A great deal of progress has occurred since we last checked in with the Raptors. First, we learned that P.J. Tucker is off to Houston, meaning he won’t be returning. Then Serge Ibaka came back, and Kyle Lowry shortly thereafter.
So, where are the Raptors now in terms of the cap, and what still needs to be done?
Current Committed Salary
The Raptors have 13 players signed to contracts for next season. OG Anunoby will certainly be signed as well, so that brings the roster to 14 slots. The following outlines the committed salary for this summer.
Kyle Lowry $30,864,198
DeMar DeRozan $27,739,975
Serge Ibaka $20,061,729
Jonas Valanciunas $15,460,675
DeMarre Carroll $14,800,000
Cory Joseph $7,630,000
Lucas Nogueira $2,947,305
Jakob Poeltl $2,825,640
Bruno Caboclo $2,451,225
Delon Wright $1,645,200
OG Anunoby $1,645,200
Norman Powell $1,471,382
Pascal Siakam $1,312,611
Fred VanVleet $1,312,611
That comes to a total of $131,953,191. The cap is set at $99.093 million, meaning the team is way beyond having any cap room. So we’ll leave aside any consideration of cap holds and free agents for now — that’s all irrelevant to this off-season at this point. Now the only concern is the tax.
Because the tax line has been set at $119.266 million, leaving the team $12.7 million over based on the above number. However, when calculating tax payments, all minimum salaries count as two-year veteran minimum salaries (minimum salaries have different values based on years of experience, the less experience, the cheaper the salary). As such, Fred VanVleet ends up counting as the same salary as Norman Powell, as does Pascal Siakam.
DeMar DeRozan’s unlikely incentives (the exact annual amount is unknown but I have it estimated at $1.2 million for this season) also count against the tax (for now). The actual tax will be paid against whatever incentives players actually earn, but to be safe we’ll include all of them. Lowry is reported to have $90 million base salary and $10 million in incentives, so the value above can be used here. If Ibaka has incentives, no details have been released yet, so we’ll just assume his salary as reported includes any incentives.
Meanwhile, Kennedy Meeks signed what is reportedly a two-way contract (that is, a camp invite contract with a clause to convert it to a two-way contract) which does not count against the team salary unless he makes the full time roster (let’s call that a long shot). So for now, we’ll just ignore his presence on the team, for salary purposes.
All that adds up to the committed salary for tax purposes being $133,470,733. That’s $14.2 million over the tax.
The tax payment system in the NBA penalizes teams more and more as they get further into the tax. Here is a breakdown of the tax brackets for each dollar spent over the tax.
First $5 million: $1.50 in tax per $1 spent
$5 million to $10 million: $1.75 in tax per $1 spent
$10 million to $15 million: $2.50 in tax per $1 spent
$15 million to $20 million: $3.25 in tax per $1 spent
$20 million and up: Increases $0.50 in tax per $1 spent with every $5 million bracket
As a note, if a team is in the luxury tax in 3 out of 4 years, they pay repeater tax penalties, which add an additional $1 to all of the above rates. It gets expensive fast. But it will be a while before the Raptors have to worry about that, so moving on to their calculation.
With a salary $14.2 million above the tax line, the Raptors will be taxed as follows.
The first $5 million yields a $7.5 million tax bill.
The second $5 million yields a $8.75 million tax bill.
Finally, the leftover $4.2 million yields a $10.51 million tax bill.
In total, that’s a $26.76 million tax bill. Throw that on top of the $133 million in committed salary and your total cost to the organization is $160 million. That’s pretty close to the amount I have been presenting as the absolute maximum a team would be willing to pay to keep a very good team together and operate with limited to no profit margins. So, if the team thinks this group, as presented above, is worth paying that hefty tax bill for, they could be done.
Of course, they aren’t.
Mostly because the group above is a step back from the group they finished the year with. Tucker is gone. Patterson might end up gone as well, and certainly would add to the cost of the roster if kept — the team still has his full Bird Rights and can offer him basically any contract they want. They are in the expensive part of the tax now, so even if Patterson saw his market crash badly and signed here for a $5 million deal (this would be extremely low for him), it would cost the Raptors a total of $16 million in taxes, meaning his salary would effectively be $21 million.
So, whether the team is hoping to add a player via the Mid-Level Exception (almost certainly the Tax-Payer version, worth about $5.2 million, so that they don’t trigger a hard cap at $125 million team salary), or to re-sign Patterson, they are going to have to shed salary.
Already the team has been rumoured to be shopping the most obvious redundant piece on the roster, Cory Joseph. His $7.6 million salary is actually very reasonable, but coming off a bad year (in terms of impact; his individual numbers were fine), and with two very cheap depth pieces in Wright and VanVleet stuck a slot below their skill level last season, he is the easiest piece to move and see no significant drop off in play on a night to night basis. His deal should be easy to find a landing place for, and might even return a non-salary asset (a future draft pick, or draft rights to a player stashed overseas). Early word is Toronto has had discussions with Indiana, but any number of teams could fit the bill here.
There is also a suggestion that Houston could look to leverage the non-guaranteed contracts they have into trading for Tucker via sign-and-trade instead of using their MLE. That would allow them to chase another role player with the MLE, and presumably the deal would allow the Raptors to waive all those non-guaranteed salaries without hitting their cap situation any, while snagging an asset (like a future second rounder or two) for their trouble. This doesn’t affect the cap situation, but plays into other salary relief deals, giving the team extra assets to deal.
Surely, though, the team has their eyes on bigger salary reduction prizes. Namely, Jonas Valanciunas or DeMarre Carroll. The team won’t want to include a draft pick to move them, which makes finding a suitor difficult. Perhaps an asset such as Lucas Nogueira (on the final year of his rookie scale deal, and buried in a C rotation behind Valanciunas, Ibaka and Poeltl) or whatever might come back in a Joseph or Tucker deal, could be enough to grease the wheels.
If one of them is shed for no returning salary (and Joseph is similarly moved), that would mean moving the team to about $8-9 million below the tax line, with room to add another role player (presumably a shooting forward), whether that is Patterson or a player signed with the MLE, or even a player coming back in the salary shedding trade. They’d need to acquire two players (probably signing one for the minimum), as the roster minimum is 14, and by shedding two salaries they would reduce their roster to 12.
This is likely the team’s goal. Now, which of the players moves? I imagine it depends on the cost. I suspect the cost would be similar for both. Carroll is old and hurt, but fits the league like a glove right now (versatile defender and shooter). Jonas is younger and better, but is hard to find minutes against more and more pace and space offences, and carries a potential three year hit instead of Carroll’s two. It will come down to finding a team that values one or the other of them to some degree.
The other issue is Tucker leaving. With Tucker gone, if the Raptors move Carroll, they would need to use that little bit of extra money to fill a depth wing spot, unless they think Bruno Caboclo is ready to contribute, or are just going to tough it out until OG Anunoby is ready to play later in the year. At the same time, if Valanciunas is gone, Ibaka slides to centre full time, and there are suddenly lots of PF minutes to fill that Tucker would have helped with. No matter who they shed, it looks like they will need to use that extra flexibility to get a little more help in the forward spots.
So, what do you think? Who moves, and to where? And who might the Raptors bring in (whether in free agency or by trade) to fill any created hole in the frontcourt?
As ever, many thanks to the invaluable basketballinsiders.com for the established salary figures.