Remember when the Knicks were like, “We didn’t match Lin’s offer sheet because of all that luxury tax!” and fans were all like, “Shah, you paid $124 million for a 23 win team!” Well, the Knicks may not have been lying. With each passing day it’s looking more and more like there is one factor to the Knicks’ thinking (if you can call it that) that is even more important than retaining Carmelo Anthony: the new luxury tax structure.
Consider Carmelo Anthony’s choice to announce he intends to opt out this summer and the interesting choice he made by publicly broadcasting his intentions.
If he was willing to wait until 2015 for the Knicks to build with cap space, his best option would have been to simply opt in, make more money in 14/15 than he could get with a new contract, and see what free agents were available and willing to come to NYC. He could then fly away if the best free agents went elsewhere. So Melo most likely isn’t interested in the summer 2015 plan, and based on his play, (confusingly worded) statements from LaLa and his own public comments, it seems like he would prefer to play in New York what gives?
The likely logic is like Kobe said (and did back in 2007), Melo is trying to send a message to the front office: “I’m not going to wait around. I want to play here but I want a championship even more, so you have to upgrade the roster now if you want to keep me.”
Well, what is stopping the Knicks from trading Shumpert, Hardaway Jr. and their 2018 pick for upgrades? Every game that goes by increases the risk of a first round matchup and almost guaranteed loss to Miami or Indiana, which could result in Anthony bailing no matter how well the team closes the season. There is no time to waste, and more than any time in the recent past, the Knicks actually have a sensible reason to believe that adding talent could push them into contention: They won 54 games last year, their most since the 96/97 season.
One problem is matching salaries. The Knicks lack expiring contracts, so that means trades for higher salaried players require a team willing to take on Stoudemire or Bargnani’s contracts, forcing the Knicks to sweeten the pot and making it unlikely for the them to come out much ahead from a talent standpoint.
The other sort of player who often becomes available midseason is the expiring cheap or rookie scale contract. Teams that don’t plan to re-sign these players will often sell them for a bargain. One such player is All-Star snub Kyle Lowry for whom the Knicks reportedly could have given two of Hardaway Jr., Shumpert and a pick. What held the Knicks back from making this trade?
The most likely explanation is that Dolan fears the incremental tax. The Lin decision and the Lowry decision really may have come down to money. To illustrate, say the Knicks were able to trade for probably the two best available, cheap expiring players: Gordon Hayward and Kyle Lowry (with Toronto getting the 2018 pick).
Everything goes about as well as could be hoped, and the Knicks make a run up to the sixth seed and even manage to beat the Heat before losing to the Pacers in the conference finals. Now it’s free agent time, and Hayward and Lowry get maybe $23 million/year combined. The Knicks, having fallen just short of making the finals, are obligated as well to use their mini MLE money to get some help for the increasingly unreliable front court.
Well, they just added $16 million in salary, putting their total salary up to about $107 million, which doesn’t sound so bad compared to the $124 million team that won only twenty-three games… until you look at the tax situation, which could get pretty outrageous with the Knicks entering repeater territory in 14/15. Take a look:
2005-06: $124 million in salary, $62 million in tax, $186 million total
2013-14: $88 million in salary, $32 million in tax, $119 million total
2014-15 with no changes: $91 million in salary, ~$45 million in tax, $136 million total
2014-15 with Hayward, Lowry, mini MLE: $107 million in salary, ~$114 million in tax, ~$221 million total
2014-15 with $20 million in salary cuts (the “blow it up!” hypothetical): $71 million in salary, no tax, $71 million total
That’s $150 million that Dolan could save just next season if he committed to a rebuild, and that doesn’t even take into account the risk of losing Anthony were the Knicks to disappoint even after those trades. What do you do with Lowry and Hayward if Melo leaves? Re-sign them and give up on having significant cap space for another four years or so, or trade them for pennies after giving up dollars (or at least half-dollars) just months earlier? Furthermore, Dolan just added Bargnani, quite possible in an attempt to placate Anthony. His $12 million salary added $7.5 million in 14/15 salary compared Novak’s salary and Camby’s $1 million of guaranteed money, which will cost the Knicks $30 million next season (tax and salary combined) assuming the Knicks stay at $91 million in salary. Bargnani’s failure to contribute as well as Novak did last year has to have left the typically trigger happy Dolan a wee bit gun shy.
Maybe it’s a fool’s errand to speculate about the thinking of an owner who rarely makes logical choices, but Dolan seems a bit more rational when it comes to money. If the price of keeping Anthony is maintaining annual tax/salary costs that are higher than even the worst of the mid 2000s and three or four times those of four of the top five NBA teams this season — illustrating more clearly than ever the weak relationship between spending and success — Dolan may blow the team up or at least call Anthony’s bluff. Whether Dolan’s mood shifts again or Anthony chooses New York City over joining a team that is ready to contend right now we’ll have to wait and see.