Dan Hamilton-USA TODAY Sports
Here's What the Luxury Tax Increase Means for the Raptors This Offseason
The Toronto Raptors will have a little more wiggle room this summer than expected.
The NBA’s salary cap and luxury tax threshold will be set at $136 million and $165 million, respectively, according to Spotrac’s Keith Smith. Those numbers are $2 million and $3 million more than had been anticipated for the cap and tax, respectively. It’s a negligible change but one that could have a huge impact on Toronto’s offseason plans.
With Gary Trent Jr.’s decision to opt into his contract Tuesday, Toronto now has at least $111.1 million in guaranteed salary committed to next season. That leaves them nearly $54 million to spend on re-signing their free agents, primarily Fred VanVleet and Jakob Poeltl, as well as adding the No. 13 pick and filling out the roster.
Multiple reports suggest VanVleet and Poeltl will be looking to make roughly $30 million and $20 million per season on their next contract. It’s possible to do that while remaining under those numbers in the first year of the contract.
For example, VanVleet could sign a three-year, $90 million deal in which the first-year value is $27.8 million, or he could sign a four-year, $120 million contract in which the first year is $26.8 million.
Similarly, Poeltl could sign a three-year, $60 million contract with a first-year value of $18.5 million or a four-year contract worth $80 million with a first-year salary of $17.9 million.
Suppose Toronto signed VanVleet and Poeltl to three-year deals each at $27.8 million and $18.5 million in their 2023-24, respectively. That would eat $46.3 million into the $54 million in space below the luxury tax threshold, giving the Raptors about $7.7 million to fill out the rest of their roster.
The No. 13 pick comes with a $4.5 million cap hold but can be signed for as little as $3 million next season, per Real GM. Minimum salary contracts for Dalano Banton and Jeff Dowtin Jr. would be slightly less than $2 million each and suddenly Toronto is right at the luxury tax threshold without making any free agent additions or signing partially guaranteed players to their training camp roster.
The Raptors would not be able to use the $12.2 million non-taxpayer mid-level exception without going over the luxury tax threshold and even undrafted free-agent signings could prove difficult.
While the increase does give Toronto some much-needed extra space, it’s going to be tight regardless, and considering how the Raptors fared last season, running it back with almost an identical roster doesn’t seem to be the best option moving forward.
Further Reading
Raptors Talk Draft Philosophy, Trade Options, & 2023 Class Strengths Ahead of NBA Draft
Gary Trent Jr. Opts Into Raptors Contract, Extension Talks Expected to Begin, per Reports
Fred VanVleet's Next Contract is Expected to Surpass $90 Million in Free Agency
