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Milwaukee Bucks Will Likely End Up Paying The Luxury Tax

By Ti Windisch

Apr 23, 2015; Milwaukee, WI, USA; An outside view of the BMO Harris Bradley Center prior to game three of the first round of the NBA Playoffs between the Chicago Bulls and Milwaukee Bucks. Chicago won 113-106. Mandatory Credit: Jeff Hanisch-USA TODAY Sports
Apr 23, 2015; Milwaukee, WI, USA; An outside view of the BMO Harris Bradley Center prior to game three of the first round of the NBA Playoffs between the Chicago Bulls and Milwaukee Bucks. Chicago won 113-106. Mandatory Credit: Jeff Hanisch-USA TODAY Sports /
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After all of the spending the Milwaukee Bucks have done this summer, it’s starting to look like the luxury tax will eventually be inevitable.

The Milwaukee Bucks typically haven’t spent a whole lot of money throughout recent history. Milwaukee hasn’t had enough talent to justify ownership spending beaucoup bucks (pun sort of intended) on the team–nobody wants to pay $100 million just to make the eighth seed.

That seems to be changing. The Bucks have established a core of young players, and they’ve paid those players handsomely. I wrote that Milwaukee will be able to keep everybody they want going forward thanks to Bird rights, and that’s true.

But it’ll be expensive. Let’s look at the 2018-19 NBA season, when Jabari Parker‘s extension will kick in and Giannis Antetokounmpo‘s will be just a year old.

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Milwaukee already has $57 million in guaranteed money for that season between just five players. Based on The Vertical’s salary cap projection of $102 million for the 2017-18 season, Giannis’ max deal could be paying him over $27 million in its second season.

He can make 25 percent of that $102 million cap, and get 7.5 percent annual raises thanks to the Bucks owning his Bird Rights. Jabari’s extension would kick in during the 2018-19 season, where the cap is currently estimated to be somewhere around $108 million.

That means his max would pay him around $27 million that season too. The two young Bucks just nearly doubled the money Milwaukee has to pay that year–that’s $111 million guaranteed to seven players.

$111 million is comfortably under the tax threshold of $130 million that The Vertical currently projects for that season, but seven players is only half of an NBA roster. Obviously there are going to be some minimum contracts and rookie deals at play, but it’s safe to say the Bucks will need to pay for at least one or two real free agents.

Re-signing Mirza Teletovic could be an option, if his first Bucks tenure goes well. He’ll likely want more than vet minimum though, bringing Milwaukee ever closer to the luxury tax.

Adding anyone from the open market plus keeping Mirza–or Rashad Vaughn, whose rookie deal expires the season before–means Milwaukee will almost certainly be in the tax bracket.

So, what does that mean exactly? From a pure basketball standpoint, it’s not the worst thing in the world if the Bucks are happy with who they’re paying. It makes transactions more difficult–both signing and trading for players requires an exception any time a team is over the salary cap.

Luckily there are many such exceptions built into the current NBA CBA. The Cleveland Cavaliers smartly got the Bucks to agree to a sign-and-trade for Matthew Dellavedova instead of simply letting Milwaukee sign him to an offer sheet, for example.

The Cavs did that to get a trade exception for Delly’s contract, which they then used to sign Mike Dunleavy. Cleveland had a different trade exception they could’ve used after they traded Anderson Varejao on deadline day last season, but that one is worth $9.6 million.

The Delly trade exception is only worth $4.8 million. That’s still enough to sign Dunleavy, so all the Cavaliers had to do to keep that valuable Varejao exception was send $250,000 in non-cap money to Milwaukee and guarantee the Bucks their replacement point guard instead of pretending to consider matching Milwaukee’s offer.

The Milwaukee Bucks might want to jot some notes down from Cleveland’s cap mastery in that trade. Milwaukee could well end up being a similarly cash-strapped team in a few years.

Even if the Bucks avoid the luxury tax, there’s no doubt they’ll be above the cap for all of Giannis and Jabari’s prime years. Those two will be expensive, but ultimately worth it considering the talent they have already.

The other side of the coin is the coin itself. Will Bucks ownership be willing to pay well into the tax if it means adding championship-caliber pieces down the line?

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There’s no way to tell until Milwaukee is actually in that situation. It seems like ownership is willing to do whatever it takes to win a title, but until the Bucks go into the tax it’s impossible to know how that situation will really play out.

Finally, the one wild card in all of this is the possibility of a lockout before Giannis and Jabari start to get paid. Either the NBA or NBPA can opt out of the current CBA anytime before December 15th, meaning it would expire in June 2017.

A new CBA will need to be negotiated before play can resume again, and that new CBA could change any number of things about how salaries in the NBA work. Even if there is no lockout, there will certainly be changes coming.

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Whether those changes make things easier or harder for the Milwaukee Bucks is yet to be determined, but no matter what happens there’s no doubt the Bucks will be paying dearly for their young stars a few years from now.

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