Dunc’d On: Warriors Have Financial Incentive for Love Trade

With the maximum offers to wing players Chandler Parsons and Gordon Hayward already promulgated this offseason, Klay Thompson’s market value for his extension next summer is now through the roof.  We can debate whether Thompson, Parsons or Hayward is the superior player, but Thompson is probably the best shooter and defender of the bunch despite his inferior overall box score statistics.  While opinions differ on Thompson’s ability, there is less uncertainty as to his market value. It appears very likely that Thompson will receive a maximum offer sheet next summer as a restricted free agent, and thus will demand nearly that amount from the Warriors in extension talks.

The shooting guard’s market price provides all the more impetus for the Warriors to trade Thompson.  The rumored trade with Minnesota of David Lee and Thompson for Kevin Love and Kevin Martin is clearly a win for the Warriors on the court, but it would be even more successful financially.  Here is Golden State’s current salary situation as best I could determine at this point:

*Note: Projected numbers are in italics. Team options are in purple.

Now assume that Thompson re-signs for the projected max next summer.  Meanwhile, valuable reserve Draymond Green is also a restricted free agent in the summer of 2015. To keep him, the Warriors offer slightly above the Mid-Level Exception, call it a starting salary of $6 million.

This leaves the Warriors with a tax bill of just below $10 million for 2015-16. Joe Lacob and his ownership group would not necessarily be happy to pay this.* And that number could easily escalate with additional signings for 2015-16 using the $3.376 million Taxpayer Mid-Level Exception or even more players at the minimum salary.

*It should be noted that the Warriors’ TV deal, worth $28 million per season per Forbes, contains an opt-out after the 2014-15 season. They could well triple that amount in a new TV deal, making tax payments more palatable. The discussion of whether they should be willing to pay significant tax is best left for another time, but Zach Lowe made some excellent points on the subject recently.

This space previously looked at the Warriors’ future, but projected a combined $15 million per year extensions for Thompson and Green. The realities of the market have well-eclipsed that, subjecting the Warriors to a significant tax payment even if (as appears very likely) they make no use of the $9.8 million Richard Jefferson trade exception that expires on July 10.  The Warriors would have to either swallow the payment or potentially bribe another team to take  Lee or Shaun Livingston with draft picks and/or young assets.  That is not ideal with the cupboard already bare of draft picks due to the Andre Iguodala trade.

But what if the long-rumored trade went through?

The Warriors’ tax bill for 2015-16 is suddenly very manageable.  It could be reduced even further by using the stretch provision on Martin, allowing many additional moves.

The Thompson/Love trade makes too much sense for Golden State, even if they have to take back Martin in the deal. The finances for Minnesota, on the other hand….