05-31-2022, 07:40 PM
Does anyone think there is a chance we see a Waive and Stretch this off-season. I'm thinking specifically of Bertans. Normally I'd scoff at the idea, but LT math may make this worth at least considering. The way I understand the rule is we'd take his remaining guaranteed salary ($38mm) and divide it over 2x remaining seasons plus one. So, we'd be eating $5.43mm per year for the next seven years. At first blush, eating $38mm for a player capable of making a marginal contribution is just silly. Dallas will have that albatross on it's cap sheet for the rest of Luka's 20's.
But, salary over the line is multiplied for tax purposes and creates an arbitrage. Dallas currently sits $4.3mm over the tax and when you add Brunson you are probably $25mm over (or more). This doesn't count the pick at about $2.2mm. It does count the NG contracts of Maxi and Frank. Let's just use the $25mm over number to keep things round. The first $20mm over costs $75mm plus another $21.25mm for the final $5mm. That is an extra $96mm in tax for being $25mm over the LT line. That is where we sit if we do nothing but bring everyone back (including Brunson).
One might say Brunson is costing all of that tax since he's the last big addition. But, you could also argue that the final dollars in the calculation belong to the worst contract. IF that is Bertans, then the tax difference for for doing a S/W of his $38mm in remaining guaranteed money is $60mm THIS YEAR ALONE. Here is the math...
We go from $25mm over to $14.43mm over ($25mm minus his 22/23 number of $16mm plus the $5.43 S/W value = $14.43 of taxable salary).
The LT on $14.43mm is $36mm. Subtract from $96mm and Yes, eating $38mm over the course of seven years in $5.43mm bites saves $60mm. That is a $22mm arbitrage for Cuban that doesn't take into account possible savings next two seasons after that. Also, if you can find a way to reduce salary by another $4.4mm, the savings jumps to $80mm because the tax for being less than $10mm over the line is $1.75 for every dollar instead of $2.50 for every dollar.
Can you "sell" this to fans? I guess they could say Bertans was always designed to temporarily replace what was lost with THJ's injury. I might buy that since $96mm is a lot of money and cripples "flexibility". But, such a move might help us to be more competitive also. It starts us under the tax by about $6mm. We'd have to get further under to do a Brunson signing AND any of the things that would hard cap us. But saving $10mm on the current cap from a Bertans S/W might put us in the game for some things previously thought to be out of reach. Nico often talks about getting "a seat at the table" and he sounds like he's talking about free agents. I doubt outright Full MLE signings can work without dramatic additional cuts, but we are starting to get into the neighborhood on S&T's working if we send out more salary than we receive (or dump some minor contracts).
$153.3mm Current Salary committed including Maxi and Frank
-$10.6mm Savings from Bertans S/W
+20.0mm Brunson signing
$162.7mm $7.7mm over the hard cap
Can we envision any of Brooklyn, Orlando, NY or LAC taking Powell and some assortment of players from us for a S&T Claxton, Bamba, Robinson or Hartenstein? We just need to get rid of about $8mm more than we bring in either through trade or salary dump (and be willing to be hard-capped for the season).
But, salary over the line is multiplied for tax purposes and creates an arbitrage. Dallas currently sits $4.3mm over the tax and when you add Brunson you are probably $25mm over (or more). This doesn't count the pick at about $2.2mm. It does count the NG contracts of Maxi and Frank. Let's just use the $25mm over number to keep things round. The first $20mm over costs $75mm plus another $21.25mm for the final $5mm. That is an extra $96mm in tax for being $25mm over the LT line. That is where we sit if we do nothing but bring everyone back (including Brunson).
One might say Brunson is costing all of that tax since he's the last big addition. But, you could also argue that the final dollars in the calculation belong to the worst contract. IF that is Bertans, then the tax difference for for doing a S/W of his $38mm in remaining guaranteed money is $60mm THIS YEAR ALONE. Here is the math...
We go from $25mm over to $14.43mm over ($25mm minus his 22/23 number of $16mm plus the $5.43 S/W value = $14.43 of taxable salary).
The LT on $14.43mm is $36mm. Subtract from $96mm and Yes, eating $38mm over the course of seven years in $5.43mm bites saves $60mm. That is a $22mm arbitrage for Cuban that doesn't take into account possible savings next two seasons after that. Also, if you can find a way to reduce salary by another $4.4mm, the savings jumps to $80mm because the tax for being less than $10mm over the line is $1.75 for every dollar instead of $2.50 for every dollar.
Can you "sell" this to fans? I guess they could say Bertans was always designed to temporarily replace what was lost with THJ's injury. I might buy that since $96mm is a lot of money and cripples "flexibility". But, such a move might help us to be more competitive also. It starts us under the tax by about $6mm. We'd have to get further under to do a Brunson signing AND any of the things that would hard cap us. But saving $10mm on the current cap from a Bertans S/W might put us in the game for some things previously thought to be out of reach. Nico often talks about getting "a seat at the table" and he sounds like he's talking about free agents. I doubt outright Full MLE signings can work without dramatic additional cuts, but we are starting to get into the neighborhood on S&T's working if we send out more salary than we receive (or dump some minor contracts).
$153.3mm Current Salary committed including Maxi and Frank
-$10.6mm Savings from Bertans S/W
+20.0mm Brunson signing
$162.7mm $7.7mm over the hard cap
Can we envision any of Brooklyn, Orlando, NY or LAC taking Powell and some assortment of players from us for a S&T Claxton, Bamba, Robinson or Hartenstein? We just need to get rid of about $8mm more than we bring in either through trade or salary dump (and be willing to be hard-capped for the season).
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