No All-NBA for Karl-Anthony Towns Means Financial Flexibility for Timberwolves

No All-NBA for Karl-Anthony Towns Means Financial Flexibility for Timberwolves

Written By Dane Moore (ZoneCoverage.com)
Photo Credit: Brian Curski

Nearly $32 million laid in the balance for Karl-Anthony Towns and the Minnesota Timberwolves prior to Thursday afternoon. If Towns was named to one of the league’s three All-NBA teams, his contract extension — set to commence this fall — would escalate from five years, $158.1 million up to five years, $189.7 million.

In a fairly surprising turn of events to many around the league, Towns did not receive enough votes to make one of those teams. This result, for the Timberwolves, creates $5.4 million in salary cap flexibility next season and an average of $6.3 million in wiggle room over the next five years. Nikola Jokic snagged first team, Joel Embiid the second team spot and Rudy Gobert — Towns’ real competition — took the third team award, and thus $31.6 million from KAT. (Ooowee, Wolves-Jazz is going to be somethin’ next year.)

For Wolves fans, this presents a really weird conundrum: the most important — and best — player in franchise history not named Kevin is likely very frustrated today (and that’s not good), but the budget for spending on talent around Towns has just opened up in a pretty meaningful way.

Now, with Towns’ salary starting this fall at $27.3 million rather than $32.7 million, the Wolves have $108.7 million in 2019-20 team salaries dedicated to eight players (Towns, Andrew Wiggins, Jeff Teague, Gorgui Dieng, Robert Covington, Dario Saric, Josh Okogie, Keita Bates-Diop). Factoring in the salary slot of the 11th overall pick in this June’s NBA Draft, $4.0 million, that number moves up to $112.7 million to nine players (provided they keep the pick). There is also Cole Aldrich’s waived and stretched cap hit of $685k, which spans this year and the next, and — the required to get to 12 — three additional roster holds of $900k that move the team’s salary cap figure to $116.1 million entering this offseason.

Rather than being $12.5 million over the projected salary cap of $109 million, without Towns receiving the boost, the Wolves are a much more reasonable $7.1 million over the cap — leaving $15.9 million to spend underneath the luxury tax line.

The new president of basketball operations, Gersson Rosas, may not have brought luck to the lottery room when the Wolves fell from the 10th slot to the 11th pick, but this piece of news is no small token of good fortune. That $15.9 million in flexibility below the tax opens offseason paths that would have been coagulated by Towns’ raise.

Where before it seemed nearly impossible to, both, add salary in the form of re-signing incumbent free agents and going out on the market to bring in others, that now becomes a possibility. With creativity, the Wolves could even add salary in the form of a trade. Maybe $5.4 million feels like chump change, but, for this team, it matters. With Wiggins, Teague and Dieng on the books for a combined $62.7 million next year, every dollar counts now more than ever.

Here’s what has changed.

Re-signing Incumbent Free Agents

Part of the Wolves’ $15.9 million in tax flexibility can be spent on the eight incumbent free agents from last season’s roster. Somewhat arbitrarily, those eight fall into three different groups.

Restricted Free Agents: Tyus Jones

Jones’ four-year, rookie contract has now expired, making him a restricted free agent. This means a mutually agreed upon contract can now be negotiated with Jones before the offseason begins, or the Wolves can let Jones hit the market where they would have the option to match any deal he receives.

What exactly Jones’ market value is remains a bit ambiguous. But now, with the extra space provided by the voters giving KAT the snip, the Wolves could offer Jones up to $6.7 million in 2019-20 salary while still having the full midlevel exception ($9.2 million) at their disposal. (This exact path would push the Wolves slightly into the tax after rounding out the roster. Bottom line: the freedom to sign Jones and use the full-MLE is now a possibility.)

The Timberbulls: Taj Gibson, Derrick Rose, Luol Deng

Tom Thibodeau’s boys, Gibson, Rose and Deng, who kinda-sorta became Ryan Saunders’ guys, are all unrestricted free agents, free to sign with any team this summer. All three players Wolves fates will likely be dictated by what the franchise does with Jones. The order of operations has Jones, with his restricted status, set to be the first domino; the Timberbulls are step two.

Now conceivable with the extra flexibility, is the possibility of signing Jones and a Timberbull. Here, a prioritization of one of the vets versus signing a player using the midlevel exception becomes the opportunity cost calculation; with only $15.9 million in space under the tax, it would be almost impossible to sign Jones, a Timberbull and use the full-MLE without going into the luxury tax.

The other factor here is Gibson, Rose and Deng all likely carrying different market values. Gibson is two years removed from signing — in a slightly blown-up market — for $14 million annually, where Rose and Deng are one year removed from signing for the veteran’s minimum. Where exactly all three of those players fall above the minimum will be determined by the market.

Also of note: Rose has a hefty endorsement deal with Adidas and Deng is set to be paid approximately $15 million by the Los Angeles Lakers next season. Those contracts could make “fit” a priority over money. However you spin it, Towns not making All-NBA naturally increases the likely a Timberbull returns next season.

Fringe Free Agents: Anthony Tolliver, Jerryd Bayless, Cam Reynolds, Mitch Creek

This group splits into two: old heads and young scrapers. Tolliver and Bayless, like the Timberbulls, fall into the veteran unrestricted free agent bin. While it’s hard to see the Wolves prioritizing Tolliver or Bayless over the other three, it is a possibility. As for Reynolds and Creek, who have both been working out in Minneapolis this past week, they are likely to, at most, grab one of the final minimum contracts spots. (Currently, Reynolds is on a non-guaranteed minimum deal for next year and Creek is, technically, a restricted free agent.)

Getting Midlevel Exceptional

Again, had Towns made an All-NBA team, it would have been impossible — given the roster’s current construction — to re-sign one of the incumbent free agents and to use the full power of the midlevel exception ($9.2 million) while staying under the luxury tax threshold. Now, the front office can at least fashion the idea of signing a Patrick Beverley, Trevor Ariza, Rodney Hood or your free agent du jour.

To roll with the Beverley example, the Wolves could theoretically use the $9.2 million midlevel on Beverley and have $122.6 million committed to ten players — the eight under contract ($108.7 million), the 11th pick in the draft ($4.0 million), Aldrich’s cap hit ($685k), Beverley ($9.2 million). The final four roster spots would then have $9.4 million left to work with. If three of those roster spots are veteran’s minimum contracts ($1.6 million), there is $4.6 million to be spent on incumbent free agents.

Could Jones or Rose be had for a salary starting at $4.6 million? Jones and Rose are both eligible for eight percent annual raises, meaning a contract starting at $4.6 million could total $20.6 million over four years.

What About the Luxury Tax?

There is also the somewhat outside of the box idea of the Wolves paying the luxury tax this season. Most teams don’t pay the luxury tax unless they are a real contender. Some teams that are real contenders, like Rosas’ Houston Rockets, don’t pay the tax even when they are a contender. But some teams bite the bullet with a small luxury tax bill for the sake of not losing important pieces.

During the 2017-18 season, the Cleveland Cavaliers and Golden State Warriors both paid hefty luxury tax bills. (Ok, fair. They went to the championship.) But the Oklahoma City Thunder (the fourth seed) and the Washington Wizards (eighth seed) also paid the tax that season. In 2018-19, the Thunder, Warriors, Toronto Raptors, Portland Trailblazers and Boston Celtics all paid the tax.

The luxury tax really only gets punitive once a team is in it for consecutive seasons — exponentially increasing the tax bill and spending restrictions. There’s a not out-of-this-world reality where Glen Taylor deems paying the tax in 2019-20 a necessary evil of improving basketball operations. (Alignment, right?)

By 2020-21, Teague’s $19 million is off the books and Dieng only has one year left on his deal (making it more movable in a tax pinch). With Towns, now, only earning $29.4 million in 2020-21 rather than $35.3 million, avoiding the tax won’t require rocket science.

To be able to use the full-MLE, the Wolves need to remain an over the cap team but not a luxury tax team. (Bear with me.) In really complicated collective bargaining agreement jargon, this means they would need to stay underneath the $138 million luxury tax apron. Which basically means this: if Taylor is willing to pay a tax bill of $6 million, the Wolves can sign a Beverley-type for $9.2 million and fill the rest of the books up to $138 million.

With a commitment to dipping into the tax, the Wolves could put together a roster where they pay the eight guys under contract, draft a player at 11, sign Beverley and spend $15.4 million on incumbent free agents. That could mean Jones and a couple of Timberbulls, provided Taylor is alright with pay a small tax bill for a season. Aggressive teams make these sort of moves and figure out the tax — made even trade someone at the deadline to duck it — later on.

At Rosas’ introductory press conference, the new POBO was asked: What is the franchise’s “relationship between the luxury tax and sustainability?” Rosas response: “Glen is fully committed to building a world-class organization with a championship focus. That’s why I’m here. And he wants to win.” Remember: Houston did not pay the tax this season.

No matter how you shake it, Towns not making All-NBA means an additional $5.4 million in cap flexibility this season, and that opens up tons of room for alignment towards aggression. Beyond that, this stroke of luck — if you want to call it that — is the gift that keeps giving. This $5.4 million gift card is reusable for $5.9 million next year, $6.3 million the year after that, $6.8 million the next and, finally, $7.2 million in 2023-24.

Now, Gersson Rosas just has to use the gift to convince Towns to stick around that long.