The Thunder offered James Harden $53 million. Harden wanted a maximum contract; somewhere between $58 million and $60 million over four years. So the Thunder traded Harden to Houston.
What if the Thunder dodged a bullet? What if the Thunder had signed Harden to the $53 million deal? Do you have any idea what that would have done to the Thunder payroll?
The Thunder’s 2012-13 payroll would have been somewhere around $69.3 million, precariously close to the luxury tax level of $70.3 million. The Thunder could have managed it to stay under, no doubt, which would be very important in the coming years, since future luxury taxes include extra penalties for repeat offenders.
But the new contracts of Harden and Serge Ibaka would have kicked in for the 2013-14 season. In that year, the Thunder would be on the hook for about $77 million in salary, for nine players: Kevin Durant, Russell Westbrook, Serge, Harden, Kendrick Perkins, Nick Collison, Thabo Sefolosha, Perry Jones and Hasheem Thabeet. The rest of the roster clearly would be minimum-salary players, so the Thunder’s payroll would be in the $80 million range.
The luxury tax fluctuates, depending on league revenues, but let’s estimate it at $72 million in 2013-14. It would be in that range. The Thunder’s luxury tax for that season would be $12.75 million. That’s not chump change. Clay Bennett and the ownership group would not like such a payout. But the Thunder could live with it. It’s been a profitable franchise in OKC. Sure, the Thunder could knock off a bunch of that luxury tax by cutting Kendrick Perkins and claiming the amnesty waiver, but someone has to play center when the Lakers and Jazz and other traditional-lineup teams line up. So the savings wouldn’t be a clean $8 million (Perkins salary, minus the minimum).
OK, let’s move to 2014-15. In that season, the Thunder would be committed to $74 million for six players — Durant, Westbrook, Ibaka, Harden, Collison and Perkins. You can’t fill out the rest of the roster with minimum salaries, so the payroll would start to expand. Let’s add eight players, at $1.5 million each. That’s still bare bones. But it’s $12 million. So that’s $86 million. Let’s say the luxury tax goes up to $74 million, which is fairly generous. The Thunder’s luxury tax would be $21.25 million. That’s serious money. Again, you could amnesty Perkins, but the hole would be even greater in this season, because you would be down to five core players accounting for most of the payroll.
Now, let’s move on to 2015-16. The Thunder would be contracted for $65.7 million for just four players — the big four. Durant, Westbrook, Ibaka and Harden. Average $1 million each for 10 more players, and that’s a payroll of $75.7 million. Average $2 million each for 10 more players, and that’s a payroll for $85.7 million. As good as those four stars are going to be, you can’t supplement them with solely minimum-salary players. Let’s say the Thunder somehow gets 10 more players for $20 million total. Let’s say the luxury tax is $75 million. And remember, in 2015-16, the Thunder would be in their third straight year over the luxury tax level. When that happens, the penalties multiply. The Thunder under such a scenario would owe $28.75 million in luxury taxes, and would be struggling to find players to fill out a championship roster.
Do you see the financial strain that a Harden max contract would add? That’s why I say even signing Harden at $53 million would be a stretch. The Thunder would still be paying luxury taxes, though not quite to the level at the $59 million level.
Yes, the Thunder is making money. But one big luxury tax hit wipes away much of the profit. Two straight years could likely wipe it all away.
Since the Thunder arrived, Sam Presti has told us, sustainability is the Thunder’s primary goal. Be good, be competitive, be relevant, be in contention, every year possible. Never has the Thunder declared an all-in philosophy on trying to win a championship. Paying James Harden the maximum would have been a change in that philosophy.
That’s why I applaud Presti’s prudence. Look at what he’s done since he’s been here. He had a plan. The plan seemed to be working. Then the plan worked. Then the plan worked famously. Now, some want Presti to scrap the plan? That makes no sense.