Atlanta Hawks: Tax strapped

You can read about the how the union’s decertification strategy “could signal the breakdown of collective bargaining talks,” would “be like taking a poison pill for the 2011-12 season” and take a look at the list of star players who are “leading the charge of decertification.”

Or you can just pretend that everything is going to work out and there will be NBA basketball soon. Unfortunately for my blog people, that leads to pondering the Hawks’ financial issues. . . .

The other day I assumed the salary cap would hover around $60 million and the luxury-tax level would stay at about $70 million. Cap expert Larry Coon, in a chat at hoopsworld.com, offers the first solid info I’ve seen on cap and tax levels:

Anthony Sanchez

It’s been said the salary cap for the 2012-2013 will be around $61 million. If that were the case, were would the tax threshold be?

Larry Coon

The best info I have right now is that the cap will be frozen at $58 million and the luxury tax threshold will be frozen at $70 million for two years. After that they will be tied to average team spending levels — the cap about five BRI points below average team salary levels, and the luxury tax about three BRI points above.

Take a look at the Hawks’ committed salaries for the next two seasons and you can see their problem. The Hawks have roughly $65 million in guaranteed contracts committed to seven players in 2011-12. They will need to add six more players to get to the minimum of 13. I’m assuming the Hawks still don’t want to be a taxpayer–they didn’t want to do it under the old CBA and it’s doubtful they will be willing to do it in what’s certain to be a more punitive tax system.

Let’s say all six of of those players the Hawks sign are minimum-salaried vets that meet the requirements for their salaries to count as two-year players for cap purposes. That still would add roughly $5 million to Atlanta’s cap figure. And that would mean pushing up against the $70 million luxury-tax threshold while adding nothing but bargain-basement vets and sticking with a roster of 13. The situation gets a little better in 2012-13, when the Hawks have roughly $61.5 million in guaranteed salaries committed.

The Hawks could get a tiny bit more wiggle room this year by including younger, cheaper players like Pape Sy and Keith “Kito” Benson among those six players. But they can forget about (finally) using the mid-level exception if it will start at $5 million as most reports indicate. The bi-annual exception is probably out, too, if it still will start at around $2 million (and the owners reportedly want to get rid of it completely).

It’s possible that the new CBA would have mechanisms in addition to the amnesty and the “stretch provision” to help teams shed cap salary. But if the Hawks still do not want to be a taxpayer, they may have to use one of those provisions just to clear enough salary to make some real improvements.

Speaking of which . . .

ESPN.com’s 5-on-5 riffs on Marc Stein and Chad Ford’s likely amnesty candidates story to identify the five most desirable targets if they are let go. Marvin makes the list twice.

Jovan Buha of ClipperBlog says Marvin would be the fourth-most desirable amnesty free agent:

Even though he’s only 25 years old, Williams’ productivity has regressed over the past two seasons. He’s been the odd man out in Atlanta, as he’s seen Joe Johnson, Josh Smith and Jamal Crawford eat away his minutes. But with loads of potential coming out of college, he might just need a change of scenery (just hope for the opposite of the Jeff Green effect).

And Nick Friedell of ESPN Chicago says Marvin would be the most desirable amnesty free agent of the bunch:

Has he lived up to the expectations he had coming out of the draft? No. But he’s still just 25 and has more time to get better. This list is full of guys who are past their respective primes. Williams may not have hit his … whatever that may be.

Michael Cunningham, Hawks beat

71 comments Add your comment

Hand Down, Man Down!

November 4th, 2011
11:35 am

They have a budget but still overvalue their assets. All of these huge contracts were handed out after making (and advancing) in the playoffs. Why do that if they KNEW they had a budget and those players you had weren’t filling the arena? Just dumb. Now we get to watch one of the few guys who DOES bring fans to Philips, a local guy at that, get shipped out, while the new owner doesn’t have the finances to be a big spender. What a disgrace. I used to love this team but ASG killed the NBA for me. I hope this lockout lasts through 2015.

Michael Cunningham

November 4th, 2011
11:48 am

@Hand Down: “They have a budget but still overvalue their assets.”

that’s a fair criticism and more accurate than the usual “they are cheap” rip on ASG. for example, it’s easy to knock the Marvin pick in retrospect but you could at least make a case for it back then (even if he didn’t fit a need). re-signing Marvin to that contract is harder to defend, especially since it seems they bid against themselves. same goes for J.J.–they took what turned out to be a good chance when they traded for him. maybe not so much giving him the richest contract in the league.

An Idea

November 4th, 2011
12:09 pm

“Now we get to watch one of the few guys who DOES bring fans to Philips, a local guy at that, get shipped out, while the new owner doesn’t have the finances to be a big spender. ”

Who?

Mike is Back

November 4th, 2011
12:13 pm

MC, I see your point…however that tells me that a lot of astute basketball minds think Marvin still has some up sides…so it kind of confirms my thought on the amnesty situation…one guy may or may not reach his prime…and one guy is already pass his prime…and that guy is costing you a sh*t load of money.

I think our amnesty guy is JJ…and it’s nothing personal…if you can find away to move JJ…that instantly frees up minute for Marvin…and think some of the other guys on the team…would benefit as well.

You are going to struggle to get out the first round of the playoff with JJ anyway…Why would you keep that contract…if there is a way out.

Before someone starts slamming me…I’m not defending or making excuses for Marvin…personally I wish there was a way to move them both…but if I have to choose…I would keep Marvin and amnesty JJ.

O'Brien

November 4th, 2011
12:18 pm

Surely, the ASG had to know that a new (and more owner friendly) CBA was coming, but yet, they did not do a good job preparing for it.

I think they knew they would not own the team much longer, so JJ’s contract would be somebody else’s problem (and that is exactly what David Aldridge reported when the deal was signed, although the ASG denied it).

One year later, here we are, and they are selling the team.

O'Brien

November 4th, 2011
12:23 pm

Mike is Back,

You think the owners should pay JJ $107 million…to go away? I disagree. He is not worth his contract, but he is still a 5 time all-star, who can give you 20, 5 and 5 sometimes. And the Hawks owners dont have the money to pay JJ his money, but also go out and get a suitable replacement.

The issue with Marvin (to me) is not that he doesnt have potential. My issue is for a guy making $7.5 mil, he is not worth his contract either. If I could sign Marvin for $3.75 mil (half of what he makes now), I would be ok with him on my team.

Ryder

November 4th, 2011
12:32 pm

Marvin has to go. He hasn’t proven that he’s worth the money they have paid him, and a change of scenery may be best.

JJ

November 4th, 2011
12:33 pm

MC,

Could you please clarify the amnesty deal in regards to JJ. If they you it, would they not have any salary cap issues? In other words, can they waive JJ using the amnesty provision and all of a sudden be under the cap and then be free to go sign whomever they want at more team friendly salaries??

Section 303

November 4th, 2011
12:57 pm

If the players go the decertification route they are dumber than I thought. Not only would this season be toast, but the owners would crush them in this battle. They need to take the 50-50 split and play. The longer this goes on, the more they will lose, and the more they will look like complete a$$clowns.

Astro Joe

November 4th, 2011
1:31 pm

Let’s face it, the ASG have been managing this team like you would treat a rented apartment… make a few cosmetic changes at best but don’t do anything that would fundamentally alter things. They have attempted to extend most of the team’s “sacred core” when their contracts expired and they even replaced the former head coach with his lead assistant. Again, cosmetic changes. With the latest speculation regarding Meruelo’s wealth (or lack thereof) it is very, very hard to feel optimistic about the future management of this franchise. That said, I still want to watch games.

Mike

November 4th, 2011
1:41 pm

It has to be Marvin, that is an easily replaceable spot for a heckuva lot less than 7.5 million, Even with Johnson’s production being down, you’re not going to just find an All-Star lurking around that would be willing to get paid a lot less.

Wink

November 4th, 2011
1:58 pm

@Section 303, first I will say I agree that both the owners & players are dumb.

One make money from the talents of others, but those talents are why we fans go to the games, not to look in the owner suites. This is why the owners via Jughead Sterns market the players not the NBA. The players realize that they grease the wheel. The sqeauky wheel always gets the grease.

This is why the player want move to the 50 / 50 split. The player were getting I believe about 56% which the owner agreed to in the last CBA agreement. During this bargaining session the players are willing to move to 53% which is half way to 50/50 split from where they started 56%. For every 1% the players move they lose over a $BILLION dollars from their previous agreement.

So in essence the owners want the players to give up over 6 Billion dollars, from their PREVIOUS AGREEMENT! To split up among the what, 32 owners, just because the Jughead Steans, says “let just split it 50/50 and call it a day”.

Let just say he made the same offer to you & me. Could you accept this man taking $6 BILLION DOLLARS from our entire families table, which would be $60 BILLION DOLLARS over the life of the 10 year contract. I COULD NOT!!!

Sometimes you just have to stand up for the Principal of a Thing, that could be why the players are trying to hang on, because they did not lock themselves out, this was the owners doing.

I don’t condone the actions of the owners, I understand the plight of the players, but as FAN of basketball, the players & owners can kick rock…the NCAA Basketball season is just about to start…now till March Madness…not insanity of NBA.

Mike is Back

November 4th, 2011
2:11 pm

OB, I know it sounds ludacris…BUT I think moving JJ contract first…would be more beneficial for the Hawks in the long run.

We don’t even know what other clauses in the new CBA that could have an impact on the overall cost of amnesty…so that figure you mention is not set in tone…and that’s a worst case scenario…may you think out the box…and come up with some type of trade…we’ve seen it happen with guys who’s skill set had decline way beyond JJ’s…so it’s not impossible.

But, yeah that’s a tough pill to swallow…agreed…like I said that is a sh*t load of cash.

Short bus shorty

November 4th, 2011
2:39 pm

I heard that the hawks could be sold and moved to a group in Seattle. Anybod heard about this ????

Mike is Back

November 4th, 2011
3:02 pm

Mike, you are not going to get an All-Star in exchange for JJ…but you may get something of need. I honestly think there is enough talent on the team…to make the move. However, if all you can do is move Marvin…then so be. The problem is…you still want change the culture of the team.

O'Brien

November 4th, 2011
3:41 pm

This was from MC’s Amnesty blog;

Wiping away J.J.’s salary now with the amnesty clause and keeping Marvin would make Atlanta’s committed payroll look like this over the next five seasons (not counting non-guaranteed deals and prorated amounts for canceled games and assuming Marvin exercises his $8.05 million option for 2013-15):

•$47.0 million for six players in 2011-12
•$41.8 million for five players in 2012-13
•$20 million for two players in 2013-14 (not counting Teague’s qualifying offer
•$12 million for two players in 2014-15
•$12 million for two players in 2015-16.

Wiping away Marvin’s salary now and keeping J.J. would make Atlanta’s committed payroll look like this over the next five seasons (not counting pro-rated salaries for canceled games or non-guaranteed deals):

•$57.0 million for six players in 2011-12
•$53.5 million for five players in 2012-13
•$32.5 million for two players in 2013-14 (not counting Teague’s qualifying offer)
•$35.2 million in 2014-15
•$36.9 million in 2015-16.

Assuming the cap continues to hover at about $60 million, the Hawks would gain significant and immediate relief by waiving J.J using the amnesty clause. They would have to wait until 2013-14 to see dramatic cap benefits from waiving Marvin using the amnesty..

Getting rid of JJ saves more money in terms of salary cap, but JJ would still have to be paid by the owners, and the owners would also have to be willing to use the salary cap space to sign other players. I dont see them spending that kind of $

moboman

November 4th, 2011
3:58 pm

Winks comments would be valid if both sides were making a profit. But with the majority of the owners operating at a loss, they arent going to agree “to just lose less” than they were losing before. The win/lose model doesnt work for the owners, and it doesnt work for the small market fans who arent going to pay $$$ to watch a team that cant compete with the big market teams and thus never has a chance for success. Stern didnt just pull 50/50 out of thin air.

kwooden

November 4th, 2011
4:01 pm

It’s clear to me that Marvin has to go and if the owners are willing to still pay him, Amnesty is probably the best bet. I don’t think a trade is going to happen, because the hole point of the lockout is for the owners to save money. (our owners would probably have to take back a bad expiring contract to trade Marvin) If Marvin goes, I would fine if Pape takes his minutes coming off the bench. I like Pape’s activity. Our real issue is finding a replacement scorer for Jamal, because he’s probably going to find more money some place else. (would have been nice to keep Jordan Crawford aka “Baby Jordan” – at least in his mind!)

Michael Cunningham

November 4th, 2011
4:12 pm

@Mike is Back: “MC, I see your point…however that tells me that a lot of astute basketball minds think Marvin still has some up sides…so it kind of confirms my thought on the amnesty situation…one guy may or may not reach his prime…and one guy is already pass his prime…and that guy is costing you a sh*t load of money.”

Marvin certainly still has value just not at his current salary.

Michael Cunningham

November 4th, 2011
4:16 pm

@JJ: “MC, Could you please clarify the amnesty deal in regards to JJ. If they you it, would they not have any salary cap issues? In other words, can they waive JJ using the amnesty provision and all of a sudden be under the cap and then be free to go sign whomever they want at more team friendly salaries??”

the details are here in a previous post. they could do it and gain immediate cap relief but it would paying JJ and also paying salaries for his replacements. in other words, they can do it but it will take a lot of cash, so it would have the same practical effect of paying a huge luxury tax in the amount of J.J.’s salary plus the new salaries.

Michael Cunningham

November 4th, 2011
4:25 pm

@moboman: “Winks comments would be valid if both sides were making a profit. But with the majority of the owners operating at a loss, they arent going to agree “to just lose less” than they were losing before.”

operating loss? yes, but franchises continue to appreciate in value so owners make money on the back end. and both the operating losses now and the capital gains later get favorable tax treatment (not to mention the benefits of arena infrastructure, which usually is subsidized by the public).

the tension comes from owners who bought their franchises recently. they are spooked by the operating losses and starting to wonder about the appreciation. they are reasonable fears, and the owners are trying to do what we all would do: decrease their risk and transferring more of it to the players. likewise, the players are doing what we all would do and trying to prevent this as much as possible. they have more leverage than the rest of us because they are a small number of workers with unique skills who generate a lot of revenue, and they are the product as well as the labor.

PMC

November 4th, 2011
4:41 pm

Somewhere David McDavid is laughing and counting his money.

What a pile of amateurs we have owning/running this team. We could end up with no NBA and no NHL teams because of a group called….the “Atlanta Spirit”

Unbelivable.

PMC

November 4th, 2011
4:45 pm

How can Sund look at everything Marvin has done in his life, from not starting at UNC to being drafted WAY too high, to not really doing much of substance in the NBA and STILL be staring at upside. The Upside train has arived. Marvin is not on it. At least not in this town. If he’s a good basketball player we’ve only seen it on occasional rare nights here.

We drafted a career backup 2nd overall and then when we had an opportunity to rectify the mistake…we decided to pay him a lot more money.

We’re the MF Global of the NBA.

Najeh Davenpoop

November 4th, 2011
4:46 pm

F-CK YOU ASG

ILL-Logical

November 4th, 2011
5:01 pm

cp

November 4th, 2011
5:05 pm

Its hard being a fan of this team. Looks like we are stuck with the B.A.S.G.

Spyro

November 4th, 2011
5:07 pm

So, the sale just fell through?

FUUUUUUUUUUUUUUUUUUU-

Najeh Davenpoop

November 4th, 2011
5:09 pm

This is much worse news than anything lockout-related. I hope the season gets cancelled at this point. Maybe it will cause the franchise’s value to drop enough that more buyers will become available.

heartofdarkness

November 4th, 2011
5:12 pm

How ’bout folding the whole Hawks organization into MF Global and hope they get lost along with all the missing customer account funds?

Section 303

November 4th, 2011
5:13 pm

First the Lockout, now the ASG….someone remind me why I am a fan of this organization.

Hearing that the ASG is now back in control is the worst news I’ve heard all day. I hate those guys.

Jay Dubu

November 4th, 2011
5:13 pm

Have you looked at the Hawks’ roster?

Jamal Crawford is not coming back to the Hawks for the vet minimum, so all of those minutes have to go to someone else. Marvin is just as good as any of the other bench players, so give him a try to see if he can earn that 8+ mill per year salary.

Hawks starting 5:

JJ
Josh
Al
Williams
Teague or Hinrich

Bench guys that will actually play in non blowouts:

Zaza
Teague or Hinrich

Rest of the guys are for practice only, as long as LD is at the helm.

Not a deep, or talented team.

The Hawks have had some bad GMs, or GMs that performed poorly…you decide, and very bad ownership.

They should have kept Jordan Crawford, signed and traded JJ and Marvin. Matter fo fact, Marvin shouldn’t even be on this team. Billy Bob did not use the pick satisfy a team need, nor did he draft the best available player on the board.

He should be taken out behind the shed and dealt with accordingly.

The Hawks are a M-E-S-S!!!!!!

microphone assassin

November 4th, 2011
5:14 pm

the NBA can go away forever…the idea of the LeBrons and Amares of the league who think having 4 or 5 great teams and 20+ feeder teams is a workable business plan is absurd…idiots…

Najeh Davenpoop

November 4th, 2011
5:16 pm

Can we use the amnesty on the DASG?

Smiling Jack

November 4th, 2011
5:16 pm

Hawks are no longer for sale! And we are left with owners (not owner) who don’t know their heads from a hole in the ground. They are mere fans and not very knowledgable fans at that. They are in way over their heads. Looks like no NBA basketball for Atlanta, oh well, what they h – -l! We’ve got GT and the Bulldawgs.

Spyro

November 4th, 2011
5:17 pm

I don’t think “microphone assassin” is familiar with the entire history of the NBA…

welikebaseball2

November 4th, 2011
5:20 pm

Alright, I’ve thought it a tad extreme before, but I’m more in favor than ever of boycotting the ASG-run Hawks. They’re a circus act whose tight pockets have led to things like Larry Drew as coach & whose clueless in building a franchise has led to desperate acts like giving Joe Johnson max money. I don’t think there’s a Hawks fan this side of the galaxy that doesn’t feel an undeniable sense of hopelessness with ASG as owners…& it’s so sad.

Jay Dubu

November 4th, 2011
5:21 pm

@Wink

The NBA is not a $100 billion business. Your point is valid, but recheck your numbers.

Najeh Davenpoop

November 4th, 2011
5:35 pm

The DASG is too cowardly to give out contact info or have a Twitter where we can tell them how much they suck. F-CK THEM GO EAT A SMEGMA SANDWICH MICHAEL GEARON AND BRUCE LEVENSON

O'Brien

November 4th, 2011
5:45 pm

From Jeff Schultz’s blog;

One of the Spirit’s owners, Bruce Levenson, released a statement, claiming: “The Atlanta Hawks are no longer for sale. We’re excited to remain as owners of the Hawks and are committed to building on our string of four straight playoff appearances.”.

I am soooo tired of the ASG.

Najeh Davenpoop

November 4th, 2011
5:48 pm

For what it’s worth (not much) Al Horford is one of the 50 players pushing for decertification, according to Marc Stein.

Grandad

November 4th, 2011
5:59 pm

This question is for Mr Cunningham, Najeh,
or any of the more astute bloggers than myself.

Serious question:

If a player (say Marv) was amnestied;
he becomes anamnesty FA,
The Hawks are on the hook for his salary.
***
Now, if he signs somewhere, anywhere ?
Does that mean the Hawks only owe the difference ?
Can he choose a team and play for said team
while the Hawks pay ?
Does the team who signs him pay some ? A portion ?
Would there be some sort of bidding
where he may actually make more ?
Is there any way the Hawks could get off the hook
for some of the $ owed ?

I’m not talking about cap dollars.
Real $.

kwooden1

November 4th, 2011
6:14 pm

Marvin’s definitely gone if the ASG can’t find another buyer. Clearly there plan was to keep JJ on the team, which maintained its value and then sell. This new CBA will force them to work with even less wiggle room, so there will be no room for Jamal or Marvin. But that also means that they aren’t going to drop JJ and rebuild from scratch. That would push the value of the franchise down and it would be even harder for them to find a buyer.

Ra'mon

November 4th, 2011
6:21 pm

I would love to see the Hawks be able to sign R. Lewis as the starting 3, if they can amnesty Marvin. Lewis would stretch the defense, for wider lanes that Teague can penetrate. Imagine Crawford and Marvin’s combined salary bringing in a discounted Lewis and possibly Roy/Mike Miller, to go along with him. Say what you want but Roy can still give you 20-25 really good minutes a game.

Also, if everyone is saying there are so many superstars in this season’s draft, why not try to trade Joe or Al for someone plus a sure bet draft lottery pick (in the west).

Ra'mon

November 4th, 2011
6:22 pm

O’brien, can the fans put a lawsuit against ASG for imprisonment? lol or something?

kwooden1

November 4th, 2011
6:37 pm

Looking at the other teams that are better than the HAWKS (Dallas, Lakers, Celtics, Miami, Chicago, OKC, NYC??, Spurs??, Memphis??) the only teams that aren’t in as bad or worse shape than the HAWKS are Memphis and OKC. Though both teams will need to pay Mark G and Westbrook respectively and neither will be cheap. Chicago hasn’t paid Rose yet and they are paying Deng, and Noah 12M a piece, along with paying Boozer 13M!! All the teams in the Luxury tax area are going to have to shed players, even with the Amnesty option. With that said, I think the HAWKS are still dependent more on the players they currently have, than on the players they can acquire. Smoove and Horford need to improve for this team to be a contender, otherwise the only trade that makes a difference is getting Dwight.

GO HAWKS

vava74

November 4th, 2011
6:47 pm

Meruelo sale officially dead! &#%$¥/ cursed ballclub!

Najeh Davenpoop

November 4th, 2011
6:49 pm

“Now, if he signs somewhere, anywhere ?
Does that mean the Hawks only owe the difference ?”

Good question. From everything I have heard I don’t think so. I think the Hawks would still owe him the entire remainder of the contract (in real money) but would just get it wiped off the salary cap, and whatever contract he gets from a new team would be in addition to what the Hawks are already paying him.

vava74

November 4th, 2011
6:49 pm

Ra’mon,

Are talking about the “corpse formerly known as Rashard Lewis”????

Grandmaster JeJe

November 4th, 2011
7:13 pm

I don’t understand why MC, as knowledgeable as he is, always reports major Hawks stories after 4 or 5 other AJC members have already done so. It does not make sense to me.

FIRE ASG

Grandmaster JeJe

November 4th, 2011
7:15 pm

Not a knock on MC – he’s our beat writer and he does a damn good job. I don’t think many other beat writers could provide the financial breakdowns and acumen he has.

LOL would Meruelo have taken out a loan to pay $300M for the team? That’s pathetic for any aspiring professional sports owner.

Mark Cuban could pay $300M after buying another franchise.