Welcome to the luxury tax inferno, Warriors.
John Hollinger of The Athletic reviewed every team’s salary cap and luxury tax situation, assuming the levels stayed around the range of this season as opposed to the expectation that both raise by several million dollars.
Hollinger, based on what his sources have told him, used a $109 million salary cap and $132 million luxury tax line in his estimates. Those are decreases from the $115 million cap and $139 million tax that was expected prior to the pandemic.
For the Golden State Warriors: There’s a chance it’s too much for the Joe Lacob and the ownership group to bear.
The Warriors could owe $135 million in luxury tax payments for the 2020-21 season.
That’s more than this year’s entire player payroll.
Hollinger writes:
If the Warriors land in the top four in the draft lottery (fairly likely), utilize the majority of the $17,185,185 Andre Iguodala trade exception, and sign a player with the taxpayer mid-level, they could end up owing the league a jaw-dropping $135 million in tax payments.
First-year salaries for top-five draft picks range from $5 million to above $8 million. The Warriors are assured of a top-five pick and have a 52.1% chance at a top-four.
With the Iguodala exception, the Warriors could simply let it expire to save luxury tax expense, or trade for a player who makes less than that.
Even so, it’ll be a lofty payment.
If they punt on using the Iguodala exception, or perhaps only use a piece of it, the numbers return to Earth a bit – then we’re looking at “just” $85 million or so in tax payments.
Lacob has proven willing to pay taxes over the years to field winning teams, and trading for D’Angelo Russell was a sign that even for the post-Kevin Durant team, the organization would still be willing to put out big dollars.
But this would essentially be paying for two teams.
The offseason for the Warriors, hoping to get back into title contention, will be complicated.
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