First thing’s first – I haven’t had a chance to say so in an article yet, but I’m very excited that Tim Chisholm has joined us here at RR. His debut piece last week looked at whether or not the Raptors should and would use their Amnexty Provision on Lithuanian forward Linas Kleiza and was, as expected, very good.
To summarize his piece succinctly: it’s complicated and maybe they shouldn’t, unless there are no other means with which they can get under the luxury tax.
Well, today is kind of a big day for the Raptors in that regard. The Amnesty window closes at midnight tonight, so Masai Ujiri (and the board, who are likely to be a part of a decision that is largely fiscal) has to roll the dice within the next few hours.
He can amnesty Kleiza, getting the team under the luxury tax and forfeiting his expiring contract in so much as that is a potential trade asset. Or he can hang on to Kleiza and make the gamble that he’ll be able to reduce the luxury tax hit in another way by the end of the season.
There are two important notes with respect to this situation that I wanted to highlight in advance of the decision tonight.
No. 1. – The Raptors don’t have to be under the luxury tax until the end of the year to avoid the bill. There’s no penalty for being over the threshold right now or at any point during the season except the date of their final regular season game. So there is no real rush for Ujiri to make a move, and if he’s confident they can get under the tax another way, then maybe it’s worth hanging on to Kleiza.
No. 2. – Assuming the Raptors keep all 15 players currently under contract for the duration of the season, they would finish the year $2.3M into the projected luxury tax. The “total cost” of Kleiza, then, would be his $4.6M salary plus $3.45M in luxury tax payments for a total of $8.05M. However, it’s not fair to charge Kleiza with the tax (he didn’t sign everyone else). Really, the decision comes down to paying Kleiza $4.6M NOT to play for the team and paying a replacement Salary X or paying him $4.6M to pay for the team AND paying $3.45M in tax. There’s also the undeterminable amount non-tax paying teams get to figure in (this is hard to estimate because it’s based on the number of tax-paying teams and the amount of tax they pay).
$4.6M for Kleiza NOT to play + replacement player + non-taxpayer benefit pay-out ~ $4.6M for Kleiza to play + (1-X) * $3.45M luxury tax, where X is the probability of getting under the tax by other means
Now, I realize that Marc Spears of Yahoo has reported the Raptors plan to amnesty him, but plan does not mean will. There is still half a day for the Raptors to make that decision, and it’s much more complex fiscally than the discussions around the Amnesty Provision sometimes tend to be.
Moving on a bit, I pulled a bunch of Raptors’ salary data from various sources to try and update the current cap situation at the request of a reader.
The table is a bit messy because there are still some uncertainties around the contracts. Allow me a few notes:
*I have penciled Buycks in for two years at the league minimum for his amount of service time, and I would assume that the second year is non-guaranteed. This is pretty standard for undrafted young players unless they went bananas in Europe.
*I have Hansbrough in as a $1M partial guarantee for next year, which is essentially the same as a “team option with a $1M buyout” as, I believe, Doug Smith reported it. It’s just semantics between those two definitions.
*I have no idea what the plan is with Camby or Q-Rich. My current assumption is that Q-Rich will be held as an end-of-the-bench floor spacer and potential trade chip and then have his options declined if he’s still here at the end of the year. I’d guess they’re working on trading Camby rather than eating salary in a buy out, though if Camby is motivated to play for a contender he could help the luxury tax situation out by agreeing to a buyout of $2M.
Anyway, the table shows the 10 players under guaranteed contracts, the two reported signings, the two veteran quagmires, and Kleiza all in different sections, with a summation after each group. This is to show “what if the team amnesties Kleiza” for example, or, “what if the team amnesties Kleiza and trades Camby and Richardson for a trade exception in a ridiculously unrealistic scenario.”
The graphic also shows the current exceptions. The Raptors have $1.7M remaining of the non-taxpayer mid-level exception, even though they’re above the tax, because they are under the tax “apron” which is about $4M over the tax. Roughly $0.95M of that MLE is in another column because it will only become available if Kleiza is waived or a deal is made, as spending it would push the Raptors past the apron. Likewise, only part of the bi-annual exception is available since a team has to stay under the apron to use it (and as such, the Raptors would be unable to use BOTH exceptions in their current state). In other words, a team gets these exceptions to use up until the point of Luxury Tax + $4M, and then they only have minimum exceptions (they do not then move on to getting the tax-payer exceptions).
If that all seems a little mathy, that’s understandable. You can feel free to tweet me any time for clarification or questions. I will update this graphic again from time to time in the Putbacks section of the site for quick reference.