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Boston Celtics 2018 Cap/Tax Outlook

The Celtics are capped out, which means the front office will have all eyes on the tax and hard cap

NCAA Basketball: Miami at Boston College Bob DeChiara-USA TODAY Sports

The Boston Celtics came within one game of reaching the NBA Finals in 2018, despite being without Kyrie Irving, Gordon Hayward and Daniel Theis. With those three set to return to a roster that now seems loaded with talent, there is considerable excitement for just what the Celtics might look like when the 2018-19 season tips off. Before then, Danny Ainge, as he does every summer, has some work to do—he’s got to fill out the roster for Brad Stevens. The primary routes to do this are the NBA Draft, free agency and via trades. Ainge has done a lot of each the last couple of summers, finally delivering on those long-promised “fireworks” from Boston ownership. This summer? It might be more like those sparklers you give the little kids at 4th of July. The ones where they feel like they are involved, but aren’t going to hurt themselves playing with the bottle rockets. Sure, you can dream big about players like LeBron James, Anthony Davis or whoever else you desire, but those sorts of big moves aren’t likely.

There are two factors that could limit Boston’s activity this summer. First is the overall depth of the roster. They’ve already got all the key pieces in place. This offseason should be about fleshing out the depth around the edges.

Second is that pesky salary cap. Even if the Celtics were to renounce all their free agents and waive their non-guaranteed players, they’d still be over $104 million in committed money, which puts them above the projected cap line of $101 million. How do we get there?

Guaranteed Salaries:

· Gordon Hayward - $31,214,295

· Al Horford - $28,928,710

· Kyrie Irving - $20,099,189

· Jayson Tatum - $6,700,800

· Marcus Morris - $5,375,000

· Jaylen Brown - $5,169,960

· Terry Rozier - $3,050,390

· Guerschon Yabusele - $2,667,600

(The Celtics also have Kadeem Allen signed to a two-way contract for 2018-19, but his deal does not count against the salary cap.)

Partial Guarantees:

· Semi Ojeleye - $901,965

· Abdel Nader - $450,000

Dead Money:

· Demetrius Jackson: $92,857

All that adds up to $104,650,766. And that’s before you get to the cap holds for the free agents and the first-round draft pick. More simply put: Boston isn’t going to have cap space this summer. So, how does Ainge go about finishing the roster?

Because the team is capped out anyway, they aren’t going to waive either of Ojeleye or Nader for cap reasons. With both having somewhat hefty guarantees, they’ll both be on the roster to start the summer. Ojeleye showed enough promise as a rookie (to go along with his $900K plus guarantee) that he’s a lock to stick on the roster. His contract becomes fully guaranteed at $1.4 million on 7/15/18, and you can bet that date will come and go with him still a Celtic.

Nader is a bit of a different story. He seems to be the NBA equivalent of a 4A player in Major League Baseball. He’s too good for the NBA G-League, but he’s not quite good enough to play rotation minutes in the NBA. His guarantee is smaller at $450K, and his fully guaranteed date doesn’t come up until 8/1/18, by which point Boston will have most of the roster completed. For a team that may want to avoid the luxury tax (more on that in a subsequent article!), It could be worth it to Boston to waive Nader, eat his small guarantee, and fill out the roster with a slightly cheaper option.

Boston’s other non-guaranteed player is Daniel Theis. At the two-year veteran minimum, Theis is one of the best bargains in the NBA. He’s not going anywhere.

The Celtics’ first order of business this summer, as far as deadlines go, will be deciding if they should issue Qualifying Offers to their three restricted free agents: Marcus Smart, Jabari Bird and Jonathan Gibson. Smart is arguably Boston’s key free agent this summer. Once again, because they are capped out no matter what, Smart is going to get a qualifying offer. By issuing the qualifying offer, the Celtics retain the right to match any offer sheet Smart signs with another team this summer. Boston isn’t going to let Smart walk unless some team massively overpays him. The Celtics have invested too much time and effort into Smart to split up that easily.

As for Bird and Gibson, their situations are less cut and dry. Let’s start with Bird. He flashed some promise in the limited minutes he got with Boston. It’s likely the Celtics will issue him a qualifying offer and hope to keep him around. In many ways, it could be Bird vs Nader for the team’s last roster spot. Expect Bird and Boston to reach an agreement on a deal that looks something like the ones Ojeleye and Nader signed. Two years with some partially guaranteed money seems to make sense for both sides.

Gibson isn’t likely to get a qualifying offer because he would probably just sign it. His qualifying offer projects to be $1.7 million, which is more guaranteed money than Gibson will get on the open market. With roster spots and potential tax concerns, the Celtics aren’t going to open themselves up to that by issuing the qualifying offer to Gibson.

Next up are unrestricted free agents Aron Baynes, Shane Larkin and Greg Monroe. Boston has Non-Bird rights on all three players, which means the maximum they can offer each player (without using all or part of the Mid-Level Exception or the Bi-Annual Exception) is 120% of their previous salary. For each player, this means something drastically different.

Baynes was a key rotation player all year long. He swung between starting and the first big off the bench. He was very important in the second-round playoff series victory against Joel Embiid and the Philadelphia 76ers. In many ways, his free agency is 1B to Smart’s 1A. He’s that important to the Celtics. Boston and Baynes could make it easy and agree to a contract using his Non-Bird Rights, which would start him at about $5.2 million for 2018-19. Or Baynes could hold out for a touch more and ask the Celtics to use some of the Mid-Level Exception to pay him. Doing that puts Boston in a precarious position, however.

Unlike the last few years, the Celtics are dancing around the luxury tax line. It projects to be $123 million for next year. With just over $109 million in locked in money (the guaranteed deals, partially guaranteed deals and the first-round pick), that leaves less than $14 million in space under the tax line. Let’s say Baynes slots in at even $5 million, and then Boston retains Smart at $10 million—they’re a tax team. You can slide those numbers up or down slightly either way, but the story remains the same. But being a tax team isn’t what really matters for the Celtics (more to come in a following piece!). What matters for Boston in 2019 is the hard cap line.

The hard cap is set at the luxury tax apron (essentially a bit of a buffer above the regular luxury tax). That projects to be somewhere between $127 and $129 million for 2018-19. Let’s be optimistic and say that it lands at $129 million. That would give the Celtics only $20 million in wiggle room, should they become hard capped. It sounds like a lot, but if you slot in Baynes and Smart at a combined $15 million (which seems slightly optimistic), that leaves only $5 million to play with. And once a team is hard capped, they can’t exceed the luxury tax apron by even one dollar. This exact scenario made things tricky on the New Orleans Pelicans and Los Angeles Clippers in recent years.

How does a team become hard capped? That is where we go back to Baynes. Remember when we said he might want the Celtics to use some of the Mid-Level Exception to pay him more than what he could get using his Non-Bird Rights? That could cause the Celtics to become hard capped. A team can become hard capped by either:

· Using a portion of the Non-Taxpayer Mid-Level Exception that is greater than or equal to the Taxpayer Mid-Level Exception,

· Using the Bi-Annual Exception, or

· Receiving a player who was signed and traded

The reason these three things hard cap a team is that teams who are at or above the luxury tax apron can only use the Taxpayer MLE, lose the Bi-Annual Exception, and are prohibited from receiving a player in a sign-and-trade deal.

So, what does this have to do with Aron Baynes? The max Boston can pay Baynes using Non-Bird Rights is almost $5.2 million. The Taxpayer MLE is projected to be $5.3 million. If Baynes wants much more than $5.2 million, the Celtics can only do that by giving him some, or all, of the Non-Taxpayer MLE, which would hard cap them. This is why re-signing Baynes isn’t as cut and dry as it might seem.

As for Shane Larkin and Greg Monroe, they could be both be squeezed due to roster spots/roles or for money reasons. Boston can pay Monroe as much as $6 million using his Non-Bird Rights, but he was out of the rotation for most of the playoffs. He’d be behind Horford, Theis and a re-signed Baynes in the big rotation. He’s likely to head elsewhere for a bigger role, even if it doesn’t come with more money.

Larkin could come back, as Boston can pay him a small bump over the veteran minimum deal he made last year. Or they could sign him to another veteran minimum contract. But he’s probably the third or fourth point guard again. Larkin proved he’s a backup-level point guard and could find a bigger role with another club.

Add it all up and the Celtics are probably looking at minimum deals to finish out the roster in free agency. There might be a veteran ring chaser or two who want to catch on, which is a path Ainge has had success with in the past. But the big signings like Horford in 2016 and Hayward in 2017 aren’t going to be repeated.

CelticsBlog will have lots to come on potential targets in the 2018 NBA Draft, but whoever Boston drafts is unlikely to be a contributor next year. That player will be a draft-and-stash candidate (keeping him off the Boston books for a year), or will sign but log considerable time in Maine in the NBAGL. There just isn’t room on the roster, nor the likelihood of the player being so good that they force their way in the lineup.

That leaves trades. Ainge isn’t shy about swinging for the fences and making a big trade. He’s done it with more regularity than any other general manager in recent years. That is the most likely path if Boston did want to go about acquiring LeBron James. Several outlets (not to mention countless message boards!) have laid out the path for Boston to trade for James. But it seems so unlikely that it isn’t worth putting much effort into the thought exercise. Of course, if the best player in the world wants to talk, you talk. But until then, it’s just a dream. Or a nightmare for some, judging from comments on message boards and Twitter.

No matter what, unless it is via trade, there aren’t going to be any fireworks this summer. Much like the persona of the Boston Celtics, it’s going to be a workman-like offseason. They’ll do what they can to retain their gritty, defensive-minded rotation guys, focus on a return to health for the injured players and continue to develop the kids. It might not be exciting, but sometimes a quiet, stress-free summer is best to get you rejuvenated for the long run to next spring.

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