22, 2014, 5:14 PM EDT
The Rockets’ defensive system is not the problem with James Harden.
Sep 22, 2014, 4:41 PM EDT
Jones previously played for the Grizzlies, Kings, Nuggets, Pacers, Mavericks and Hawks
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