The reality is that there are very stiff penalties for going over a certain number in team player salaries and, though these teams can be considered expensive toys for folks with more money than they could easily spend, the owners are rich mostly because they realize the value of money and don't waste it.
How does the Kings payroll this year effect their ability to gain talent this off season?
Let's start with a very brief explanation of the salary cap and luxury tax. The salary cap is a soft amount that teams are supposed to stay under (to save owners from themselves and preserve owner profits) when signing new players. We call it soft because a team can go over this amount to resign it's own players to new contracts. There are a bunch of exemptions and special rules that are defined here among other places:
There is a limit on how much a team is allowed to go over that soft cap and once a team exceeds that amount then there are severe penalties for every dollar a team goes over on an increasing scale. This tax penalty is paid to the league and split between the teams with lower payrolls and in league revenue sharing.
From the above faq:
Tax levels from 2013–14
|Amount over tax threshold||Standard tax per excess dollar||Repeat offender tax per excess dollar|
|$4,999,999 or less||$1.50||$2.50|
|$5 million to $9,999,999||$1.75||$2.75|
|$10 million to $14,999,999||$2.50||$3.50|
|$15 million to $19,999,999||$3.25||$4.25|
|Over $20 million||$3.25 + $0.50 per $5 million||$4.25 + $0.50 per $5 million|
According to recent reports the salary cap is expected to increase to $63.2 million in 2014-15 -- thanks to increased revenues. A corresponding rise in the luxury-tax to $77 million is also projected.
So where do the Kings salaries fall in this as of now and how does this effect the team's ability to sign free agents and avoid paying the penalty?
Since Rudy Gay picked up his player option of $19 million and pennies, much of the salary flexibility this year has been lost. Team salaries are hard to find exactly as they are often not revealed in detail by the teams, but the numbers below are listed on multiple websites so are probably close enough for our purposes.
First round rookies have a set scale salary depending on their pick number in which a team can offer 80% to 120% of the scale amount. For Nik this means he might get a maximum of around $2.75 million this year.
Below are the 2014-2015 salaries of Kings players as of now, best I could find:
So since the luxury tax level is expected to be at $77,000,000, this means the Kings right now can only offer Isaiah a contract with a starting salary of roughly $7,000,000 and stay under the luxury tax level.
It also means the Kings would be unlikely to use either their Mid-level cap exemption of $5,305,000 nor their bi-annual exemption of $2,077,000 unless they let Isaiah simply sign with another team and walk with no returning compensation.
This assumes the Kings are unable to get financial relief by trading away any other player and taking back less salary.
We are already hearing rumors that Isaiah has been offered an $8 million average salary.
Whether that deal is front or rear weighted may make the difference on whether he stays or goes if the Kings wish to limit luxury tax payments.
It's only money, though, right?
Thankfully it is not my money in the balance.
Dave Lack was the longtime webmaster of the Bleacher Mob and Kingsfanclub websites way-back-when before real life became too hectic.
You can follow him on Twitter at @davelack
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