$500 million. This is the staggering amount the Warriors could spend on cumulative salaries and luxury taxes during the 2023-24 season. It is enormous. This is a historic record that raises a lot of questions and criticisms about pay equity between the different NBA franchises. Let us question ourselves, let us criticize the system in place. It’s obvious, there are blind spots, but let’s also highlight another obvious fact: in many ways, what Joe Lacob and his associates are doing is a blessing for the NBA.
The numbers fell on the Warriors side. Saturday evening, 140 million over four years was put on the table for Jordan Poole. A large amount that suggested that the Warriors would wait to see what Draymond Green would like to do with his player option next summer before incurring other expenses. That was underestimating Joe Lacob’s determination. Hot on the heels of Poole, Andrew Wiggins was offered a 109 million four-year extension. Two extensions that will take effect in a year, when Steph Curry will enter a season at 51 million dollars, Klay Thompson 43 million and Draymond therefore potentially 27.5 million. In the 215 million salaries to be paid, on only 12 players under contract and almost 270 million luxury tax to go with it. Yes, that’s already 485 million. The famous 500 million are not far away and will most likely be reached once the roster is completed, as the “capology” expert Bobby Marks points out.
Golden St. payroll and tax penalty in 2023/24 will likely exceed $500M once the roster is filled.
That factors in Draymond Green opting-in to his $27.6M player option.
With 12 players
????Salary: $215M
????Tax: $268M????????Total: $483M
— Bobby Marks (@BobbyMarks42) October 15, 2022
The numbers are astronomical. The salary cap exploded. The luxury tax threshold is far in the rearview mirror. The record for sums paid in “salaries” for an owner will soon be shattered.
Sunday, I was reading the reactions following these announcements of extensions at the Warriors. In short, I was scrolling on Twitter and elsewhere on the internet. Many observers and fans, very bitter, shared a certain feeling of injustice. For some, the Warriors don’t play by the rules. Whether ! For others, the Warriors take advantage of rules that are too soft to really ensure the famous pay equity essential to the proper functioning of the NBA. An NBA whose authorities should look into this case and rely on it to modify the CBA (Collective Bargaining Arrangement) as soon as possible. Why not. In any case, a discussion could (and will) surely be opened on the subject in order to assess the possible harmful impact of this strategy of the owners of the Warriors. Because it is indeed a strategy in question.
As I read these indignant and sometimes even angry reactions, I felt embarrassed because I disagreed with most of them on the substance. That fans or observers are upset at the idea of seeing a team, an opponent moreover, happily exploding the salary caps is completely understandable. The feeling of injustice quickly arrived when passion got involved. In my wanderings on the blue bird social network, I nevertheless ended up coming across a tweet that spoke to me, a tweet from @Tartrou highlighting the fact that seeing the Warriors exterminate all luxury tax records can be a good thing.
For (a very) long time, owners have been trying to erase the antagonism between the desire to win and maximizing profits.
To have someone who once in a while comes and taps their foot to remind them that they didn’t just buy an annuity seems like a good thing to me.— Antoine Tartrou (@Tartrou) October 16, 2022
Because basically, what is it really? The owners of NBA franchises are all billionaires or groups of billionaires. They spend their money as they see fit, taking more or less risk. Some are ready to pull out the checkbook when necessary, others are more difficult to convince because they are there to make a profit first and foremost. Which is not so easily compatible with lavish spending for the incredible purpose of winning. And yes, win. Wouldn’t that also be an important goal for any sports club owner? When we take into account some major figures from the epic Joe Lacob at the head of the Warriors, we can see that his strategy works, that winning financially and sportingly are not incompatible. Come on, two pretty clear numbers: Lacob and his group bought the Warriors for $450 million in 2010. Today, the franchise is estimated at more than five… billion dollars. Because the NBA business is booming, because the Warriors are also winning, because they have a strong identity, because Stephen Curry of course. Because the owner didn’t hesitate to invest in it. It is still interesting to note that until 2015, the Warriors were still among the only three franchises to have never paid a luxury tax. During the first five years that he spent at the head of his franchise, Joe Lacob therefore did not splurge. As soon as it started to smile for his warriors, he didn’t do anything wrong. He took out the competition checkbook and applied a strategy. He is within his rights. He exploits the current rules, at his expense, for the greater good of his team and possibly for that of the league. Other owners are in this line and could imitate Lacob with the double aim of winning sportingly while ensuring good financial results. Steve Ballmer and Joe Tsai for example and to name a few.
So what ? Is it the money that wins?
History shows quite clearly that it helps but it is far from enough. The luxury tax has been in effect for 19 seasons in the NBA. 28 teams have already paid, for a total of more than 2 billion (before this 2022-23 season). The Warriors are obviously at the top of the biggest payers with 337 million dollars paid in five years in the tax. The podium is completed by the Nets with almost 300 million in seven years of luxury tax and then by the Knicks with 248 million. We let you count the titles of the two New York franchises over the period. And if you fancy looking into the full ranking, it’s available HERE at Forbes. You will see that luxury tax does not necessarily rhyme with NBA title. Money is a factor in winning trophies in top sport, that’s undeniable. But you still have to know when and how to spend it wisely. While accepting that the vagaries of the field, bad luck, injuries, LeBron James or Kawhi Leonard could at any time come to destroy your plan.
So yeah, Joe Lacob’s way of incurring huge expenses and pushing an entire system to its limits is, in a sense, a blessing.
A blessing because it can encourage other owners to invest in their franchises and not just expect dividends, which would be good for the team in question, certainly welcomed by its fans and simply beneficial for the NBA as a whole. . A blessing because, each season, the sums paid by the franchises paying the luxury tax are donated to those who do not pay it. The owners of these teams (without luxury tax) may complain when they see the Warriors workforce, for example, but there is no doubt that they are absolutely delighted to receive a small jackpot to improve the financial performance of their franchise or simply to stop a few holes if there are any. Not to mention that it helps maintain the balance of revenue shared between owners and players.
Yes, a blessing because it can and will push the people concerned to question the viability of the current system precisely. How can we improve it? Should we review the operation of Bird Rights? Should they be capped to prevent a franchise from exceeding the salary cap so much? Should we put the notion of hard-cap back on the table? Is this such a desirable solution? Is this also the assurance of more equity between the different deductibles? Because ultimately the financial part is just one more tool to attract the best players. Basically, this Bird Rights system to cross the salary cap ceiling was put in place to allow smaller markets to keep their best players. It is the Bird Rights that today allow the Warriors to keep Stephen Curry, Klay Thompson, Draymond Green and Jordan Poole, four players drafted by Golden State. If you remove this lever from the leaders, another will come back at a gallop to the front of the stage: the city, the market in which the franchise is established. And guess what, it could be even more unfair to smaller markets.
The soft cap system, with multiple exceptions and the tax for the biggest spenders, is far from perfect. We will surely have to revise it, bring it up to date, adapt it to the new amounts of TV rights and try to keep it as fair as possible. However, it doesn’t work that badly. The NBA regularly regenerates athletically. Joe Lacob shakes up the habits of his fellow owners and pushes a strategy very far in order to win with his core of drafted players. It should only be taken for what it is: high-level sport-business.
