The Payroll Challenges Ahead for the Wolves

[Lipoli390]

The Wolves are set for this season. They've filled all 15 regular roster spots and remain around $3 under the current luxury tax threshold of around $150 million. But things get very challenging financially for the Wolves starting next summer and get exponentially worse the following summer in 2024.

Next summer the luxury tax threshold is expected to raise to around $157.7 million. The Wolves will have 10 players under contract for a total of $120 million - KAT, Gobert, Edwards, Anderson, McDaniels, McLaughlin, Moore, Knight, Minott and Prince (non-guaranteed contract). That seems like a comfortable margin to fill out the remaining 4 or 5 spots on the roster, but the margin shrinks quickly when you consider who on this season's roster isn't included and then start adding up the numbers. If the Wolves want to retain Nowell it will probably cost at least $8 million. Naz Reid would likely cost at least another $4 million to keep. That takes the Wolves payroll up to $132 million. Then there's DLO. If he's extended or re-signed at around his current $30 million salary, that would put the Wolves over the luxury tax threshold at $162 million with at least one more roster spot to fill.

The following summer things get really dicey as KAT's super-max kicks in, Gobert's salary rises and the Wolves are faced with re-signing Edwards and McDaniels. The luxury tax threshold is expected to be $165.5 million that year. The Wolves will have $96 million tied up in four players - Rudy, KAT, Wendell Moore and Josh Minott. I'm guessing the max for Edwards will start at around $35 million that year if not more. If McDaniels becomes anything close to the player many think he'll be, he'll command a salary of at least $25 million (probably more and maybe even a max). That would put the Wolves payroll at $156 million for just six players. Just one MLE contract would put the Wolves over the luxury tax threshold with 7 or 8 roster spots left to fill. If DLO is on the payroll at $25 to 35 million, the Wolves would be well over the luxury tax threshold and likely bumping up against the hard cap.

Bottom line is this. I don't think the Wolves can or will retain DLO more than one year beyond next season, even at what some might perceive as a reasonable salary of $25 million. And even then, the Wolves organization will have some tough decisions to make. It all seems great now in the abstract. But when confronted with payroll numbers that will entail a huge luxury tax and likely hit the hard cap - and with the resulting transactional limitations - the Wolves organization will have some tough decisions to make. And if the Wolves are not a perennial championship contender at that point, the decisions could be far reaching.

[Coolbreeze44]

Nice write up Lip. I just don't see how they can extend DLO at a number both sides would be comfortable with. They may give him another year, but how can they go beyond that? You can't pay near max money to your 5th best player who is a below average point guard. I wonder who they are expecting to emerge as a point guard.

[Lipoli390]

Nice write up Lip. I just don't see how they can extend DLO at a number both sides would be comfortable with. They may give him another year, but how can they go beyond that? You can't pay near max money to your 5th best player who is a below average point guard. I wonder who they are expecting to emerge as a point guard.

Good question, Cool. So far it's not clear that the Wolves organization has anyone in mind as a PG successor to DLO. Perhaps they're thinking that Edwards becomes our de facto PG like Michael Jordan, in which case the Wolves could eventually replace DLO with a shooter like Paxon or Kerr. Maybe the organization sees Nowell or Moore as an eventual PG in a couple years. There's simply no way the organization can commit to a $20 million + PG two years from now when the team will have to pony up at least $60 million to keep Edwards and McDaniels on top of the $90 million they'll be spending on KAT and Rudy. That's $150 million on four players. I'm not even sure that's tenable. But it certainly means they can't have another $20 million player on the roster.

[Camden [enjin:6601484]]

Lip, I understand where you're coming from, but Minnesota is undoubtedly going over the luxury tax threshold -- perhaps significantly over depending on what Jaden McDaniels commands -- with or without committing to D'Angelo Russell on a long-term deal. The issue is that if they let him walk they will have lost not only a legitimately good player while they're in win-now mode, but also the salary slot that he holds. They'll have very little means of adding a point guard of similar or better quality using the mid-level exception and they'll have no tradable salaries to use in a trade to match for another. The convenient example of this is looking at how Golden State operated once they found out Kevin Durant was planning to sign with Brooklyn. They scrambled in order retain Durant's salary slot on their payroll by maneuvering for Russell in a sign-and-trade. Had they simply let Durant walk they would have been handcuffed in adding another quality player.

That leaves the Timberwolves in a dicey situation. They can either extend or re-sign Russell, which is what I think they should do, or they should look to move him at or before the trade deadline for salary that extends beyond this season. Note that if they get Russell on a new deal they can reconfigure their plans on the fly as they need to. The issue with the second option is that they're essentially just kicking the can down the road without knowing if an attractive player they covet might become available while also still operating as a team set to exceed the luxury tax threshold. Well, that and they'd be trading a pretty important piece in the middle of what looks to be a pretty competitive season.

Lastly, there are 12 (!) teams set for luxury tax payments in 2022 and most, if not all, of them have their eyes on contending. That kind of investment comes with having a potential winner. You essentially have to pay in this league or else you have no chance of winning a championship. Some of those teams are 30-40 million over. I won't be surprised when this franchise is among them in the near future. Frankly, you don't sign off on a trade for Rudy Gobert -- adding another super-max contract to the future payroll -- without accepting that the franchise is heading for the luxury tax. There's not much avoiding it now. Everything from this point forward should revolve around winning a title -- not focusing on luxury tax payments.

[thedoper]

They better be ready to pay the luxury tax. This was the point I made in another thread. We are on track for at least 3 max slots but could hold 4 if we extend Dlo. That is a good thing if they are willing to pay. Gives us a lot of flexibility to bring in talent. If they are unwilling to pay the tax its going to run us over like a truck.

[Monster]

The Wolves didn't do all the aggressive moves they have made the last few weeks to then be like nah we aren't gonna pay good players what they are worth. If players are good enough to demand significant salaries that's an excellent problem. We all know this team is head towards the luxury tax it's just when and how long it takes to get there.

If they want to dunk the luxury tax in 2023-2024 I could see them letting Prince go as they have players on the roster that could provide a lot of what he does or they could decline his option and sign him to a longer term deal for less money. I think they may have paid him this season more than what he would have gotten on the open market. They could also let him go and replace him with a vet min guy. I'm a big fan of prince as a solid NBA player but I can see him as a guy that might not be worth keeping next season relatively speaking. We have an entire season to see how thinks worth out. Let's see where things are a few months from now when we see the product on the floor. Maybe Prince will be a bargain at less than 8 million next year. Maybe he is traded.

[Lipoli390]

They better be ready to pay the luxury tax. This was the point I made in another thread. We are on track for at least 3 max slots but could hold 4 if we extend Dlo. That is a good thing if they are willing to pay. Gives us a lot of flexibility to bring in talent. If they are unwilling to pay the tax its going to run us over like a truck.

It's not whether the Wolves are willing to pay the luxury tax. There's no doubt they'll have to exceed the threshold in a couple years just to retain Edwards and McDaniels along with KAT and Gobert while filing out the rest of the roster. They issue is by how much and for now long. You can only go so far about the threshold before you hit the hard cap and there are penalties for repeaters. And that's in addition to the financial implications that the Wolves ownership, including minority owners, can't ignore entirely.

I'll note that KAT, Rudy, Edwards and McDaniels will add up to four max slots. McDaniels might be slightly short of the max, but KAT will be on a super-max with Rudy at the same level as KAT. That means DLO becomes a 5th max or near max. No team in the NBA has four max players, much less five. So it's not going to happen. The Wolves organization will have to make tough choices and paying DLO $25 million plus after the 2023-24 season is a choice they really can't make as a practical matter.

[rapsuperstar31]

We have new aggressive owners that just spent a pretty penny on a new gm. If Lore and Arod are willing to go deep into the luxury tax I could see us retaining Dlo for another contract, maybe a 3 year deal. We have limited draft picks going forward to find a late first round draft steal pg. Unless a solid veteran pg is going to come here for the bae or minimum contract we are not going winning a championship with a bad pg. Maybe Ant can play more pg, but that is still a few years away with his current passing abilities. I don't feel like Jaden is going to necessarily breakout this year or even next year. That is going to depend on Jaden, if he can stay out of foul trouble. If Jaden can't stay on the floor, he isn't going to get anywhere near a max contract. Plus Arod and Lore want to eventually build a new stadium, I don't think the public is going to be very keen to help fund it, if the owners let good players walk for nothing.

[thedoper]

They better be ready to pay the luxury tax. This was the point I made in another thread. We are on track for at least 3 max slots but could hold 4 if we extend Dlo. That is a good thing if they are willing to pay. Gives us a lot of flexibility to bring in talent. If they are unwilling to pay the tax its going to run us over like a truck.

It's not whether the Wolves are willing to pay the luxury tax. There's no doubt they'll have to exceed the threshold in a couple years just to retain Edwards and McDaniels along with KAT and Gobert while filing out the rest of the roster. They issue is by how much and for now long. You can only go so far about the threshold before you hit the hard cap and there are penalties for repeaters. And that's in addition to the financial implications that the Wolves ownership, including minority owners, can't ignore entirely.

I'll note that KAT, Rudy, Edwards and McDaniels will add up to four max slots. McDaniels might be slightly short of the max, but KAT will be on a super-max with Rudy at the same level as KAT. That means DLO becomes a 5th max or near max. No team in the NBA has four max players, much less five. So it's not going to happen. The Wolves organization will have to make tough choices and paying DLO $25 million plus after the 2023-24 season is a choice they really can't make as a practical matter.

The comparable situation is Golden State. Im sure if they had room to add a 5th max or near max slot they would. You want the multiple slots before you are hard capped, that is why Golden state made sure to ask KD for the sign and trade for DLo to keep that 4th slot. If Jaden turns into a 5th max slot that would be an amazing problem to have as I see it.

[Monster]

They better be ready to pay the luxury tax. This was the point I made in another thread. We are on track for at least 3 max slots but could hold 4 if we extend Dlo. That is a good thing if they are willing to pay. Gives us a lot of flexibility to bring in talent. If they are unwilling to pay the tax its going to run us over like a truck.

It's not whether the Wolves are willing to pay the luxury tax. There's no doubt they'll have to exceed the threshold in a couple years just to retain Edwards and McDaniels along with KAT and Gobert while filing out the rest of the roster. They issue is by how much and for now long. You can only go so far about the threshold before you hit the hard cap and there are penalties for repeaters. And that's in addition to the financial implications that the Wolves ownership, including minority owners, can't ignore entirely.

I'll note that KAT, Rudy, Edwards and McDaniels will add up to four max slots. McDaniels might be slightly short of the max, but KAT will be on a super-max with Rudy at the same level as KAT. That means DLO becomes a 5th max or near max. No team in the NBA has four max players, much less five. So it's not going to happen. The Wolves organization will have to make tough choices and paying DLO $25 million plus after the 2023-24 season is a choice they really can't make as a practical matter.

It's worth noting all those deals you speak of are going to be signed based on a salary cap before the big TV deal. That's really fortunate for the Wolves. Once that new TV deal kicks in there will be guys signing for significantly more than what Towns will make on his super max and it's also worth remembering that rookie max deals are expensive but not as crazy money. Again if Jaden deserves anywhere near a max deal and this roster stays healthy then DAMN this is gonna be a hell of a basketball team. If Russell is legitimately say a 20 million dollar a year player based on what he does this year meaning he is a good starting level player I'm gonna be willing to overpay maybe even 5 million to keep that level of player on my roster especially if the Wolves are legitimately competing for a championship. The idea that the Wolves traded all that stuff for Gobert and then decide nah we aren't gonna pay Russell 25 million (if he is worth keeping) just makes zero sense to me. There is absolutely a path where Russell simply isn't worth paying that money. Let's see where we end up. There is so much more information to gather before we get too concerned about Lore and Arod's pocketbooks. Lol