Boston Celtics Offseason Preview:A New CBA Brings Back Old Questions
The Boston Celtics’ season has ended in disappointing fashion with their upset loss in seven games to the Miami Heat in the Eastern Conference Finals, kicking off an earlier than hoped for start to the offseason. Instead of duck boats and contract extensions, GM Brad Stevens now has to think about how to reshape this team to address their post-season failing and for a future financial landscape quite different than the one the roster was built under.
The league’s new Collective Bargaining Agreement (CBA) is targeted to break apart high cost rosters like Boston’s. After carefully containing spending during the early years of the careers of Jayson Tatum and Jaylen Brown, the franchise expanded their payroll last offseason and continued the practice of locking their role players into long-term contracts. Under the prior agreement this was a solid plan for any ownership group willing to pay luxury tax. The penalties were largely financial. The new deal significantly increases the financial penalties but also adds difficult-to-manage roster building restrictions on high payroll teams. This comes in just as Tatum and Brown are due contract extensions with significant pay increases.
Instead of thinking about player salaries and benchmark figures, like the luxury tax line, as dollar amounts it is more helpful to consider them all as percentages of the salary cap. The projected luxury tax line next season is not $162 million but 121% of the salary cap. The Taxpayer Mid-level Exception is 3.7% of the cap, not $5 million.
By way of making the All NBA team, Brown and Tatum have both become eligible for five year contract extensions (on top of the remaining years of their existing deals) starting at 35% of the salary cap in the first year of the deal.
Brown’s extension could be signed this offseason and begin in the 2024–25 season when the salary cap is projected to be around $143 million. Tatum’s extension would start a year later when the salary cap projection is less clear but $152 million is a commonly used estimate. In both cases the salaries would raise annually by 8% of the first year’s salary. However, the salary cap is also expected to be increasing by 6–10% per season and those increases compound while contract raises do not, so each will have a salary that should be stable at ~35% or less of the cap each year of the deal, or 70% in total. The new CBA includes a “cap smoothing” provision that limits the annual increase to a maximum of 10% so there is no “TV Deal Spike” coming to mitigate that.
In comparison, for the 2022–23 season their combined salaries were just under 50% of the cap. The NBA’s salary cap is a “soft” one where teams can exceed it under certain circumstances and with restrictions placed on the team above the cap. The Celtics spent above the cap and so Brown and Tatum combined to account for just over 33% of the team’s total salaries, or 25% of the team’s total spend on salary plus the over $60 million luxury tax payment levied against them for being a high spending team.
The New Collective Bargaining Agreement
The new CBA hardens the cap through three primary mechanisms.
The first is that luxury tax payments scale more precipitously based on how far over the tax line a team is, and for “repeater” teams who have been in the tax on a consistent basis over recent seasons the rate is heavy even for teams barely into the tax.
Second, teams with total salaries above the previously existing “tax apron,” an amount just over $6 million higher than the tax threshold, will suffer more severe restrictions on their salary cap exceptions.
Third, a new “second apron” set in 2023–24 at $17.5 million over the tax line carries with it penalties draconian enough to make that act as a de facto hard cap for almost all teams. There may be teams that exceed it for a season but not unless they’re a top-tier contenders with a clear path to get back under the line in the near future.
The reason that the second apron is treated as a near hard cap is because of the restrictions it carries, beyond simply being very expensive in terms of luxury tax liability. A team over the second apron in 2024–25 and beyond suffers the following restrictions:
- Their draft pick seven years into the future becomes untradable and locked to the team for at least four years, with the possibility of the team never being able to trade it and it being downgraded to the bottom of the first round if they stay above the second apron for multiple years
- The team will not be able to use any Mid-level Exception
- The team will not be able to combine multiple outgoing players to match the salary of an incoming player via trade, and in 1-for-1 trades the incoming player must have a salary equal or lower than the outgoing one
- The team cannot send any cash out in trade
- The team cannot acquire anyone via an outgoing sign-and-trade, and will not receive a TPE by trading them into cap space, adding to the existing restriction on being able to bring anyone in via sign-and-trade
- The team cannot acquire anyone in-season who was waived from a contract that paid them more than the Mid-level Exception (the “buy out market”)
- At the end of the season, all Trade Exceptions held by the team will expire
Balancing The Books
Herein lies the problem for Boston as the league transitions to the new CBA next season and implements most of the second apron restrictions the season after that. The Celtics’ total salaries for this season were 142% of the salary cap. In 2024–25 the second apron line will be around 134% of the salary cap. Brown and Tatum, on max extensions in 2025–26 would combine to account for 52% of the de facto hard cap of the second apron instead of the 33% of total team salaries they cover now. That difference is equivalent to roughly Malcolm Brogdon’s salary now.
If the Celtics were to stay a tax team until that season and then spend up to the second apron, they would also be charged a luxury tax bill of $80 million, $15 million more than it will be this season even though they would be closer to the tax line than they were this year.
If the Celtics intend on retaining Tatum and Brown long-term on maximum extensions, they need to begin preparing for that now by transitioning to a much less expensive supporting cast than the one they enjoyed this past season.
With just players currently on the books, the 2024–25 roster projects to have only around $20 million in space below the second apron with just seven roster spots filled, needing to complete the rest of the roster at an average salary of about $3 million per player. By that season a rookie picked in the high teens will make more than $3 million and minimum salary veterans over $2 million. This does not include Grant Williams, Payton Pritchard, or Sam Hauser who might all be unaffordable already.
These are untenable numbers two years out but it’s possible that the goal will be to cut over $20 million in salary immediately, with most of that already being accounted for by Al Horford’s much lower future salary, to get out of the tax for next season. They could then be directed to cut deeper the following season when Brown’s extension kicks in simply to avoid the increasingly punitive repeater tax and put off that status for the first few years of Tatum’s assumed extension.
The Jaylen Brown Question
Of course, the first question is now “is it prudent to build a team with Tatum and Brown as the two best players under the new CBA?” It’s reasonable to answer that as “no” even if you believe that Tatum and Brown can win a title together if the remaining budget is not severely restricted, which seems obvious considering they’ve nearly done it already. How likely are they to achieve that as the contracts and rules kick in and force a severe paring of the talent around them? A team could definitely win a title with prime LeBron James and Steph Curry making 52% of their maximum salary budget. Can one do it with Tatum and Brown as they progress through their primes?
If that’s answered in the negative then the process of extricating the team from the trap starts this offseason. The quick answer would be to trade Brown while he still has a year on his contract but it’s not that simple. While the Celtics can extend his contract at 35% of the cap, any other team that’s over-the-cap and acquires him could not do the same. They could extend him to a contract at nearly 30% of the cap but they could not do it for six months after acquiring him, meaning they would have to trade for him with no guarantee of being able to retain him beyond one season, and he would probably decline that and wait for the offseason to get rid of the incentive-based compensation in his current deal. It’s not impossible to trade someone under those circumstances but your return will be less than ideal. The best trade partner would be one who is very confident in their ability to keep him even with no guarantee, or one who is simply desperate or stupid.
NOTE: The below three paragraphs are not correct. The new CBA puts a six month post-trade waiting period on contract renegotiations even for teams under the cap. I’m leaving the paragraphs in for posterity sake and to give an example of how difficult even parsing through all the ewn rules on a short timetable is.
The other type of good trade partner is one who has a lot of cap space. A team with enough cap space could trade for Brown and then renegotiate his current contract up to his current maximum salary and then extend him at the 30% max using that as the new baseline. There would be no waiting period on that and so if given the right assurances by Brown’s agent they would be confident in trading for him.
There’s also the question of what the Celtics would be targeting in return. It makes no sense to trade Brown for financial reasons and then bring in a second star of a similar level who will be making the same type of salary when Tatum’s future extension begins. A “second star” would have to be substantially better than Brown for that trade to make sense so a more likely trade would be something less exciting for the fans. Trading Brown for multiple above average, lower priced players plus future picks to sustain the salary cap model would be on the table.
In this scenario where the team decides that the new CBA forces them to move off Brown and they want to act quickly, an unexpected team like the San Antonio Spurs could get involved. They have the cap space to renegotiate-and-extend him and will be adding Victor Wembanyama via the draft. If Wembanyama lives up to expectations he’ll be an All NBA caliber player between “immediately” and a few years from now. He’ll also be on rookie scale and then a 30% max extension and so set up a manageable cap sheet with a second star like Brown making 30% of the cap. Would trading Brown for a package centered around Devin Vassell make sense for both sides? The Spurs have an excess of future picks and other good young and/or reasonably priced players. Vassell, Keldon Johnson, and picks for Brown and Brogdon could realign your future cap sheet and solve the new CBA’s repeater tax problem at the same time. It’s also, obviously, a talent and experience downgrade.
The alternative, if you still start with the position that the team will not be able to keep the two stars together long-term, is to still offer Brown the extension and simply figure it out later. Brown’s extension won’t even kick in for another year and Tatum’s two. While the team would not be allowed to trade Brown for a year after he signs, would they want to, anyway?
This route gives you one or two more seasons to try winning a title with the duo. If at some point someone blows you away with a trade offer you can take it. If not, you’re at least shopping him with contract control left. Brown would be getting paid the maximum amount possible and stars don’t often move these days without their tacit consent so he’d be unlikely to be traded anywhere he doesn’t want to be. For both sides, this makes a lot of sense.
There are obvious risks like an injury or drop-off in level of play, but you buy time and open up the pool of reasonable trade partners by going this route. The team will have to make a call on the most difficult decisions at some point but that point doesn’t need to be “this offseason” unless something else forces their hand, like Brown being offered the maximum extension and turning it down.
The Cost Of Keeping Both
If the answer to the core question is that you can still build around Tatum and Brown even with the new CBA, the work still begins now. As said, it might be an ownership imperative to get under the luxury tax for the next two years if you’re preparing for that future. If that were the case, the team would have to either trade one of Brogdon, Marcus Smart, or Derrick White, or choose to not re-sign Grant Williams. They would also have to find a new home for probably Danilo Gallinari and possibly cut Mike Muscala’s non-guaranteed contract.
Even without a tax mandate, the team probably needs to make one or both of those larger moves now. It’s tempting to say they will move on from Williams, who regularly fell out of the rotation this season, but the first step there is still seeing what the restricted free agent market has to offer for him. Every other front office can do this same cap math for the Celtics and so a team might be more willing to extend him a strong offer sheet under this CBA, knowing that the Celtics will be harder pressed to match it than under the old one.
If a market doesn’t develop and his best offers start at the newly increased 9.1% of the cap Non-taxpayer MLE then keeping him at a position of comparative weakness while trading one of Brogdon/White/Smart for assets instead of losing Williams for nothing makes sense. That could also set up an extension for Payton Pritchard who has been itching to get to a better playing situation but might be able to find that in Boston after all, though not for a large salary.
The problem at the guard position is that the long-term contracts that Stevens favored when acquiring these players went from a positive in the old CBA to an eventual negative in the new one. There was unfortunately no way to predict this at the time but it needs to be dealt with now. It’s extremely difficult to see all of Brogdon, White, and Smart still on the team if Brown signs the extension and is not traded next offseason before it even kicks in, so it’s logical to try to trade one of them for a positive return now.
You’re working towards a situation where you have to fill out twelve roster spots for a total of less than 70% of the salary cap three seasons from now, so any young player you can lock up in a year or two, and especially future draft picks, become more valuable. It also means that the era of trading out the Celtics’ own picks should stop.
Stark Reality
The math on this frankly just gets brutal for any team with two 35% max players. This CBA is purpose built to break up the best teams. For decades its been a debate which of three or two stars (and better role players) is the ideal team construction. Briefly the Warriors put four stars together. Starting this offseason the question for long-term sustainability is one star or two, once they accrue enough service time to really get paid.
The league may find out that they don’t like this outcome. The NBA has been built on the back of superteam dynasties and not only will that become difficult, but teams built “the right way” like the Celtics with drafting and making reasonable trades and re-signings gets broken up for purely financial rules management as soon as their stars reach the age where they’d be expected to contend. That could mean that the next agreement swings back in the other direction but that will do nothing to help this team.
Regardless of if you think the playoff failure has necessitated it or are left to accept that the new CBA will force it, there’s now a ticking clock on the core of long-tenured Celtics draftees and most likely one on the pairing of Tatum and Brown.
