NBA teams spend millions of dollars to pay the salaries of its players. But there are penalties when teams go beyond a specific amount. This is called the salary cap, a specific amount that NBA teams must manage so that they will not get harsh tax penalties. For the 2012-2013 season, the salary cap has been set at $58.04 million. If teams go beyond the amount of $70.3 million, they will be imposed a luxury tax of $1 for every dollar in excess.
Luxury tax can really kill the profits of an NBA team. Thus, a championship caliber team with plenty of salary cap space is now seen as an important asset. Here are ten NBA teams that have become financially smart about their expenses to gain an edge over the competition.
1. Houston Rockets: Jeremy Lin Has Landed
The Houston Rockets blew up most of its roster to have the chance to trade for Orlando Magic Dwight Howard. This pursuit remains a long shot but nevertheless, the Rockets amnestied the $9.4 million for power forward Luis Scola. They also let stud point guards Kyle Lowry and Goran Dragic to leave.
However, they have a nice consolation with the arrival of the global phenomenon Jeremy Lin, an Asian-American point guard that became an instant celebrity with the New York Knicks. The Big Apple didn’t match the 3-year, $25 million contract offer of the Houston Rockets because of a tricky third year that will pay Lin close to $14 million.
Lin is expected to take over the huge global void that Yao Ming left when he retired due to injuries. As for the Rockets, it is estimated that they only have $40 million in contracts before Lin signed with them.
2. Phoenix Suns: The Nash Aftermath
The Phoenix Suns has recently lost the face of its franchise, 2-time MVP point guard Steve Nash. Now the rebuilding is in full mode and their salary cap is safely tucked at $49 million.
Nash heads to the Los Angeles Lakers in exchange for draft picks. Phoenix chased Nash’s former back-up Goran Dragic in free agency so that he can return and run the show in Phoenix. As a bonus, the Suns signed talented small forward Michael Beasley and claimed skilled power forward Luis Scola from the waiver wire after Houston amnestied him.
3. New Orleans Hornets: Youth on the Horizon
The New Orleans Hornets have struck gold during this year’s NBA Draft by landing top pick Anthony Davis and phenomenal guard Austin Rivers. They also re-signed upcoming star shooting guard Eric Gordon for $58 million over four years. To facilitate the rebirth of the franchise, the New Orleans Hornets cleared cap space and traded most of their bloated contracts.
As it stands, the payroll of the Hornets is at $38 million and can go to about $50 million when they sign the rookies. In the process, he traded Emeka Okafor and Trevor Ariza for the expiring bloated contract of Rashard Lewis to gain cap space.
4. Portland TrailBlazers: Bad Luck with Franchise Players
The Portland TrailBlazers couldn’t catch a break with franchise players. Their top draft pick center Greg Oden was let go after his string of unfortunate injuries. Their star shooting guard Brandon Roy got a max contract but had to retire because he no longer had cartilage on his knees.
As the Blazers tried to achieve roster flexibility, they trimmed their salary cap space to $51 million. They also let go of free agents Raymond Felton and Jamal Crawford but kept their promising small forward Nicolas Batum with a four-year $45 million contract.
5. Milwaukee Bucks: Quiet and Quality Moves
The Milwaukee Bucks has an interesting collection of talent and yet their salary cap space next season is only at $54 million. They recently re-signed bruising and versatile power forward Ersan Ilyasova. They still have their stars Monta Ellis and Brandon Jennings locked up.
To add to their flexibility, Milwaukee’s Beno Urdih ($7.8 million) and Samuel Dalembert ($6.7 million) are coming off the books next summer, leaving the Bucks with over $30 million in cap space.
6. Sacramento Kings: Success as Facilitator
The Sacramento Kings has a bevy of players that can be used to facilitate trades for other desperate teams. They have $58 million in salary cap space and they have many parts that can be used as trade bait.
They have an exciting core of young players from DeMarcus Cousins, Tyreke Evans, Thomas Robinson and Isaiah Thomas. Their maturity and chemistry are still an unknown factor at this point especially with the addition of point guard Aaron Brooks.
7. Dallas Mavericks: Moving On from Deron Williams
The Dallas Mavericks are one of the biggest spenders in the NBA led by billionaire owner Mark Cuban with a usual payroll of $90 million. But in the past few seasons, they have become financially responsible with the hopes of landing a superstar next to Dirk Nowitzki from free agency. The $58 million salary cap space of the Mavs was almost enough to lure point guard Deron Williams away from the Brooklyn Nets but it was really not meant to be.
But Dallas has moved on well by signing impactful players at low salary rates from All-Star centers Chris Kaman and Elton Brand and emerging guards OJ Mayo and Darren Collison. They also amnestied the lumbering contract of center Brendan Haywood for three years and $21 million.
8. Indiana Pacers: Keeping the Core
The Pacers have finally gained momentum to become a considerable force in the Eastern Conference. Their focus this summer was to retain their prized free agent center Roy Hibbert. They signed a new point guard in DJ Augustin and a few other players. Yet their cap space remains at a solid $64 million.
Most of the major players of the Pacers have reasonable contracts from Danny Granger, David West and even some of their emerging rookies. They are still not flirting in the critical luxury tax level.
9. Denver Nuggets: New Team in the Rockies
The Denver Nuggets have moved on well from the Carmelo Anthony era of the past few years. They have now maintained salary cap flexibility at $64 million and they have retained most of their promising young players from JaVale McGee and his large four-year, $44 million contract and Anthony Randolph at $2 million.
The Nuggets also retained veteran guard Andre Miler and amnestied Chris Andersen’s two-year, $9.4 million contract. The Nuggets have also purged enigmatic players from its roster from J.R. Smith and Nene.
10. San Antonio Spurs
The San Antonio Spurs have been a model of basketball consistency and financial flexibility for over a decade. After a good playoff run, the Spurs are looking to retain their core starting from their franchise cornerstone center Tim Duncan at three years and $30 million.
The salary cap of the Spurs is now at $70 million. They have also kept other free agents such as Boris Diaw and Danny Green. They also inked an intriguing second round pick in Nando de Colo.