- The Golden State Warriors acquired forward Kelly Oubre from the Thunder via trade on Thursday.
- Oubre’s $14.4 salary could send the Warriors’ 2020 luxury tax payments skyrocketing.
- However, an amendment in the NBA’s CBA provides for a tax reprieve in the proportion of the decrease in BRI.
On the day that Klay Thompson’s Achilles tear was announced, the Golden State Warriors pulled off a big trade to acquire Kelly Oubre Jr. from the OKC Thunder. While Oubre would certainly help the Dubs offset the production of Klay Thompson, news outlets were quick report that he may not be worth what the Warriors are paying for.
But if you take a close look at the deal, it may not be as financially bad as it has been painted to be:
An $82.4M Addition?
Golden State tax bill is currently $66M
The addition of Kelly Oubre would see it increase to $134M
$14.4M of Oubre + $68M in taxes= $82.4M
— Bobby Marks (@BobbyMarks42) November 19, 2020
The Golden State Warriors have the highest payroll in the league for the 2020-21 season. Golden State currently owes $148,884,768 in salaries for the 2020-21 season and that’s because the top four players on the team are already worth $130M. The salaries of Steph Curry, Thompson, Draymond Green, and Andrew Wiggins combined are already over the $109M cap set for the 2020-21 season and because of that, the Warriors were already due to pay the league $66M in luxury taxes this year.
But by adding Oubre who was traded by the Thunder for a future draft pick, the Warriors were incurring an extra $14.4M . According to ESPN salary cap expert Bobby Marks, adding Oubre’s salary to the Golden State total would mean an extra $68M in luxury tax payments or a total of $134M in luxury taxes for the year.
In the same Tweet, Marks said that Oubre is effectively worth $82.4M for the Warriors this season if we count the additional luxury tax payments incurred. But while that reported $134M in luxury could be a possibility for the Dubs, there’s a good chance that they will be paying a significantly lower amount.
Reduced Luxury Tax Payments
NBA and NBPA agree on 2020-21 season start and adjustments to CBA.https://t.co/HOaa1V9q8U pic.twitter.com/Z9m0OG8KI8
— NBA (@NBA) November 10, 2020
The list above contains the amended items in the NBA’s CBA. The last part talks about luxury tax payments reduced in the proportion to any decrease in Basketball Related Income (BRI) and the Warriors could get a reprieve from this provision. With the NBA projecting a 40% loss in overall revenue if the season starts without fans and the accompanying gate-night receipts, the Warriors could pay a significantly lower amount of luxury tax. In fact, it was Bobby Marks himself who talked about this earlier this month:
For example: If Golden State used the $17.2M trade exception and revenue decreased by 30%, they could save close to $50M.
This will help out the Warriors, Boston, Brooklyn and Philadelphia plus possibly a team like Milwaukee. https://t.co/uxII5oQXzl
— Bobby Marks (@BobbyMarks42) November 10, 2020
With the season starting in barely a month’s time, there’s a good chance that it will begin without fans. Up to when? We don’t know for sure. Although the doctors are working double time in coming up with the vaccine, there is still no definite timetable as to when this pandemic will end. Because of that, it’s almost certain that teams will get a luxury tax reprieve. The only question is how much. Given the NBA’s projection, that tax reprieve is potentially material. It may not be $50M, but it should reduce the additional luxury tax payment from Oubre’s salary significantly.
So you see, the Warriors may not be paying $134M in luxury tax payments after all. Sure, they will be over the luxury tax line this year but they were destined to pay the luxury tax anyway. If you look at Golden State’s payroll, they are already at $148.8M without Oubre. That’s already above the luxury tax line of $132,627,000.00 and that’s not even including the contract of No. 2 pick James Wiseman.
The Warriors know that they could end up paying an extra $68M in luxury taxes because of Kelly Oubre. But they didn’t have a choice. Klay Thompson is irreplaceable. But having Oubre help Wiggins try to fill the void makes things a a lot better. If Bobby Marks’ computation on the financial reprieve is correct, trading for Kelly Oubre wouldn’t hurt the Warriors as much as we first thought. And their odds to win the title may not be too bad at all.