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Celtics Salary Cap/Luxury Tax Update

With Aron Baynes back in the fold, Boston is dancing around the luxury tax.

NBA: Playoffs-Boston Celtics at Cleveland Cavaliers Ken Blaze-USA TODAY Sports

With Aron Baynes agreeing to re-sign with the Boston Celtics for two years and $11 million, it’s time for a quick check of Boston’s salary cap and luxury tax situation.

First we have to look at Baynes’s new deal. Generally during free agency, deals are reported with a salary figure that is rounded to the nearest whole-dollar amount. League sources indicate that Baynes is re-signing with Boston using his Non-Bird Rights. That means the new contract for Baynes will actually look like this:

  • Year 1: $5,193,600.00 (fully guaranteed)
  • Year 2: $5,453,280.00 (player option)
  • Total: two years, $10,646,880.00

You can see where the rounding to $11 million comes from.

Next, what does it mean that Boston is using Non-Bird Rights to re-sign Baynes? Quite a bit actually. Since the Celtics are over the salary cap, they’re using exceptions to get all of their offseason work done. Non-Bird Rights are a form of exception. More importantly, so is the Non-Taxpayer Mid-Level Exception, which Boston has available to use this summer.

The Non-Taxpayer MLE is for $8,641,000.00 for 2018-19 (updated with the salary cap set at $101,869,000.00). There had been speculation that in order to retain Baynes, the Celtics would have to give him a portion of the Non-Taxpayer MLE. By using his Non-Bird Rights instead, that means that Boston now has the full $8.6 million to use on another free agent. Or it can be divided up among multiple players. The Celtics can either use this exception in the offseason, or they can use it once the season starts.

What impact does Baynes re-signing with Non-Bird Rights have on Marcus Smart, Boston’s other key free agent? The workings of the cap and luxury tax mean that all contracts are intertwined in a sort of “this causes this, which causes that, which causes this” dance. In the case of Smart, it’s more about the luxury tax, but the Non-Taxpayer MLE also ties in as well.

If a team uses a portion of the Non-Taxpayer MLE that is equal to or greater than the Taxpayer MLE ($5,337,000.00 for 2018-19), that team is then subject to the hard cap at the Luxury Tax Apron ($129,817,000.00 for 2018-19). With Baynes in the fold, the Celtics are currently at $114,281,447.00 in committed salaries. That leaves them about $15.5 million under the hard cap.

So, where does Smart factor in? Let’s say he and the Celtics agree to a deal that starts at $10 million or so in the first year. That leaves about $5.5 million under the hard cap. That means the Celtics could use some of the Non-Taxpayer MLE to re-sign a player like Jabari Bird, who the team only has Non-Bird Rights for. Bird is also subject to the Arenas Provision, but that’s a whole other can of worms we aren’t getting into here! Having the extra wiggle room could be important, because Boston could pay Bird more than they might have been able to otherwise. And they may have to do so, as reports are that Bird has some suitors as a restricted free agent.

Staying under the hard cap is also important to the Celtics because it gives them wiggle room in trades. The hard cap isn’t impossible to work around, but it makes everything that much more difficult. The Los Angeles Clippers and New Orleans Pelicans had struggles working around the hard cap in recent years. It’s something you’d like to avoid if at all possible.

Finally, what about Boston becoming a tax payer this coming season? With just over $114 million in committed salary, the Celtics sit just about $9.5 million under the tax. Assuming they work out a new contract with Smart that isn’t Smart simply signing his qualifying offer, they’ll be over. Add a new deal for Bird, and they’re even further over. This isn’t a huge concern, as the more punitive repeater tax wouldn’t kick in for years. And Boston ownership has repeatedly said they’ll pay the tax for a title contender.

Are the Celtics a contender? Fully healthy and with Baynes back, and possibly with Smart and Bird, things are looking that way. This team is deep and versatile. Those are two aspects all title teams have.

What’s next for Boston with Baynes’s re-signing?

  • First-round pick Robert Williams IV should sign his rookie-scale deal soon, likely before NBA Summer League starts on Friday 7/6.
  • Watch out for Smart and Bird, for whom Boston can match any deal as restricted free agents. If someone crafts an offer sheet, it could get uncomfortable for Boston to match on either player. With so much cap space off the board on the first day of the offseason, that seems less likely than it did even 24 hours ago. Still, it bears watching.
  • Then you’ve got how the Celtics are going to use the Non-Taxpayer MLE.
  • Last is minimum signings, both rookies and veterans, to help fill out the roster.

No fireworks, but a smart, efficient offseason was in order for Boston. Re-signing Aron Baynes was the first step along that path.