The Payroll Challenges Ahead for the Wolves

[Sundog]

I'm not sure where this info fits into your analysis, Lip, but Rudy's contract goes to 2024-25, with 2025-26 being a player option. If Rudy wants a max extension prior to exercising that player option, that's a point when the Wolves can take a step back and consider their player and salary options.

[Lipoli390]

I'm not sure where this info fits into your analysis, Lip, but Rudy's contract goes to 2024-25, with 2025-26 being a player option. If Rudy wants a max extension prior to exercising that player option, that's a point when the Wolves can take a step back and consider their player and salary options.

Good point, Sundog. The Wolves could agree to extend Rudy multiple years at a significantly lower annual salary starting in 2025 to ease the luxury tax burden and avoid the hard cap. But I think the Wolves will still have to confront the payroll reality in the Summer of 2024 since that's when they'll be faced with re-signing Edwards and McDaniels while still carrying Rudy's contract one more year before his player option. The organization's decisions in the summer of 2024 will depend a lot on the team's situation at the end of the 2023-24 season. If the Wolves end up in the 2024 NBA finals, then the organization will likely be willing to accept a higher luxury tax burden than if the team doesn't make it past the second round that season.

What I don't think the Wolves can prudently do is commit $25 million (or even $20 million) to DLO beyond the next two seasons because they know they'll likely have to carry four max salaries in KAT, Rudy, Edwards and probably McDaniels starting the 2024-25 season. I can see the Wolves extending DLO for one year beyond next season, but that's it.

[Monster]

Pretty good article on the rookie max extension rules if you are curious about that.

https://hoopshype.com/lists/nba-designated-rookie-rule/

[rapsuperstar31]

I'm not sure where this info fits into your analysis, Lip, but Rudy's contract goes to 2024-25, with 2025-26 being a player option. If Rudy wants a max extension prior to exercising that player option, that's a point when the Wolves can take a step back and consider their player and salary options.

Good point, Sundog. The Wolves could agree to extend Rudy multiple years at a significantly lower annual salary starting in 2025 to ease the luxury tax burden and avoid the hard cap. But I think the Wolves will still have to confront the payroll reality in the Summer of 2024 since that's when they'll be faced with re-signing Edwards and McDaniels while still carrying Rudy's contract one more year before his player option. The organization's decisions in the summer of 2024 will depend a lot on the team's situation at the end of the 2023-24 season. If the Wolves end up in the 2024 NBA finals, then the organization will likely be willing to accept a higher luxury tax burden than if the team doesn't make it past the second round that season.

What I don't think the Wolves can prudently do is commit $25 million (or even $20 million) to DLO beyond the next two seasons because they know they'll likely have to carry four max salaries in KAT, Rudy, Edwards and probably McDaniels starting the 2024-25 season. I can see the Wolves extending DLO for one year beyond next season, but that's it.

What do you think the chances are that Jaden ends up being better than Mikal Bridges? Bridges contract the next 4 years is 20, 21.6, 23.3, 24.9. That would be the type of contract I could see Jaden getting 2 years from now if he stays out of foul trouble.

[BloopOracle]

Isn't there a huge cap spike in 2 years? So we could be blessed with extending AnT and Jaden right before their demands explode?

[Camden [enjin:6601484]]

Isn't there a huge cap spike in 2 years? So we could be blessed with extending AnT and Jaden right before their demands explode?

The cap is expected to rise approximately 15-percent annually as the NBA heads toward a $75-billion media deal by 2025. The entire landscape of player salaries and how we view them is going to change significantly.

[Lipoli390]

As the cap goes up so do the minimum and maximum individual salaries. There's ultimately no way around the fact that there are limits to what a team can pay. There are practical limits on how much luxury tax a team can pay and for how long. A team like the Wolves in a more modest market with one of the oldest arenas in the League and without Hollywood or tech money behind it is more limited that others as a practical matter. Note there are minority shareholders who have rights as well. Then there are the transactional constrains that come with being over the luxury tax as a repeater. Finally, there's ultimately a hard cap above which a team can't go except in limited ways.

There's a reason that even the most lucrative teams in the biggest markets don't have four max players and only a select few have three. Eventually wishful or wistful thinking runs head long into financial reality, which exists even in the free-spending NBA. That reality will hit the Wolves in the summer of 2024 with KAT and Rudy consuming $90 in payroll. Retaining Edwards and probably McDaniels will have to be priorities that summer. The starting max salary for Edwards will be around $36 million in 2024. I would think that McDaniels will command a salary of at least $26 million that summer and that's optimistic because if he becomes the player many of us think he'll be he will command a max salary as well. That's at least $152 million devoted to only four players. A good comparison would be last season's Warriors. They had the second highest payroll in the NBA at $190.5 million. They had Curry and Thompson combining for $88 million, Wiggins at $33.6 million and Draymond Green at $25.8 million, combining for a total of $147.4 million. They surrounded those four players with a roster that included salaries ranging from $1 million to $9.6 million. It didn't take much to balloon up to over $190 million.

All salaries will be higher in 2024 - vet minimums, rookie salaries, the MLE and max salaries. I see the Wolves re-signing Edwards and McDaniels while obviously retaining KAT and Rudy as well unless the team hasn't established itself as a championship contender by then. Like every team, the Wolves will face some financial constraints just as the Warriors and Clippers do now. I just don't see DLO at an annual salary in the $25 to $30 million range fitting within those constraints. Hence, knowing what the organization will face in 2024, I don't see the Wolves extending or re-signing DLO beyond the 2023-24 season. I thought differently until I looked at the numbers.

[Camden [enjin:6601484]]

I appreciate the breakdown, Lip, but unfortunately I disagree with your conclusion. It's feasible financially to keep all of their current players long-term. It's a matter of probability and decision-making. What will Minnesota choose to do? The following questions are the most important factors. Are the Timberwolves in win-now mode? Is ownership prepared to make luxury tax payments? What alternatives are there if they simply let D'Angelo Russell walk? Can they find a suitable replacement for him through other means? All of these factors lead me to believe that they will either extend or re-sign Russell, or they will replace his salary slot via trade with another player or players. Either way, I don't see them letting that resource dissolve into nothing.

[Lipoli390]

I appreciate the breakdown, Lip, but unfortunately I disagree with your conclusion. It's feasible financially to keep all of their current players long-term. It's a matter of probability and decision-making. What will Minnesota choose to do? The following questions are the most important factors. Are the Timberwolves in win-now mode? Is ownership prepared to make luxury tax payments? What alternatives are there if they simply let D'Angelo Russell walk? Can they find a suitable replacement for him through other means? All of these factors lead me to believe that they will either extend or re-sign Russell, or they will replace his salary slot via trade with another player or players. Either way, I don't see them letting that resource dissolve into nothing.

Fair assessment, Cam. I agree with you on the questions that will factor into what the Wolves ultimately do. I just reach a different conclusion. However, I won't be shocked if the Wolves extend DLO beyond the 2023-24 season even though I don't think they will.

[Q-is-here]

The Gobert trade really did change the calculus on DLO in my opinion. Before I was absolutely not in favor of an extension. Now I'm unambiguously flummoxed as to what the best outcome might be because of the ins and outs of the salary cap. Is it more valuable to retain DLO/the salary slot or are we still better off letting him walk even though we lose the salary slot? In addition, he may have a say in this as well. He might decide to bet on himself and willingly become an UFA after next year.