|Found this on the internet but couldn’t find anyone to credit, so…good work, random anonymous person.|
Taj Gibson is bloody excellent. Long noted for his technically precise interior defense, he has managed the rare feat of developing his offensive game to the point that he is a versatile and viable offensive weapon (he now hits the mid-range jumpers he has always taken, and damn near dream-shook Greg Stiemsma the other day) without losing any of his defensive intensity or effectiveness in the process. On a team more capable of creating high percentage looks for each other, he might even crack a 53% true shooting percentage. There is a reason Carlos Boozer just did something very out of character for his usually highly professional sense and complained publicly about regularly being benched in the fourth quarters – it is because he is regularly benched in the fourth quarters. Because by this time, Taj Gibson is comfortably better. “Power forward of the future” claims are a bit ambitious considering Gibson turns 29 in June and Nikola Mirotic is waiting in the wings, but he’s certainly the power forward of the now.
However, as the Bulls have long since been aware of, the retention of talent costs money. Having retained everybody except Omer Asik and Kyle Korver, the Bulls still paid out so much that they went into the luxury tax last season, for the first time in their history, and were due to do so again this season before the Andrew Bynum and Luol Deng swap. That trade saw them pick up some future draft picks and squeak a few dollars under the luxury tax this season, and the subsequent trade of Marquis Teague opened up a little more wiggle room.
Chicago nevertheless remain extremely close to the luxury tax. They are only $678,595 under it, to be precise. And this amount is too small to be comfortable.
Understanding how small of an amount this is necessitates understanding how minimum salary contracts are handled in luxury tax calculations. Players on minimum salary contracts are paid 1/170th of the minimum salary for each day they are on the roster, including both part days and the 48 hours of waivers should they apply. Therefore, players signed to 10 day minimum salary contracts (in theory, 10 day contracts can be for any amount – in practice, they are always for the minimum salary, because, obviously) are signed to 10/170ths of the minimum salary. When Chicago signed Cartier Martin to two 10 day contracts, therefore, each one cost them $52,017, which is equal to 10/170ths of Martin’s minimum salary of $884,293.
The same applied to Mike James’s 10 day contract, which also cost $52,017. James has many more years of experience than Martin (James has 11 to Martin’s 5), yet they cost the same amount, due to the rule whereby players with more than two years of experience, when signed to minimum salary contracts of either one season or part-season in length, cost the team only an amount equal to the minimum salary of a two year veteran, with the league reimbursing the remainder.
Also needing consideration here is the oft-overlooked rule whereby rookies or sophomores signed to minimum salary contracts, who did NOT sign as draft picks (i.e. whose current contract is not the first one they signed after being drafted, and without having their draft rights renounced prior to signing it), are treated as two year veterans in luxury tax calculations. It matters not if they were traded whilst on that contract, as long as it is the same contract. This rule presents teams from saving on luxury tax by signing youngsters, thereby protecting veterans, which the NBPA is always keen on doing.
In tandem, those rules make players all pretty much cost the same. To put that confusing prose into real numbers: for ten day contracts, unless you are signing a hitherto unsigned draft pick to a 10 day contract (which would never happen in practice) all 10 day contracts will cost $52,017 this season in luxury tax calculations.
As for one season minimum salary contracts: the rookie minimum salary this season is $490,180, the sophomore salary is $788,872, and the third year player/two year veteran’s salary is $884,293. Because of the aforementioned rules, any rookies or sophomores who signed for the minimum salary for one season, but not as a draft pick, will count as $884,293 in luxury tax calculations. This reason is why Erik Murphy is actually pretty valuable to the Bulls right now – having signed as a draft pick, he costs only $490,180 in tax, whereas any random D-Leaguer or free agent with one or zero years of experience would count as $884,293. Chicago cannot therefore skirt this issue just by signing a rookie, because a rookie would have the same impact on their tax number as would, say, Kurt Thomas.
The same is true for prorated rest-of-the-season minimum salary contracts, which, if they are only for the rest of the season (thus having no additional years attached), are treated the same as the above, except prorated to the appropriate degree. As mentioned above, this proration comes in the form of how many 170ths of the season apply.
The number 170 is chosen because there are 170 days in an NBA regular season. Today is February 7th – the regular season started on October 29th and finishes on April 16th. Therefore, including today (part days count) and including every day up to and including April 16th, there are 69 days remaining this regular season. So any rest-of-the-season minimum salary signed today will cost 69/170ths of its full amount. In conclusion, due to the two rules above, any player Chicago signs that isn’t Mirotic or Vladimir Veremeenko (their only players with outstanding draft rights) will count for them in luxury tax calculations as $358,919 for the remainder of the season.
$358,919 is smaller than the $678,595 amount that Chicago are under the luxury tax by, so on the face of it, there isn’t a problem. Chicago has only 12 players under contract, one of which is the injured Derrick Rose, and teams must have 13 under contract, able to drop down to 12 for only two weeks at a time. Yet it appears they have enough wiggle room under the tax to afford this 13th player when they want them, or, with three roster spots open, enough wiggle room to give a few players 10 day auditions.
However, this is where the troublesome Taj Gibson situation comes in.
Because of how good Gibson has been playing, the Bulls are worried. Initially, after the Deng and Teague trades, they signed Martin and James to their ten day contracts to fill out the roster, content in the knowledge they now had some wriggle room under the tax with which to do so. However, it seems they have now had pause for thought. Standing pat with only 12 players now for a week, including Rose and the never used Murphy and Toko Shengelia, the Bulls really could use some extra bodies on the roster (and will be mandated to do so next week to meet the 13 player requirement), yet are abstaining from signing any for as long as possible.
This is a problem because of Gibson’s contract. Calling for a $7,550,000 salary this season, Gibson’s contract also provides for a $250,000 bonus if he makes the all-defensive second team, and a further $250,000 on top of that if he makes the all-defensive first team. These bonuses are currently regarded as unlikely – for cap calculations, bonuses are deemed likely or unlikely during the season based on whether they happened in the previous season, which it didn’t. Yet if they meet the bonus at season’s end, then an unlikely bonuses is applied retroactively, and thus if Taj does make the team this season, the Bulls must pay him an extra $500,000, an amount charged to both their cap and tax calculations.
Performance bonuses are fairly common in big contracts, and Chicago is no exception. Joakim Noah’s extension, for example, calls for him to receive a $500,000 bonus should his team win the NBA title with him being named Finals MVP. However, performance bonuses are not met more often than they are. There exist countless unmet incentives in the NBA today, many of which are amusingly unlikely.
Taj is an exception to this rule. The Bulls, it appears, really feel he may make second team all-defense or higher. Should that happen, this halves the amount of wiggle room Chicago has under the luxury tax, which is what seems to have stymied their current spending. And they evidence their worry through their actions.
This is where it gets confusing again. Working on the assumption that that $500,000 bonus will be met, the Bulls now have to juggle the signings that they are obligated to make to meet the 13 man roster limit whilst also staying under the tax.
Taking away the $500,000 from the $678,595 wiggle room than the Bulls have leaves them with only $178,595 in luxury tax room. Chicago will have to sign someone on February 14th due to the 13 player minimum roster requirement. Certainly, this player will be signed to a 10 day contract, which, as we see above, will cost $52,017. Take that and Gibson’s hypothetical $500,000 away from the $678,595 leaves the Bulls with only $126,578 under the tax with which to meet the 13 man roster for the remainder of the season.
Each day at the prorated $884,293 minimum salary all players would cost is $5,201.72 – therefore, the most days for which a player can sign that still fits under that amount is 24 (as 24 * $5,201.72 = $124,841.36). 24 days from the end of the season is the 24th of March. However, the 10 day contract signed on February 14th will run through February 23rd, meaning that Chicago will have to meet the 13 player requirement again on March 9th. Chicago then needs to sign someone again on that date, and they can’t sign that player for the remainder of the season without paying tax. The final 10 weeks of the season, then, are going to be an intricate and embarrassing balancing act of 10 day contracts and 12 man rosters. And while this seems cheap and skinflint from a team already beset by such an image, it nonetheless makes sense. You don’t pay the luxury tax for Cartier Martin and Mike James types unless you have to, and Chicago don’t have to. They very very nearly have to, but they don’t have to.
These problems can of course be solved via trade. So perhaps it is all just another reason why Mike Dunleavy Jr will likely be gone by the deadline. And Chicago must be very, very grateful right now that they used the stretch provision on Richard Hamilton – if they hadn’t, this issue would be almost unavoidable.
EDIT – This post initially ran with an error in the amount of room under the luxury tax that the Bulls had, and was rewritten accordingly.
EDIT II – A further edit to clarify any confusion and add further details.