The LA Lakers team that squeaked into the playoffs by a hair and got spanked by the Spurs in their playoff opener is sure to be under the microscope this summer. Why? Because they haven't been that great, their roster is star-studded with a payroll that's astronomic, and the NBA's new tiered luxury tax will take effect next season. The cost of LA's player payroll is going to go through the roof unless they make some serious choices - choices of great interest to the Dallas Mavericks, as well as many other teams.
In order to understand the choices, it's first necessary to understand the Lakers' payroll situation.
How bad is it? In the 2012-13 season, LA's payroll was right at $100M, almost $30M over the tax line. For the 2013-14 season, if they keep their players under contract, re-sign star center Dwight Howard to a max deal, and fill up the rest of the roster, they'll have a payroll likely to land in the $106-109M range, depending on whether they use their MLE or not.
If the salary cap stays the same, that means a tax bill in the $115M to $130M range. The Lakers' resulting cost of payroll (player salary plus tax) would jump in one year from $130M to $220-235M.
Ouch. Double ouch.
For almost every other NBA team, such a payroll would be impossible. But not the Lakers, with their massive income stream (in large part from monstrous TV revenues) of about $400M a year.
However, just because they can afford it doesn't mean they would want to.
What will they do? The smart money is that they'll take some action.
The passing of longtime owner Jerry Buss this spring means the ownership is less likely to be willing to swallow a huge outlay in tax, and GM Mitch Kupchak has proven adept at making moves when they are needed.
But which ones?
Even the Lakers can't say yet. By the time the summer arrives, they could get some help from the league: 2012-13 revenues might drive the new cap upward to some degree. There's also the chance – at least on paper – that their problem could be solved for them, with Howard leaving in free agency. His departure* would erase the payroll problem almost entirely, saving them $20M in salary and about $80M in tax and putting their player cost back in the same range again. (*Note: I still don't see any indication he'll leave, but who knows?)
Barring either of those, their choices will be somewhat limited.
To make a decent size reduction in the tax, the Lakers will obviously need to get rid of a sizable chunk of salary. As their payroll is invested in only 5 players to any degree (Howard, Gasol, Bryant, Nash, World Peace), that means one or more of those players have to go.
All are intriguing.
Clearly the Lakers' fallback will be the amnesty process, in which they can waive one player and have his salary removed from the tax calculation. The salaries of Bryant ($30M), Gasol ($19M), World Peace ($8M), or Blake ($4M) would be eligible for that. But their first attempts will be to find a trade sending a high-salaried player for little-to-no salary coming back, as that would remove BOTH salary and tax, and might also yield some sort of value as well.
World Peace lends the easiest possibility for a trade giveaway, as his salary is the least among their big five for another team to have to swallow ($7.7M). The downside is that his relatively-smaller salary also means his removal would offer the least payroll benefit for the Lakers.
Gasol makes the most sense for them to move by some means. LA has made it clear that they want Howard as their future centerpiece in the middle, and the two have had a hard time co-existing in the space around the basket. Losing Gasol's $19M salary would also make the payroll tolerable, reducing it by probably close to $95M. If Howard re-signs, smart money is that Gasol will be gone, one way or the other.
The most intriguing possibility – and one that can't be overlooked now – is Kobe. If he was healthy, the chance that the Lakers would considering him as a payroll casualty would be absolutely zero. But he's not. There's no chance they could trade him for no salary, given his $30M contract plus his no-trade control.
But could they make him an amnesty casualty?
The sheer numbers, combined with his situation, make it something the Lakers have to look at. And they will. It's noteworthy that when Kupchak was asked about the possibility of Kobe being amnestied, he said it wasn't something they were thinking about "right now." But the time to pick a player to amnesty isn't now, it's July – after three more months of rehab reports and with a better view of other choices.
The tax savings by amnestying him would be about $115M; that's enough savings to offer a shot at being on the tax-free list for a year and delaying the repeater tax surcharge.
But the main motivation for LA would be Kobe's possible lame-duck status. He's indicated he is only going to play one more season, and his is a crippling injury that sometimes ends careers. If all they have left from Kobe is one rehab season and if they are trying to get their payroll down to $80-$90M, will they want $30M of it (plus tax) spent on nothing more than a feel-good story who won't be helping anymore?
We also need to mention Nash. While he can't be amnestied, he can probably be traded. (He could be waived under the stretch provision, but that would only provide about $5.5M in cap savings, not enough to really help.) He's a favorite of Laker coach D'Antoni, but he's been so-so all season (12.7ppg, 6.7 apg) while missing about half the season with an assortment of injuries. Would the Lakers pull the plug on him and look elsewhere for a PG?
Because of the nature of the tax brackets, it is impossible to put an exact savings number on each of the following potential moves, as other moves might move the marginal tax from one bracket to another. But if we use the assumption that the cap stays the same, that no MLE is used, and that the Lakers will have about $106M in total payroll barring any proactive action, here is the relative value of their choices:
|ACTION||salary + tax = player payroll||dollars saved*|
|Do nothing||106 + 115 = 221||0|
|Trade Kobe**||76 + 9 = 85||136|
|Amnesty Kobe||106 + 9 = 115||106|
|Trade Gasol**||87 + 34 = 121||100|
|Amnesty Gasol||106 + 34 = 140||81|
|Trade Nash**||97 + 68 = 165||56|
|Trade World Peace**||98 + 72 = 170||51|
|Amnesty World Peace||106 + 72 = 178||43|
|Amnesty Blake||102 + 94 = 196||25|
* dollars saved from a baseline $106M taxable payroll
- note: all dollars are in millions and all totals are broadly rounded
**Each of these trades is a "no salary in return" analysis.
For the Mavs, all of the Lakers' potential choices are intriguing.
• Howard? Dallas would certainly love to sign him.
• Gasol? They would probably decline him in a pure salary dump trade (the $19M would use up too much of their cap room) but if he is on the amnesty list and available as a bargain, clearly an attractive option at center.
• World Peace? Same as Gasol: no interest in tying up $8M in cap room on him in a salary dump trade. But if he's amnestied, he could certainly help at the right price. And Carlisle knows him.
• Nash? As a salary-dump via trade to Dallas, you have to think he could fix the Mavs' needs at PG.
• Kobe? If he's amnestied, do you bid? If so, how much of your cap do you invest in a guy in rehab, and playing the last year of his career?
The Lakers can't do anything until their season ends, and are most likely to wait until July when teams will have cap space to take players in trade, and when amnesty designation is allowed. But talk between teams (not actual trades, but "talk'') can begin at any time – even now, while they are still in the playoffs.
What are they going to do? It looks like "something big" is a necessity – but which biggie they'll pick will stay a mystery for a while.