Off-season Raptors Roster Moves: Keeping the team together vs. ducking the tax

Setting aside the coaching change, there are big questions about which direction the Raptors should go with their roster this summer. The team is lined up to be a significant tax payer the next two seasons, especially if they want to retain their free agents over the next two summers. But that tax payment was probably intended to come along with a measure of success a little ways above being swept in the second round of the playoffs.

So, over a few articles, we’ll explore some options the Raptors have. First, we’ll start simple: what if Toronto wants to keep the core of this team together, and give it another shot with a new coach? This is the boring (if potentially still good) option, but let’s make sure we understand the baseline before we tackle more interesting alternatives.

Then, second: we’ll figure out how the Raptors can keep the team relatively together — but still duck the luxury tax bill that will surely come with that strategy.

Death and Taxes

As we covered last week, the Raptors are set up to be tax payers next year. Currently, they are projected to be about $8 million into the tax. That’s a reasonable tax bill for a team that thinks they should make the Conference Finals. Perhaps they still think that.

But that tax bill doesn’t include a salary for Fred VanVleet, who is a restricted free agent. And his contributions to the team this season suggest that perhaps, if he were to leave, the team shouldn’t expect to make the Conference Finals even if they avoid getting crushed by LeBron James again. And as we noted last time, adding VanVleet’s salary to the team’s books would mean a dramatic increase in the tax bill (VanVleet’s $8.6 million likely salary would actually cost the team about $25 million with taxes included).

So, there is one obvious set of moves that would be easy but doesn’t make much sense, in my opinion. Let VanVleet walk (along with Lucas Nogueira), and sign two minimum salary depth pieces to fill the roster spots. The team pays a moderate tax bill for a team that is going to rely on a new coach to more than make up the difference that comes from losing a key contributor like VanVleet.

The obvious alternatives are to either a) find a way to bring back VanVleet, then reduce salary elsewhere if needed, or b) still let VanVleet go, but still find a way to shed salary elsewhere and avoid the tax if the team is not expected to be as good next year. Obviously as fans, we’d prefer the former, but the mechanics of both options are the same — find a way to shed salary. So let’s explore that.

Either way, the team would probably like to shed at least $8 million (about what the additional cost of VanVleet would be at most, and also about how far over the tax they currently project). So, we’ll set that as a goal, and for sanity’s sake explore the question assuming VanVleet is going to be re-signed.

Who Should Go?

Looking at the roster sheet, the only salaries that could have an impact of $8 million or so (or more) would be the following.

Kyle Lowry $31,200,000
DeMar DeRozan $27,739,975
Serge Ibaka $21,666,666
Jonas Valanciunas $16,539,326
Norman Powell $9,367,200
C.J. Miles $8,333,333

Serge Ibaka is probably largely immovable after that playoff performance, Valanciunas seems important to the team’s success after his own playoff run (and has proven difficult to move in the past), and DeRozan and Lowry are presumably staying in this scenario.

The likeliest candidates seem to be Miles and Powell, both earning right around the correct amount to save the Raptors most of the cost of VanVleet’s potential deal, assuming they can be dealt with no more than a minimum salary returning.

The trick is finding a team with cap space to absorb those salaries. With the cap level not projected to rise much, if at all, this summer compared to last, the number of teams with cap space is at an all time low — and the number of teams looking to dump salary at an all time high. Finding a landing place for either player, when there will be very few teams in a position to absorb salary into cap space, could be an expensive proposition, as teams can charge a huge price in draft picks to accommodate any salary shedding.

This is where the likelihood of Powell moving increases significantly. Miles is on a roughly $8 million salary already, but Powell’s expensive salary doesn’t kick in until the summer. For the moment, he still makes close to league minimum, and now that he is more than six months removed from signing his extension, he can be traded any time. His current 2017-18 salary is what counts in trades now and at the draft, so the market of teams that could absorb his deal is far larger than the small number of cap room teams that can do so after July 1st (when his extension salary kicks in).

So, as long as a team is willing to take on the extra salary this summer, they don’t need to have the cap space to do it, so long as they have a minimum salary or small trade exception they can use at the draft to match salaries.

A scenario can be dreamed up for almost any team to be able to take on Powell, with only tax considerations (and whether teams want to take a gamble on Powell regaining his form) being a bit of a road block for some teams.

In any case, even if the move still costs the Raptors an asset to drop salary, the asset price should be far lower with them able to deal with significantly more potential trade partners than the small pool of cap room teams.

They can certainly also explore options to move Valanciunas or Ibaka for a lower salary, but again they are forced to deal with cap room teams to make such a deal work and shed enough salary. The options here may be very limited, and could be more costly than a simple Powell or even Miles trade.

In any case, this is pretty much what the expected route was coming into the playoffs — keep the 59 win team together, and find a way to make the money make sense.

With the disappointment of the playoffs, bigger changes may be coming, and we’ll explore what some of those might look like next time around.