For seemingly the umpteenth consecutive season, the Oklahoma City Thunder are staring down the barrel at a gargantuan luxury tax bill going into the offseason. Last year, ownership was willing to spend significantly on a team they believed was better than their Game 6 first-round exit at the hands of the Utah Jazz in the 2018 playoffs. Paul George re-upped for another three years (plus an option for Year 4) after those playoffs, convinced by the Oklahoma City culture that they were the right place for him. The green light to spend north of $200 million on the 2018-19 roster still gave general manager Sam Presti some financial constraint; that’s how far over the tax they were. They were able to get within their payroll budget with a trade that sent out Carmelo Anthony’s massive one-year salary (along with a protected first-round pick) in exchange for Dennis Schröder’s slightly-less-massive three-year contract.
As it turns out, the Thunder exited in the same round, but this time in one fewer game to the Portland Trail Blazers, though some of the loss could be explained away by George’s shoulder injury. Still, another playoff failure raised intense questions about the efficacy of Oklahoma City’s roster, particularly in their defense-first (and, at times, defense-only) mentality that relied so heavily on George and Russell Westbrook to create offense out of thin air.
Moving forward, it seems as though ownership isn’t quite as interested in spending through the roof again. Reports have already surfaced that they’re willing to part with assets, including No. 21 in this year’s draft, in order to move off of salary and unburden themselves from the punitive repeater tax penalties. Getting themselves all the way out of the tax will take some doing from Presti, as my projections have them at $20.5 million over the assumed $132 million luxury tax threshold going into next season, under the assumption that Nerlens Noel opts out of his $2.0 million contract and they retain Abel Nader’s $1.6 million non-guaranteed contract, along with signing a pair of minimum contracts to fill out a 14-man roster. If they’re going to start shedding salary, then it makes sense to try to get out of the tax altogether, though dumping that much money is going to be immensely difficult, particularly if they want to remain competitive at the same time.
For Oklahoma City, the theory behind the Anthony-Schröder trade made sense – they had to get rid of Anthony, but rather than stretch his salary over three years and get nothing for their financial pain, they exchanged him for someone making less money per year but had more years left on his contract in Schröder. The move added to their luxury tax bill compared to stretching Anthony, but the added value of having Schröder on the roster for what amounted to about $6 million per season was exactly the sort of move for which they were looking last year.
Repeating a similar maneuver this year is going to be difficult, as they don’t necessarily have the same sort of massive salary they need to move in order to save significantly on the luxury tax. While not as untouchable as in previous years, it would be a massive shakeup to move one of Westbrook, George, and Steven Adams, though Presti has never been one to shy away from making an incredibly impactful deal in the past. None have been linked to a move away from the club at this point and it would likely take some sort of in-season calamity for Presti to consider a trade of one of his best three players, but it’s a possibility, particularly with respect to Adams, if things go south in a hurry for Oklahoma City in the first half of next season.
Still, using their limited draft assets – they’re already out protected first-round picks in 2020 and 2022, making it impossible to trade any picks between 2020 and 2023 due to the Stepien rule – to shed smaller unwanted contracts seems like the way to go. While the in-a-vacuum cost of a first-round pick is roughly $15 million in today’s market, things are more complex when a team is so deep into the tax. Since the Thunder are currently in the $4.25 per dollar tax bracket, trading away Patrick Patterson, who is slated to make $5.7 million next year, would actually save them roughly $18 million in total salary and tax penalties, assuming they replace him with a minimum salary, and that’s before you get into the salary relief of sending out No. 21 and replacing that player with a minimum salary. However, he wouldn’t count for that much money on a receiving team’s books, which brings about an interesting negotiation – how much should Oklahoma City pay to shed $18 million in cash, even if less than a third of that will end up on another team’s books?
Should Oklahoma City solely use No. 21 to shed a single salary, whether it’s Patterson or Andre Roberson, who makes $10.7 million next season, then it’s clear that the price of a first-round pick has more to do with what it saves the sending team than what it costs the receiving team, but if Presti can find a home for both Patterson and Roberson in one fell swoop, the Thunder would significantly cut their luxury tax obligations. Moving No. 21, Patterson, and Roberson in the same deal would slash their tax bill by more than $45 million, even after adding back in three minimum contracts to replace those three outgoing players, all for the cost of just $18.9 million to the receiving team, $2.5 million of which is No. 21’s first-year salary, which would clearly be a positive asset on their books. Should Oklahoma City be willing to do this sort of deal, pretty much any team with that level of cap space and the need for that draft pick should be willing to take that on.
Adding to the limited depth of the Thunder roster while not incurring too much in the way of financial penalties will be difficult. The need for a backup center to replace Noel shouldn’t be a problem, as there are a thousand and one backup centers on the market for the minimum every year, like Noel was last year. Their current wing rotation of George, Roberson, and Terrance Ferguson, along with some dual-point guard minutes with both Westbrook and Schröder, isn’t necessarily awe-inspiring, but adding playable wings or guards at the minimum is much more difficult than at the center position, due to the scarcity of playoff rotation-level wings and guards across the league. They don’t necessarily need a playoff-caliber player, though obviously trying to find someone who can contribute like James Ennis did this past postseason for the Philadelphia 76ers would be very helpful, particularly if that player could shoot consistently to relieve some of the offensive pressure on Westbrook and George.
Should they keep No. 21 in the upcoming draft, there will be plenty of players available there who could fill that fourth wing role, particularly as a shooter. Tyler Herro and Cam Johnson come to mind immediately as players who should be available at that spot and would add a shooting dimension to Oklahoma City’s offensive attack.
It’s tough sledding for Oklahoma City to improve the team while also cutting the necessary salary to meet whatever ownership’s payroll budget is for the 2019-20 season. For tax purposes, it is advantageous that Presti can wait until the trade deadline to make any last-minute financial moves, since that will allow him to see how the roster plays for more than half the season before he has to make any big decisions. While No. 21 will have lost a bit of its value once it turns into an actual tangible player at that point, whomever they take in that spot should still retain enough value to figure strongly into salary-shedding talks. Another issue with waiting until the deadline to move that much salary is that teams don’t often have the kind of cap space Presti may need for a team to take on nearly $19 million in salaries. In the summer, teams have all kinds of space available for trades exactly like this one or the one they made last year with Atlanta, but for a team to hold back that much cap space until the deadline is relatively rare.
If Presti had the go-ahead from his bosses to spend like they did last season, he’d have a lot more flexibility, but after another first-round-and-out playoff performance that netted just two home games against the Trail Blazers, it’s not as if ownership raked in a bunch of extra playoff revenue to offset some of the spending. Continuing to spend at that level may or may not be feasible for them, particularly on a team that’s not necessarily guaranteed much, if any, playoff success.