Earlier this week, I kicked off a two-part post by describing how the NBA’s multiplier-based luxury tax functions and has been designed to strongly disincentivize teams from spending significantly over the luxury tax threshold. Following up on that post, I wanted to share the example that brought this all to mind - the 2022-2023 Golden State Warriors!
Player Salaries
The Warriors are set to spend $190 million on their 2022-2023 roster, a figure that exceeds the $150 million luxury tax threshold by a whopping $40 million. Data from Sportrac helps us visualize how those funds are allocated across the roster…
Salaries and Luxury Tax Penalties
Our last post showed us how each incremental salary dollar above the tax threshold costs teams much, much more in tax penalties. In the Warriors’ case, their final tax multiplier will end up being 5.75x!
As such, while the Warriors intend to spend $190 million on their players, they will have to pay another $175 million to the league for the privilege of reaching so high above the tax threshold. Take a peek below to see how sharply those penalties kick in to increase the total roster cost!
Potentially Even Crazier in 2023-24?
The Warriors recently chose to sign Andrew Wiggins and Jordan Poole to long-term contract extensions, which are set to pay them on the order of $25-30 million annually for the next several seasons. Electing to sign their young players, however, creates a very awkward position with one of their existing stars - Draymond Green.
Locking in Poole and Wiggins means the Warriors don’t really have space to also give Green another contract - the luxury tax bill would simply be too high.
We can get a sense of this looking at the Warriors’ 2023-24 roster - if Draymond opts into his player option, Poole’s extension (and Steph and Klay’s deals climbing with the cap) is set to drive the team’s total salary bill to $214 million. That figure would be $52 million over the luxury tax, and would trigger such huge penalties that the bill for the roster would more than double, for a final cost of $474.5 million.
While I’m sure the Warriors would love to have Draymond around forever, it certainly seems that the league’s financial restrictions have pushed them towards an inevitable divorce…
