How the Sacramento Kings can keep Isaiah Thomas and avoid NBA’s luxury tax

Isaiah Thomas rises for a lay-up against the Philadelphia 76ers. (Photo: Tobin Halsey)

There isn’t a shortage of teams that would like to employ Isaiah Thomas next season. When free agency tipped off Monday night, the 25-year-old point guard reportedly drew interest from several teams, specifically the Boston Celtics, Detroit Pistons, Dallas Mavericks, Los Angeles Lakers, Miami Heat, Golden State Warriors and Phoenix Suns. The Warriors are out of the chase now that they’ve agreed to terms with veteran Shaun Livingston.

It’s been said numerous times, but it’s worth mentioning again: the Sacramento Kings would like to retain Isaiah Thomas, but only at a certain price. With players like Jodie Meeks getting a reported $6.5 million annually in a three-year deal with the Pistons, it’s hard to see Thomas commanding anything less. The Kings will have to pony up more than $4 to 6 million a year as was previously reported before the free agency period began.

What is the Kings’ price range for Thomas? That may depend on how far under the luxury tax they are, which is projected to be at $77 million this upcoming season. Based on their current roster, the Kings have a payroll of approximately $69.5 million. That means that they would have roughly $7.4 million to use towards re-signing Thomas without going over the luxury tax level.

Will the Kings go over the tax threshold to retain one of their three best players? There is a sense around Sacramento that the organization would be unwilling to do so, even if they cross the level by just a few million dollars. That might lead teams that are courting Thomas to believe that all they have to do is offer him a starting salary next season above $7.4 million to scare the Kings away from matching. Initially, we thought that was the case. But after digging deeper into the collective bargaining agreement, we realized it was not.

As my partner James Ham alluded to yesterday, the Kings can give themselves room to breathe in the Thomas sweepstakes by using a salary-cap flexing option in the CBA called the stretch provision.  It allows teams to spread out the payment and cap hit of a player over a longer period of time than stated in the original contract. The Kings have three players in particular who are more likely to see their deals stretched than others.

Jason Terry
Remaining salary: $5,625,313, one year remaining
Stretched salary: $1,950,104 paid annually for the next three years

Travis Outlaw
Remaining salary: $3,000,000, one year remaining
Stretched salary: $1,000,000 paid annually for the next three years

Derrick Williams
Remaining salary: $6,331,404, one year remaining
Stretched salary: $2,110,468 paid annually for the next three years

If the Kings stretched all three players, they could put themselves roughly $18 million below the projected luxury tax threshold. That’s more than enough room to retain Thomas while simultaneously avoiding the tax. However, don’t expect the Kings to consider stretching all three men. Williams likely has some value left since he’s just 23-years-old and is under contract at an affordable price for just one season.

Stretching Terry or even both him and Outlaw seem like more plausible ways for the Kings to avoid the tax if Thomas commands a high salary figure in year one of his new contract. Using the provision on just Terry would keep the Kings under the tax level by about $11.3 million. Alternatively, stretching both Terry and Outlaw would keep them below the tax threshold by about $13.3 million.

Deciding whether to use the stretch provision on any of their players doesn’t have to coincide with their decision to match an offer sheet on Thomas. The Kings could exercise their right of first refusal on the 25-year-old point guard and go over the luxury tax threshold temporarily. They have until August 31 to figure out if they need to stretch any of their players in order to avoid hitting the tax.

The Kings can also save approximately another million if they decide to part ways with Quincy Acy. As he enters his third season in the league, the 23-year-old forward doesn’t have a fully-guaranteed contract with the Kings. They can waive him before or by July 25 to keep the $915,243 remaining in his deal from impacting their cap figure.

Thomas is eligible to have his next contract start at a minimum salary of $916,099 and a maximum of $13,701,250 in year one. Various reports suggest that Thomas’ first-year salary may fall somewhere around $6 to 8 million. The question now is do the Kings also value him in that range? If they do, the Kings can certainly create enough flexibility to retain him at that price.

Information from Larry Coon’s CBA FAQ was used to write this story.

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About: Jonathan Santiago

Jonathan Santiago serves Cowbell Kingdom as senior editor specializing in writing, podcasting and video production. He also handles the majority of CK’s day-to-day beat coverage of the Kings.