I know what Dan Gilbert is going to do with his money from the recent tax cut…
The current highest payroll in NBA history is the 2013-14 “we’re moving into a new building so spend like mad” Brooklyn Nets at $193 million. Next season a couple NBA teams could blow that out of the water — to the tune of $300 million in salary and tax. One is the Oklahoma City Thunder if Paul George returns on a max deal and if, as expected, Carmelo Anthony opts into the $28 million he is owed on his current contract (remember the Thunder already gave Russell Westbrook a max extension).
A couple of weeks ago that seemed as likely as a Nigerian bobsled gold medal, but after the roster shakeup at the trade deadline, LeBron is playing with a renewed energy and the Cavaliers look like they again are the team to beat in the East (it’s just two games, I’m not fully buying yet, but they’re improved). There’s a chance LeBron stays in Cleveland. How big a chance depends right now on who you ask, and at the end of the day will depend on how the new-look Cavaliers fare in the playoffs, but there is a chance again.
But if he stays, it gets crazy expensive, as Brian Windhorst laid out at ESPN.
Focusing on the future, if James remains and accepts a new max contract or picks up his option and the Cavs re-sign Hood — who will be a restricted free agent — they will break all current records.
It is hard to predict the market for restricted free agents. This summer is especially challenging because teams are expected to tighten spending. If James stays and Rodney Hood remains with Cleveland and lands a long-term deal that starts at $12 million or more, the Cavs would likely crest $300 million in total spending based on the contracts they have on their books. That would include roughly $150 million in luxury tax alone.
Gilbert has said he will pay it — and it’s worth it to him. With that level of expense the Cavaliers might lose money on the balance sheet for the year, but the franchise valuation will remain high (Forbes just estimated it at $1.3 billion). If LeBron leaves the franchise worth will drop down to one of the lower numbers in the league (around $1 billion), so a small loss year-over-year is worth it. Especially if Gilbert decides to get out and sell.
It’s something to watch this summer — two middle-to-small market teams may have the highest payrolls in NBA history. All in the pursuit of a title (and higher franchise values).