Tip of the Tower
Fansided

Toronto Raptors: The implications of the luxury tax

By Paul Taylor

TORONTO, ON - APRIL 17: Serge Ibaka #9 of the Toronto Raptors comes up with the ball against Bradley Beal #3 of the Washington Wizards in Game Two of the Eastern Conference First Round in the 2018 NBA Play-offs at the Air Canada Centre on April 17, 2018 in Toronto, Ontario, Canada. The Raptors defeated the Wizards 130-119. (Photo by Claus Andersen/Getty Images)
TORONTO, ON - APRIL 17: Serge Ibaka #9 of the Toronto Raptors comes up with the ball against Bradley Beal #3 of the Washington Wizards in Game Two of the Eastern Conference First Round in the 2018 NBA Play-offs at the Air Canada Centre on April 17, 2018 in Toronto, Ontario, Canada. The Raptors defeated the Wizards 130-119. (Photo by Claus Andersen/Getty Images) /
facebooktwitterreddit

After avoiding it for several years, the luxury tax has finally caught up with the Toronto Raptors, but how will it impact them in both the short and long-term?

Fair or not, MLSE come in for a lot of criticism. However, there is no denying they have been more than willing to fund the Toronto Raptors during the most successful period in franchise history.

For example, two seasons ago, the Raptors had the sixth-highest payroll in the NBA. And back in 2014-15, they were fourth-highest.

What has been particularly impressive about this, is that while Toronto has been racking up 50-win seasons, they have managed to avoid going into luxury tax territory. Until now.

The NBA confirmed at the end of June that they have set a salary cap of $101,869 million for the 2018-19 season, with a tax level of $123.733 million. At the time of writing, the Raptors have an active roster cap of around $139.3 million.

As noted by Luke Adams of Hoops Rumors, even if Toronto is able to get rid of one of their unwanted contracts, they will likely still be above the tax line. However, Adams adds that MLSE won’t mind too much, as the Raptors currently have a championship-caliber roster.

As such, the short-term prognosis isn’t an issue. The question is, what are the long-term implications?

Looking ahead to next season, there should be at least some decrease in the payroll. Ironically though, the biggest drop will come if Kawhi Leonard doesn’t return; if the Raptors can convince Leonard to stay long-term, they will be more than happy to remain in luxury tax territory.

More from Toronto Raptors

Regardless of what happens with the two-time Defensive Player of the Year, the Raptors will remove significant money from the payroll following the 2019-20 campaign. More specifically, Kyle Lowry and Serge Ibaka, who will both become unrestricted free agents at that point.

Assuming they are still on the team, Lowry and Ibaka are set to earn around $33.3 million and $23.3 million respectively in 2019-20. Lowry will be 34 by the end of his current deal, and it is no secret the Raptors want to rid themselves of Ibaka’s contract.

Jonas Valanciunas will also be set to become a UFA after earning around $17.6 million during 2019-20. However, as long as the affable big man continues to improve as he has done every season he’s been in the league, you would imagine the Raptors will push hard to re-sign him to a multi-year deal.

Of course, there will be other factors to consider as well. For example, Fred VanFleet will also become a UFA following the 2019-20 campaign, and he will be due a big pay rise if he continues along his current projection.

However, the salary cap and tax level will both increase another couple of times between now and then. As such, ultimately, the Raptors shouldn’t have long-term issues with the luxury tax, unless they veer back into this territory by choice.

Next. Kawhi Leonard among favourites to win league MVP. dark

How do you see the Toronto Raptors’ payroll being impacted in the coming years? For example, how confident are you about Leonard and VanVleet remaining with the team long-term? Share your thoughts in the comments section below.

Home/Toronto Raptors