The Wolves Salary Cap Problem

[FNG]

Lip, thanks for summarizing the restrictions under the new CBA for exceeding the apron...very helpful. But given Tim's report that the apron threshold is expected to be north of $192 million, do we really think it's going to be all that difficult for TC to stay under it? I think it's mandatory that we keep Rudy, KAT, Ant, Jaden and SloMo, and I estimate those 5 will cost us about $155 million- leaving only $37 million for the remaining 10 players. I also assume they are going to want to keep one of our two functional reserve wings (NAW or Prince), and let's say that is another $8 million, leaving us $29 million for the remaining 9 players ($3.22 million per player) While that sounds ridiculously low, a core like those 6 is an excellent start, and most of the bottom 6 or 7 players shouldn't average more than $2 million per player. We definitely can't afford Naz as I have said many times before, but I don't see that as a big loss. And I would not be surprised if Mike Conley agreed to stay with a winning team (in a city he has said he wants to raise his kids in) for the vet minimum once his contract is over.

I think it will not be too daunting a task to keep the payroll under that apron. The luxury tax threshold is another matter, and if Lore has indicated he's not going to pay that, then we can expect either KAT or Rudy to be gone this summer.

[60WinTim]

Actually, those things didn't seem that terrible if you are already a good team...

You keep insisting that now is the time to move KAT (or preferably, Rudy). But did you know that the 2024-25 luxury tax is calculated on a team's salaries at the end of the 2024-25 season? Heck, they could be well over the 2nd apron at the beginning of the 2024-25 season when ANT's and Jayden's extensions kick in, but move Rudy or KAT by the trade deadline in 2025 for cap relief. Any tax is calculated on the value of salaries at the end of the season.

I don't think the Wolves feel any rush to solve the future cap issues. Yes, they need to take those cap issues into account as they make decisions now, but it does not mean moving either KAT or Rudy this offseason.

[Lipoli390]

Lip, thanks for summarizing the restrictions under the new CBA for exceeding the apron...very helpful. But given Tim's report that the apron threshold is expected to be north of $192 million, do we really think it's going to be all that difficult for TC to stay under it? I think it's mandatory that we keep Rudy, KAT, Ant, Jaden and SloMo, and I estimate those 5 will cost us about $155 million- leaving only $37 million for the remaining 10 players. I also assume they are going to want to keep one of our two functional reserve wings (NAW or Prince), and let's say that is another $8 million, leaving us $29 million for the remaining 9 players ($3.22 million per player) While that sounds ridiculously low, a core like those 6 is an excellent start, and most of the bottom 6 or 7 players shouldn't average more than $2 million per player. We definitely can't afford Naz as I have said many times before, but I don't see that as a big loss. And I would not be surprised if Mike Conley agreed to stay with a winning team (in a city he has said he wants to raise his kids in) for the vet minimum once his contract is over.

I think it will not be too daunting a task to keep the payroll under that apron. The luxury tax threshold is another matter, and if Lore has indicated he's not going to pay that, then we can expect either KAT or Rudy to be gone this summer.

Real GM and other sites I’ve looked at all put the 2024-25 season luxury tax threshold at $170,100,000. That would put the second apron at $187.6 million. Ant will get the player max projected to be $36.18M while Jaden would likely get at least $30.0M. Gobert will get $43.83M while KAT will be due $50.05 million. Those four players add up to a payroll of $160.06M. The minimum vet salary for a player with one year of experience is projected to be $2.09 million in 2024-25. If the Wolves filled out the remaining 10 roster spots with all minimum contracts the total payroll would be $181 million. Obviously, the Wolves won’t contend for a championship with those four and 10 minimum salary players. Just adding NAW and one other player at only $5 million each would put the Wolves at 165.6 million at $170.6 million with 8 spots left to fill. If all 8 were filled with only minimum salary players, the team’s payroll would exceed the 2nd apron. But of course, you’re not going to contend for a championship with two $5 million players and 8 minimum salary players.

The situation is obviously untenable. There’s the desire to believe and then there’s reality. At some point, this organization will have a reckoning with reality. If it’s not this summer, it will be a year from now. I am certain this team won’t make the NBA finals running it back and I doubt they’ll make the conference finals. Teams typically don’t just leap from getting knocked out of the first round to making the NBA finals. Then the team will have to move either Gobert or KAT. You have to ask yourself, what’s the point of that?

[Q-is-here]

Actually, those things didn't seem that terrible if you are already a good team...

You keep insisting that now is the time to move KAT (or preferably, Rudy). But did you know that the 2024-25 luxury tax is calculated on a team's salaries at the end of the 2024-25 season? Heck, they could be well over the 2nd apron at the beginning of the 2024-25 season when ANT's and Jayden's extensions kick in, but move Rudy or KAT by the trade deadline in 2025 for cap relief. Any tax is calculated on the value of salaries at the end of the season.

I don't think the Wolves feel any rush to solve the future cap issues. Yes, they need to take those cap issues into account as they make decisions now, but it does not mean moving either KAT or Rudy this offseason.

But Tim, what is the cap relief you speak of? Even expiring contracts are still on the books through the end of the season, no? Wouldn't it be too late to wait until the trade deadline in February of 2025 to make a move since they still have to match salaries?

[60WinTim]

Actually, those things didn't seem that terrible if you are already a good team...

You keep insisting that now is the time to move KAT (or preferably, Rudy). But did you know that the 2024-25 luxury tax is calculated on a team's salaries at the end of the 2024-25 season? Heck, they could be well over the 2nd apron at the beginning of the 2024-25 season when ANT's and Jayden's extensions kick in, but move Rudy or KAT by the trade deadline in 2025 for cap relief. Any tax is calculated on the value of salaries at the end of the season.

I don't think the Wolves feel any rush to solve the future cap issues. Yes, they need to take those cap issues into account as they make decisions now, but it does not mean moving either KAT or Rudy this offseason.

But Tim, what is the cap relief you speak of? Even expiring contracts are still on the books through the end of the season, no? Wouldn't it be too late to wait until the trade deadline in February of 2025 to make a move since they still have to match salaries?

True - it would take a team that has cap space to absorb the difference between what our player earns and what the returning player(s) earn. It would not be a position you would want to be in. However they make your bed at the start of the season will probably be how they end it... unless you accomplish a buyout, or waive and use the stretch provision, but none of those seem very applicable.

And I do believe your second apron threshold is wrong. You've seen 170 as the luxury tax threshold. I've seen 172 at spotrac.com. But the 2nd apron is set to 17.5 mil over the luxury threshold, not 7.5. That sets the apron at 191.5. Not that the Wolves would want be anywhere near that number!

As to why run it back when you know somebody has to be traded? To give ANT as much playoff experience as possible, and to establish a winning culture in Minnesota so decent FAs are willing to come here on vet minimum deals. Because you just don't know how those threshold numbers may fluctuate, maybe NBA revenues exceed expectations and you do have enough room to make the current roster work. Because a successful season should only increase the value of the player you might need to trade. There are all sorts of reasons for not making a panic move for something that is still far away. Just like they did with Dlo (if you listen to the most recent Dane/JonnyK podcat).

Of course, if the right deal comes along, then go for it. Just don't make a deal because of something that might happen in 2025.

[Q-is-here]

Actually, those things didn't seem that terrible if you are already a good team...

You keep insisting that now is the time to move KAT (or preferably, Rudy). But did you know that the 2024-25 luxury tax is calculated on a team's salaries at the end of the 2024-25 season? Heck, they could be well over the 2nd apron at the beginning of the 2024-25 season when ANT's and Jayden's extensions kick in, but move Rudy or KAT by the trade deadline in 2025 for cap relief. Any tax is calculated on the value of salaries at the end of the season.

I don't think the Wolves feel any rush to solve the future cap issues. Yes, they need to take those cap issues into account as they make decisions now, but it does not mean moving either KAT or Rudy this offseason.

But Tim, what is the cap relief you speak of? Even expiring contracts are still on the books through the end of the season, no? Wouldn't it be too late to wait until the trade deadline in February of 2025 to make a move since they still have to match salaries?

True - it would take a team that has cap space to absorb the difference between what our player earns and what the returning player(s) earn. It would not be a position you would want to be in. However they make your bed at the start of the season will probably be how they end it... unless you accomplish a buyout, or waive and use the stretch provision, but none of those seem very applicable.

And I do believe your second apron threshold is wrong. You've seen 170 as the luxury tax threshold. I've seen 172 at spotrac.com. But the 2nd apron is set to 17.5 mil over the luxury threshold, not 7.5. That sets the apron at 191.5. Not that the Wolves would want be anywhere near that number!

As to why run it back when you know somebody has to be traded? To give ANT as much playoff experience as possible, and to establish a winning culture in Minnesota so decent FAs are willing to come here on vet minimum deals. Because you just don't know how those threshold numbers may fluctuate, maybe NBA revenues exceed expectations and you do have enough room to make the current roster work. Because a successful season should only increase the value of the player you might need to trade. There are all sorts of reasons for not making a panic move for something that is still far away. Just like they did with Dlo (if you listen to the most recent Dane/JonnyK podcat).

Of course, if the right deal comes along, then go for it. Just don't make a deal because of something that might happen in 2025.

I'm certainly not in favor of a fire sale or any sort of panic trade. If we can't get a decent-ish return, then yeah, run it back.

That being said, we won 46 games without Rudy two seasons ago and 42 games without KAT for most of this last season. So the question is if you trade one or both of those guys this season, do you get existing assets that may help you at least tread water as far as '23-'24 is concerned AND provide further long-term upside via cap relief, added draft picks, etc.?

[60WinTim]

I use to have a pretty good handle on the CBA a few CBA's ago, but then let it slide over the years. I don't consider myself an expert, but I know how to find the answers, and you guys are forcing me into updating my CBA skills!

The Wolves do not have a cap problem that cannot be navigated. 2024-25 will be the tightest year to navigate, but the cap and luxury tax thresholds are scheduled to make a sizeable leap in 2025-26, which will be a higher % than what our big contracts will be increasing, thus creating even more space under the luxury tax to work with.

The Wolves may need to decide whether to go over the luxury tax by a few mil in 2024-25, where the penalty will be 1.5 * the amount they are over the threshold (3 mil over = a 4.5 mil tax bill). The 2nd apron does not come into play.

The apron is set to 10.8% of the luxury tax threshold of the current year. 2023-24 apron is 17.5 mil over the lux tax threshold, but the 2024-25 apron is projected at 18.675 mil over the lux tax threshold for that year.

It seems clear Connelly intends to turn the Wolves into an elite team quickly so it becomes a desirable place for cheap veteran players to come and have a chance to win. I wouldn't be surprised if we make a decent signing or two this offseason, but only on a one year deal. It will help establish the Wolves as a winner and make it easier to sign cheap veterans next offseason to help navigate the luxury tax.

I don't have a problem with that!

[Lipoli390]

Tim - You’re not being realistic.

If you look at the Wolves salaries (those we know and those likely) for what would be our six best players, the total payroll in the 2024-25 season would be $167,077,285 with 8 roster spots to fill. My estimate is based on (1) the actual salaries of KAT and Rudy that season; (2) a max salary of $36,180,000 for Ant; (3) a $30,000,000 salary for Jaden; (4) a bargain $5 million salary for NAW; and the actual $2,019,699 salary for Minott that season. My projection assumes the Wolves don’t pick up Moore’s option.

I projected the 2024-25 payroll of all the teams that finished in front of the Wolves this season as well as OKC and New Orleans based on the actual or likely salaries of the best six players on their rosters this past season. Disturbingly, all those teams except the Lakers had lower payrolls than the Wolves - most of them substantially less. I didn’t project the Lakers with a higher payroll than the Wolves. I just couldn’t reasonably estimate what their payroll would be for their top six players that season because, other than LeBron and Anthony Davis, I couldn’t reasonably project who the top 6 roster players would be.

Even the core top six on the world champion Nuggets (Jokic, Murray, Porter, Gordon, KCP, Braun) will have a total combine salaries of around $163.5 million, which will be about $4 million less than the Wolves that season. The Grizzlies top six (Morant, Jackson, Bane, Clarke, Adams, Aldama) will total around $123.6 million. The Kings top six (Fox, Huerter, Murray, Mitchell, Sabonis, Holmes) will total around $123.6 million assuming they resign Sabonis at Rudy’s salary that year - although I think they can sign him for less. The Suns top six (Durant, Booker, Ayton, Shamet, Payne, Craig) will total $162.6 million assuming Craig re-signs at twice his current salary andPayune gets the same salary he got this season. The Clippers top six (PG, KL, Norm Powell, Zubac, Mann, Hyland) will total $144.1 million assuming Paul George and Kawhi Leonard o pick up their team options. The Warriors top six (Curry, Wiggins, Poole, Looney, Moody, Kuminga) will total $134.6 million without Klay Thompson. OKC’s top 6 (SGA, Dort, Giddey, Holmgren, Tre Mann, Jalen Williams) will total $81,277,090. The Pelicans top six (Ingram, McCollum, Zion, Herb Jones, Valanciunas, Nance) will total $152.2 million assuming Jones re-signs at $20M and Valanciunas re-signs as only slightly more than his current salary.

[60WinTim]

I don't know what NAW will get, but I suspect the 2nd year will not be guaranteed, giving the Wolves some flexibility on those dollars. And given the new CBA, as Jonny K pointed out in his podcast, the middle class players are about to have the shit squeezed out of them -- there could be a lot of great vet minimum deals available next offseason. $30 mil for McDaniels seems like the high end of what he will command. I hope it doesn't go this way, but maybe they don't reach an agreement and McDaniels becomes an RFA next offseason. Plus recent history has shown these cap estimates tend to increase over time. There are just too many variables at play right now to make a significant basketball decision based on speculation of the finances in play over a year from now.

I know I am not convincing you, because you hate the Rudy trade and that is your primary motivation. No question the 2024-25 salaries will be difficult to navigate, but I would not call it unrealistic. Especially if a small venture into the luxury tax is acceptable.

[60WinTim]

On McDaniels, Mikal Bridges seems like a pretty good comp -- we would be very happy if McDaniels could achieve that kind of production and impact. Bridges just signed his rookie extension last year, 4 year 90 mil, with the first year starting at 20.1 mil. That's the kind of deal I would expect for McDaniels. Maybe even a bit less.

The cap situation in 2024-25 is still difficult, but navigating may not be as difficult as you are portraying.