By Kevin Figgers
Now that the dust has settled on the NBA trade front, its time to take a step back and look at what the Lakers deadline moves mean for the team not only today, but for the future.
Before we get into the ALWAYS riveting salary cap and luxury tax discussions, we’ll tackle the on-court impact that these trades produce.
Lakers receive: Ramon Sessions & Christian Eyenga
Cavaliers receive: Luke Walton, Jason Kapono, 1st round draft pick & other considerations
On the surface this looks like an obvious steal for the purple and gold. The starting point guard position has been an achilles heel for the franchise for as long as Laker fans can remember. While not an all-star, Sessions is a serviceable point guard that can create shots for both himself and others while relieving Kobe Bryant from much of the ball handling duties. Christian Eyenga is a project player that will likely see more action with the D-Fenders than the Lakers. To say that Luke Walton and Jason Kapono were not producing for the Lakers would be an understatement, and no doubt the biggest draw for Cleveland in this deal was the ability to acquire another 1st round draft pick in a year where the pool is as deep as its been in a while.
Lakers receive: Jordan Hill
Rockets receive: Derek Fisher & The Mavs 2012 1st round pick
To the disappointment of many Laker fans, the purple and gold said goodbye to one of the faces of the franchise with this move. Even with Fishers’ declining skills, his leadership in the locker room and unflappability in the toughest of situations (whether on or off the court) will be tough to replace. Jordan Hill is a former lottery pick by the New York Knicks whose career has not lived up to expectations, but he undoubtedly has the physical ability to be a decent if not solid contributor in the NBA. The Lakers get salary relief (which I’ll get to in a second) while the Rockets get the Mavs top 20 protected #1 pick in this years draft (this is the pick the Lakers received in the Lamar Odom trade) as well as a veteran point guard in Fisher, to aid in the progression of Kyle Lowry.
Now to the “fun” stuff.
A big story I’ve been hearing over the last few months has been how the Lakers want to operate a lot more frugally in the wake of the new Collective Bargaining Agreement (CBA). Many fans are up in arms that a team that has never had a problem with spending money before, would all of a sudden start penny pinching. Without getting too technical, I’ll explain why the Lakers reasoning for shedding salary is more than warranted.
Let me start off by saying that the Lakers are a family run organization that does not draw revenue from other business interests. Unlike the Dallas Mavericks with Mark Cuban or The New York Knicks with James Dolan, who essentially print money, the Buss family is at the mercy of the revenue that is generated from the team and nothing else. So that needs to be kept in mind.
This is the final year of the NBA’s current salary cap/luxury tax structure, which for all intents and purposes is a fairly simple system. For every team that exceeded the luxury tax threshold (about $70 million) the team would pay a $1 for $1 amount for every dollar they were over. So for example, the Lakers are currently $12 million over the luxury tax level, which means that they have to pay the league an additional $12 million in tax penalties.
Now under the previous CBA, this doesn’t seem too unreasonable. A team like the Lakers, while not being able to use money from other business interests, could surely afford to pay a paltry (relatively speaking) $12 million in taxes. The problem is that things get a little more complicated and the penalties get a lot steeper with the new CBA.
Luckily for big spenders like the Lakers, these new luxury tax penalties don’t kick in until the 2013-14 season, giving them two full years to get their financial house in order. If the Lakers were to operate under their current salary structure in the 2013-14 season, their tax penalties would increase from $12 million in taxes to upwards of $30 million and likely more, obviously a significant difference. Some fans might be compelled to ask “If they don’t need to shed all of this salary for another two years then why are they cost cutting now!?” Its fairly simple. There is a provision called the “repeat offender tax” which penalizes teams up to $4.25 for every $1 they are over the luxury tax for three out of the four previous seasons. Essentially, the sooner you can get yourself under the luxury tax, the better for your franchise moving forward in subsequent years. Simply put, the Lakers are taking a pre-emptive strike, trying to shed as much salary as they can now, to be better prepared for the future when these ungodly penalties start to kick in.
They traded Derek Fisher knowing that he has a $3.5 million player option for next season that he would have likely exercised, and in exchange traded for Jordan Hill who has a $3.5 million TEAM option after this season. Meaning there’s an additional $3.5 million of salary that the Lakers would be able to knock off of their cap in the off-season if they choose.
In the Ramon Sessions trade the Lakers were able to accomplish something that teams rarely, if ever, are able to do – they were able to shed salary AND improve the roster. Luke Walton is due to make just over $6 million next season while Jason Kapono will become an unrestricted a free agent. Sessions has a player option for $4.5 million that he may or may not choose to pick up. If he does, the Lakers have a decent starting point guard at a reasonable price. If he doesn’t, the Lakers free up an additional $4.5 million of cap room.
So let’s hypothetically say that the Lakers exercise their team option on Andrew Bynum (which they obviously will), Sessions opts-in for the last year of his deal and the Lakers do not retain the contract of Jordan Hill. That would place their cap number at around $77 million, which would still place them slightly over the luxury tax. But lets not forget that they still have the amnesty provision where they can cut a players salary and not have it count against the cap. If they were to use that provision on Metta World Peace, that would place the Lakers’ cap number almost right at $70 million, or, just under the luxury tax. If the organization re-visits a trade for Pau Gasol’s $19 million contract to get more assets, the Lakers would have found a way to get under the luxury tax while still fielding a competitive, and hopefully for them, championship caliber team.
To set the record straight, the Lakers are not being cheap for the sake of being cheap, rather they are adapting to an evolving salary structure that will change the landscape of the NBA as we know it. They are essentially attacking the beast before the beast attacks them.