Time for a Rudy Gay safari?

So I'm trying to figure out the tax implications of a Rudy Gay move, especially in the future. As somebody pointed out (I can't find the original post to quote/like it). The big problem will be fitting a large Rudy Gay extension into the Cavs current roster after this year is over.

The luxury tax threshold next year is predicted to be $122M, while this year it is $111M. If Rudy Gay takes a contract starting at $20M/year (compared to Shumperts $10.3M) per year. Then he will take up almost all of that increase.

The thing I can't figure out is -- how much do LBJ/KI/Love/Thompson contracts go up if the salary cap increases?

I think only KIs is actually linked to the salary cap year to year (LBJs is maxed out at 7.5% per year increases, Thompson isn't a max deal (just very close numerically), and I'm not 100% sure about Love.

I also know that KI took a cut on the Derrick Rose deal in his contract -- meaning he only gets 27.5% of cap instead of 30%. I'm not sure if that is changed by the new CBA?

 

Max salaries are set at a percentage of the cap in the year they were signed. The raises are not tied to the cap.

 

Then Rudy Gay - even starting at $20M/year next year, isn't insane.

We would be over the tax about the same as we are now --- if we resign Korver at around $5M per year. Would save a bunch of money if we let Korver go, or if he signed for more of a vet min type deal.

 

This is exactly right. I wrote a post about this in the Shumpert thread but Rudy Gay @ ~$18.5M is a wash if Shumpert/Jefferson/James Jones are out and with the cap going up.

With that said, I expect the cap to go up further than expected (perhaps $105-106M), and I don't expect Gay to get $20M/yr, but even if he did, that's a reasonable contract.

If Cavs can make room they should; he'd be our 5th most important player after Tristan Thompson and would really round out our core against Golden State for the foreseeable future.

 

It does still cost about $12M this year compared to our current roster (of course we saved about $6M on the Korver deal).

Assuming we trade, say: Shumpert + Anderson + McRae + Cedi for Gay then we are taking in $1.8M more than we are sending out. On top of that, we would only have 12 players under contract. I would guess we would just keep 14, instead of paying for a 15th, but that is still $2M more in minimum deals that gets taxed. So we're talking 3.8M * 5.25 = $20M or so.

For the Mo Williams deal we saved 1.8M * 5.25 = 9.45M, so getting Rudy Gay costs us around $10M this year --- will Gilbert go for that?

We could solve this by sending out Richard Jefferson? But not sure we want to do that. We could also make it a $5M cost by only keeping 13 on the roster (but do we want to go to through the playoffs like that?)

 

OTOH, If i can do math correctly:

With a deal that includes only Shumpert + Anderson + Cedi for Gay (that is actually cheaper for us), and then includes us signing one minimum contract player (a PG) to get to 14 players --- we would then pay $56.53M in tax this year.

With our current contracts (after the Korver trade) we will pay: $41.43M in tax this year.

Last year we paid $54M in taxes -- so we would actually be fairly close to our historical peak. Not sure if we want to do that again though.

 

Adding Korver, I'm afraid we would be becoming too offense oriented adding Gay and at way too big of a price. To balance this roster, we need a defensive forward who can match up with KD. We can get that at a much cheaper price, which helps keep us deep, flexible, and better overall I think. You know it isn't because I think Shump is invaluable. But a role player that fits well, is young, and on a very good contract is actually quite valuable for us. Not just around the league, but especially to us because it allows us to play around with more money elsewhere and add extra pieces every year, whether it be MLE, TPE, etc. etc.

But if we are paying Gay 20+ mil, it really puts all of our eggs in one basket so to speak. LeBron, Kyrie, and Love will be making more money too, and all that cash on 4 players is really going to make it near impossible for us to add players with TPE's and MLE's to keep the roster strong. It limits our flexibility and depth. Which is a mistake the GSW are currently making imo. I understand Rudy Gay adds another dynamic, but I don't think he is worth that price (literally and figuratively). Especially when we have more than enough scoring already. The idea of Rudy Gay was much more appealing to me when Shump and Love were struggling. Now he would be eating shots from people that need them and at a hefty price.


However, if we could convince Rudy Gay to take a discount in free agency, that would be much more enticing to me. Which also means his priority would have to be more about winning than money (which should be his mentality here anyway). Maybe he would take less per year for more years, which equals more money in the long run, on a championship team which he has never experienced. That should be quite the offer if I was him. Like around 3/45 or 4/60 instead of a 2 year deal where he is just going to get traded again anyway. If we could convince he could make a home here, perhaps he would like the discount. Probably a long shot, but I think it is our only shot. Us paying Rudy 20+ mil is a much longer shot. Which I don't think 3/45 or 4/60 is a discount anyway. I think it is fair at the least. Perhaps LeBron could convince him.

Which I think any team that is willing to pay 20+ mil a year for a 30 year old that isn't an All Star is crazy, but that is just me. Someone probably will get desperate though. They miss out on the big free agent, and throw their money at him as a consolation prize. Only to trade him a year or two later. Our pitch to him is that we will give him a permanent home, and he won't be playing meaningless basketball anymore. Maybe that is a great pitch and will be better than other offers he gets, who knows. I don't know if he values money or winning more at this stage, but I'd hope winning.

If not, I just don't think it is feasible for us to pay him 20+ mil a year. I think one of Frye or JR would eventually have to leave (with Shump already gone) and then it is minimum contracts rest of the way. Which wouldn't be smart. Depth can separate us.

I do think Rudy can be had for cheap though. Shump+Bird and a 1st really ought to do it. I don't think the Kings will get a better offer and would be happy to get that for a player that is gone anyway. But if it is a rental, it isn't a good deal for us either.

 

Walter you've made your feelings clear on the Gay potential acquisition but your last pos is confusing. Your ok with it if it's a 3/45 type scenario (15/yr avg), but no at 20 million per year... Correct?

First off, even if a 20 million per year deal interfered with exception acquisitions, I would not let that prevent me from adding Gay.

My bigger question is the financial end. You are presenting your concerns as if a 3/45 deal created cap room. The Cavs are so over the cap, why on earth would an extra 5 million prevent anything? Even above the apron, the Cavs will have exceptions available to the to add to the team (half mid level/tax payer) and with the rising cap that still nets a good player.

The raising cap will keep the Cavs from repeating over the apron, which will limit the tax penalties exponentially. If we were discussing adding Gay by absorbing him in some large trade exception and pay huge penalties than I get it. But adding Gay with matching Shump's outgoing $ along with another player or two is a grand slam scenario you do every day of the week.

We are constantly discussing the biggest needs on this team relative to the rosters weaknesses, a la back up point guard, another big etc. Adding Gay doesn't fill a weakness, but it creates aneccessity of limiting Lebron's soaring minutes played that's been ignored e EE since he's come back here. Gay gives us a healthier Lebron in the playoffs, he gives us a productive Levron still at 35 years old. Add an elite option and fret over an extra 5 million per season already over the cap?? That's laughable. No offense.

 

Ever heard of luxury tax? I don't think the difference is that small. Gay would be making over twice that of Shump next year under a new contract just on pure base salary alone. That doesn't even calculate the luxury tax difference which I'm sure is astronomical. And I don't know how much he will actually command. Could be closer to 25+ mil a year for all I know. I mean Mozgov and Evan Turner got 16-17 mil a year.

If a cap expert could project what our salary would actually look like and the tax implications of such scenarios, that would be helpful. I might give it a shot, but I'm not an expert. I just know Rudy Gay potentially becoming the 2nd most paid player on this team is a problem. Not to mention apparently Kyrie and Love's salaries might be renegotiated under the new CBA.

But for the record, I've changed my mind on trading Shump. Shump is just way too inconsistent and it is a problem every year. I'd probably be okay with a Rudy Gay rental even if it means winning this year.

 

If this Gay Safari gets hot and heavy I expect some good plugs in here.

@The Oi

 

We will never escape hackey gay jokes.

 

Here's my take on all this, and I'm not using exact figures, just ballpark guesstimates to demonstrate why the tax implications should really be a consideration here:

Gay would likely make around $18-20M; average it to $19 for the sake of argument... I think this is reasonable since he'll likely use the Luol Deng contract as a starting point in negotiations.

Shump will make nearly $11M next year, RJ $2.5M. That's $13.5M.. Jones and Anderson will be gone, that's $3M, total $16.5M..

The difference between this team with Gay, versus this team with Shumpert and Jefferson plus 1 guy who never plays and another who is medically retired is about ~$2.5M (w/12 guys on the roster)..

If we could upgrade to Rudy Gay for an additional $2.5M to even $5M (Gay @ $21M+), the Cavs should do that every day, all day.

 

Two complications with any deal for Gay:

1.) Sumpert's salary + McRae's salary is (per BBRef) $10,574,636. Multiply by 1.25 and add 100k and you get $13,318,295. That's the absolute most the Cavs can take back. Gay makes $13,333,333. So that combo falls about 15k short.

2.) Shumpert + Birdman gets it done, even though it adds 2 mil to our books (pre tax). However, Sacramento doesn't have an open roster spot. They could just waive a player and eat his salary, however their 4 lowest paid players are 3 rookies who they wouldn't trade and Ty Lawson, who is playing significant minutes for them. Next is Assginfers, but he's making 3mil, and I doubt the owners eat that much money. They could try and get a 3rd team involved, but that's another complication.

 

Is the exact team salary and player salary information available to the public with such fine grained resolution?

I ask because if the difference needed is only $15k, then I'm wondering if this amount is not potentially hidden behind a rounding error (or could be called one by the league office).

 

Fair question. Couldn't tell you for sure.