Title: How the Raptors used the tools available to fill out their roster in a post-Kawhi Leonard summer
Date: July 22, 2019
Original Source: The Athletic
Synopsis: In my latest for The Athletic Toronto, I wrote about the tools the Raptors used to fill out their roster and the strategies that Kawhi Leonard leaving necessitated.
The 2019-20 NBA champion Toronto Raptors owned the third-largest payroll in basketball and, subsequently, paid the third-highest luxury tax in the league. It’s exactly what a team owned by an organization with deep pockets should do when the competitive window opens, and the Raptors reaped the rewards in the form of that Larry O’Brien Trophy and the spike in gate and merchandise revenue — plus any long-lasting effects of an expanded fan base — that accompanied it.
It was also fairly new for MLSE to go into the tax. The Raptors were taxpayers very early on in the luxury tax system but hadn’t paid in since the 2003-04 season. Often, the reason for that was obvious: They haven’t been very good very often, and an uncompetitive team doesn’t warrant that kind of spending. As the Raptors became good, though, there were other impediments to being a tax team. The collective bargaining agreement only allows teams to spend into the tax using certain exceptions around the soft salary cap, and as the Raptors rose from an uncompetitive, under-cap team to a theoretical Eastern Conference contender, they often lacked the means to spend into the tax even if they’d been willing.
There is also, of course, plenty of financial incentive to avoid the tax. While the marginal dollar might not seem like much to a sporting monolith, each additional dollar beyond the tax carries a hefty per-dollar penalty and, most notably, avoiding the tax allows a team to be a recipient of tax disbursement from other teams. That one dollar crossing the tax threshold, then, could cost millions. In 2017-18, the Raptors carefully navigated the tax line amid some uncertainty due to “unlikely incentives” for Kyle Lowry and DeMar DeRozan. The result was ducking the tax by almost $2.7 million and receiving $2.2 million in tax distribution from taxpaying teams.
That careful tiptoeing created a $4.9 million difference and, in concert with the $5 million received from the Spurs in the Kawhi Leonard trade, gave the Raptors some real cushion for their 2018-19 season. The Raptors once again massaged their tax number expertly while still improving the roster, cutting an estimated $18 million from their bill and fortifying their championship core. That’s roughly $28 million that the Raptors were able to save (or avoid spending) while still building a championship team. It’s evidence that while throwing money at a roster can be helpful, there are always cap, tax and profit-seeking realities that teams operate within.
I bring all of this up because the Raptors will once again be a non-tax team this season.