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Are Oklahoma City Thunder Willing To Pay Luxury Tax?

ByChris St. Jean|
Jan 15, 2015; Houston, TX, USA; Oklahoma City Thunder forward Kevin Durant (35) and Houston Rockets guard James Harden (13) wait for a rebound at Toyota Center. Mandatory Credit: Thomas B. Shea-USA TODAY Sports
Jan 15, 2015; Houston, TX, USA; Oklahoma City Thunder forward Kevin Durant (35) and Houston Rockets guard James Harden (13) wait for a rebound at Toyota Center. Mandatory Credit: Thomas B. Shea-USA TODAY Sports

The James Harden trade was one of the most controversial NBA transactions of the last 15 seasons. There’s been similar outrage and controversy attached to other NBA transactions. LeBron James leaving Cleveland, the league nixing a Chris-Paul-to-the-Lakers trade, LeBron James returning to Cleveland.

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But no NBA transactions has had the staying power or has hung over a franchise like the James Harden trade. At the time, it seemed like the Oklahoma City Thunder were going to be a perennial title contender. And in many ways they have been, but now, with Kevin Durant’s free agency looming and after another lost season, it’s only natural to wonder what could have been.

Although, the Thunder have never publicly said this, the trade was made to avoid paying the luxury tax.  If they had handed out max-level contracts to Russell Westbrook, Durant, Harden, and Serge Ibaka, they would be living above the luxury tax line. This is old news though.

The Thunder did not approach the luxury tax, ironically, until this lottery-bound season. The in-season trade that brought in Enes Kanter, Kyle Singler, and D.J. Augustin put the Oklahoma City Thunder payroll at just more than $80 million, according to HoopsHype salary numbers.  That put them over the tax line, which rested at $78 million last season.

The Thunder also are already committed to $76 million in the upcoming season and that’s with Kanter and Singler both unsigned for next season at this point. Now the luxury line is tied to the cap, so it will increase next season, but it’s rumored to be around $81 million for the 2015-16 season.

So, the Thunder will have plenty of interesting decisions to make. The reason they may want to get below the luxury threshold is because of the newly instituted repeater tax. The repeater tax is an even harsher penalty and was developed to punish teams for being above the luxury tax threshold in three out of any four year span.

With the Thunder being above the tax line in the 2014-15 season that is just ending, and assuming they are over the luxury tax threshold next season as well, that’s means they only need to be over the threshold once in the following two seasons to be hit with the repeater tax.

For a small-market team, that could be catastrophic. And there is reason to believe the Thunder will once again be over the luxury tax threshold this upcoming seasons. If the Thunder decide to keep Kanter, he’ll single-handedly get them over the bar. Kanter’s amazing offensive performance and horrible defensive performance make it an intriguing position for the Thunder front office.

But even if they decide (after sending a first-round pick to Utah for him) that Kanter isn’t worth it, they would still have Singler to decide upon (both parties expressed interest as the season came to a close) and they have a lottery pick in this year’s draft whose contract is slotted by the CBA. Bringing the lottery pick and Singler in would probably get them over the threshold.

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    • And that’s not even mentioning last season’s first-round draft pick, Josh Huestis.  There was a lot of controversy surrounding Huestis’ decision to forego the four-year contract that all first-round picks are entitled to in order to play in the NBA Developmental League under the Thunder’s control this season.

    It was rumored that Huestis did so because he was not a first-round talent but was promised to be taken by the Thunder. The implication was also that the Thunder would at some point “take care” of Huestis by giving him the long-term deal he had no business sacrificing.  If the Thunder need to pay that unofficial debt this season, that’ll get them over the threshold as well.

    In almost every scenario, and considering the Thunder need to be motivating Durant to sign an extension with them, the Thunder will be sitting over the luxury tax threshold, which seemed incomprehensible after they traded Harden away to avoid it.

    But the Thunder do have one bit of luck on their side.  As I mentioned before, the luxury tax threshold is tied to the salary cap and the salary cap is going to explode in the next two seasons. Early projections of the luxury tax threshold are at $108 million in 2016-17 and $127 million in 2017-18.

    That enormous jump could easily give the Thunder all the breathing room they need to avoid that repeater tax even after they give Westbrook and Durant the massive extensions they’ll be looking for.  Of course, that’s how the Thunder hope everything works out.

    Next: What the Blazers Can Expect Out of the 23rd Overall Pick

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