Joe Johnson Trade Could Have Cavs Paying Over $100 Million in Luxury Tax Alone

Ryan Glasspiegel
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Cavaliers general manager LeBron James has had a busy offseason. He locked up Kevin Love and Iman Shumpert to long-term deals, and made sure Timofey Mozgov is sticking around for another year. With Tristan Thompson, who is repped by LeBron’s agent and long-time friend Rich Paul, LeBron is ostensibly negotiating both sides of the deal. Apparently, talks are held up based on the precise amount of Dan Gilbert’s money that he’s permitted to overpay — so he’s using himself as leverage:

On a separate front, there are also some talks that LeBron’s front office is talking with the Nets about a trade for Joe Johnson. Per Brian Windhorst, one possibility involves shipping off Brendan Haywood — because of a waivable contract, he’s one of those weird TRADE ASSETS that only exists in the NBA — and Anderson Varejao. This would be great for Cleveland on the court; Johnson’s 3-point-shooting rate fell to 35.9% last season, but he’d be getting more open looks on a team with LeBron. His contract, however, would be catastrophic on the Cavs’ salary cap.

Johnson is making $24.9 million in the final year of his contract next season. He’s the NBA’s second highest player behind Kobe Bryant. Combined with other salaries that look like they’ll be on Cleveland’s payroll next season, it would perhaps put the team nearly $50 million over the salary cap, and more than $30 million above the luxury tax threshold. Here’s what I believe would be on their books next season:

The Thompson contract isn’t done yet — but five years, $80 million was a number being kicked around — and I couldn’t find the yearly breakdown of Shumpert’s four year, $40 million deal, so both of those were rough estimates based on having their yearly wages rise a bit during their contracts’ duration. The Real GM numbers are based on minimum contracts for rookie players who weren’t first round picks.

Per USA Today, the luxury tax threshold is $81.6 million next season, which the Cavs would be $32.1 million over. Using figures and formulas provided by the essential CBA FAQ, which is a foreign language course for everything weird about NBA transactions, Cleveland would have to pay $45 million for the first $20 million over the threshold (at that level, there are incremental escalators every $5 million).

Beyond that, you pay $3.75 per dollar over, and that goes up $.50 every $5 million. Here are the calculations for where they’d be at the margins:

  • (3.75)*(5 million) = $18,750,000
  • (4.25)*(5 million) = $21,250,000
  • (4.75)*(2.1 million) = $9,975,000

This equals $49,975,000. Added with the $45,000,000 from the first $20 million over the threshold, this leads to nearly $95,000,000, which is a number that goes up about $5,000,000 at a time if Cleveland signs veterans at the minimum rather than their second round draft picks. Re-signing restricted free agent Matthew Dellavedova would also push it higher — if he’s paid $3-5 million per season, as rumored, that could be more than $20 million in luxury tax.

Cleveland would also be putting themselves in a position where the repeat offender provision is on the horizon. As big as these numbers are right now, they’d be astronomical in a few years.

For Dan Gilbert, this is the cost of doing business with LeBron, who is nominally underpaid in a CBA that was crafted by the owners with the intention of quashing the type of individualistic power he’s been wielding. In addition to the excitement and winning generated by LeBron on the court, his presence swung the franchise’s Forbes valuation from $515 million to $915 million in one year.  Whether or not Joe Johnson winds up in Cleveland, for as long as he’s there LeBron will keep his metaphorical foot on Gilbert’s throat to make him spend that money back on the court at exorbitant rates.

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