Salary Cap Hell: Don’t Count on the Sixers Using the Mid Level Exception Anytime Soon..
The Philadelphia 76ers are in a difficult financial position entering the 2020 offseason. Last summer the team committed over $60 million annually to Tobias Harris and Al Horford thus plunging themselves squarely into the group of luxury tax-paying teams.
2020-21 Luxury Tax Totals
|2020 NBA Luxury Tax Threshold||$132,627,000|
|Total Taxable Salaries||$148,729,612|
|Luxury Tax Space||$-16,102,612|
|Est. Luxury Tax Bill||$32,333,492|
Because the NBA uses a soft salary cap, any team may exceed the current $132 million threshold but there are penalties depending on how much teams exceed that number.
- $1.50 per $1 up to $5 million (incremental max: $7.5 million)
- $1.75 from $5-10 million (incremental max: $8.75 million)
- $2.50 from $10-15 million (incremental max: $12.5 million)
- $3.25 from $15-20 million (incremental max: $16.25 million)
- $3.75 from $20-25 million (incremental max: $18.75 million)
Currently the Sixers are projected to be somewhere between $15-20 million above the cap meaning they would be taxed $3.25 for every dollar spent.
Ouch! $32 million for a sixth seed and first round exit can’t be what ownership had in mind when they approved the large contracts handed out last offseason. Josh Harris and Elton Brand clearly understood the future financial ramifications when they made these moves but had to believe they would be packing the Wells Fargo Center with well paying fans on the path to the NBA Finals.
The Sixers will have to get creative to meaningfully improve the roster before the beginning of next season. NBA circles realize Philly has no leverage. Making finding a potential trade suitor for either Harris or Horford highly unlikely without attaching younger players or future draft picks in any potential deal. Without making a trade, one tool the Sixers could employ is the use of the mid-level exception or ‘MLE’
Recently, Sixers fans and blogs have been throwing around names such as DJ Augustin, E’ Twaun Moore, and Justin Holiday as potential MLE targets All these guys bring some combination of a playing making, ball handling and shooting, filling clear team needs.
If for example the Sixers were to add DJ Augustin for the estimated $5.75 million MLE, it would move the team into the higher 3.75 tax bracket and the actual cost to the team would exceed $20 million for one year of a backup PG.
I don’t see any scenario in which Josh Harris and ownership agree to pay between $40-50 million in tax with so much uncertainty surrounding revenue projections and the status of whether fans will be permitted in the stands to begin the season.
At this moment, I believe it’s more likely that the Sixers front office looks at their current financial situation combined with the state of the league and decides to cut salary to decrease their potential tax number. It’s a depressing outlook for a team we had so much excitement for following their loss to the Raptors in 2019. It doesn’t make them a better team but it might be the correct financial decision moving forward.
Mandatory Credit: Philadelphia Inquirer