NBA Rumors – Cleveland Cavaliers Might Break Luxury Tax Record

After re-signing LeBron James, Kevin Love, Iman Shumpert and likely bringing back Tristan Thompson while also negotiating things with J.R. Smith and Matthew Dellavedova, the Cleveland Cavaliers are going to pay a lot of money through luxury tax, maybe even breaking the record.

Paying a lot of money through luxury tax doesn’t promise success. The six biggest offenders of all-time (four of them Knicks teams courtesy of Isiah Thomas) never got past the conference semifinals. The Nets paid $90.6 million in luxury tax for the 2013-2014 season, making the conference semifinals. The Cavs are on their way to go past that number.

NBA Luxury Tax Rules
Chart via ESPN

The Cavaliers, without Thompson, Smith and Dellavedova re-signed, and presumably still with Brendan Haywood’s contract (we’ll get to him in a minute), are already above the $84.7 luxury tax threshold. Haywood is owed $10.5 million next season, but can be waived before August 1 and not cost the team any money, but the Cavaliers are trying to get the trade exception, which means trading Haywood to a team with enough cap space and get back maybe a second round pick, keeping it an insurance next season.

Assuming the Cavaliers manage to re-sign Thompson on a five-year, $80 million deal (he’s looking for over $90 million), J.R. Smith to $6 million a season and Dellavedova on a $5 million deal and somehow trade Haywood for contracts worth that $10.5 million, the team’s payroll grows to $124 million. That means just below $40 million over the luxury tax line, and that means paying $131 million in tax and $255 million overall in player salaries.

Image: Source
Image: Source

Cutting Haywood or getting rid of him (which will happen) by a trade would save over $51 million in taxes and almost $62 million total due to the increasing nature of the tax, resulting in a total tax of $80 million and a total expenditure around $193 million.

Another amazing numbers is what a minimum-salary player would cost the Cavaliers. The around $1 million (Depending on the veteran’s experience) salary gets a $3.75 million tax addition, which means nearly $5 million for a minimum-salary player, which the Cavaliers were hoping to add, although with the wage bill swelling so, there might not be room for anyone else.