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I've written in various places about why the Bulls shouldn't trade Rip Hamilton even though it would get them under the luxury tax, so it seemed like a good idea to bring everything together. Especially because doing so isn't just a "Don't Trade Rip Hamilton FAQ", it gets to the heart of who the 2012-2013 Bulls are and what they can hope to accomplish. So really, it's the 2012-2013 Bulls FAQ. And beyond, because there's some long term financial thinking to do too.
[Thanks to long-time semi-frequent contributor Sports2 for this post. -yfbb]
Q1: Why Trade Rip Hamilton? Because the Bulls team salary of $74.06M is over the luxury tax threshold of $70.3M. This means that unless the Bulls can reduce team salary by making a trade (to a team under the cap or with a trade exception) by $3.75M, they will pay the luxury tax for the first time. That means they'll have to pay over an extra $3.75M to the league. In short, trading either Rip or Kirk Hinrich for nothing is the easiest way to get under the luxury tax threshold and save the team money, although the savings come at a cost on the court.
Q2: But what about this "Repeater" Tax Level? It's supposed to be awful, and trading Rip now would help us avoid it in the future? Beginning in the 2014/2015 season, luxury tax teams will pay a prohibitively higher rate if they have been over the luxury tax level in previous seasons. In 14/15, the repeat offender provision kicks in if the team has paid the tax in each of the three previous seasons (plus 14/15, obviously). Since the Bulls have a stated plan to clear cap space in 14/15, and since they didn't pay the tax last year, they will not be subject to the repeater provision in 14/15 even if they pay the tax this year and next.
What about further out? From 15/16 onward, the repeater provision kicks in if they are over the tax line and have paid tax in three of the four previous seasons. Again, this seems like an impossibility for the Bulls, since, if, as expected, they go the cap space route in 14/15, they will be very unlikely to generate enough additional salary the next year to put them over the LT threshold. So even if they keep rip this year, their two consecutive years of avoiding the tax would prevent them from paying it in the 15/16 season.
Q3: OK, so financially, it's really just about this year. But the Bulls aren't really contenders anyway, so can you blame Reinsdorf for pocketing the money? Yes. First, the money saved by avoiding the luxury tax tax is somewhat offset by the probability of the Bulls winning more and getting further in the playoffs with Rip. That is, suppose with Rip, they get another playoff home game or three. Without him, they don't. That's a substantial chunk of money.
Q4: But I don't like Rip Hamilton. I think he's old and he sucks. So does he doesn't help the Bulls win anyway. The statistics are heavily against this line of thought. First and most obviously, the Bulls are dramatically better with Rip playing instead of Marco Belinelli. Here's my post about Bulls lineups from a while back. Here's updated statsfrom Basketball-Reference.In my first look, the main Bulls lineup (Kirk, Deng, Noah, Boozer) with Rip was plus 0.6 net points 100 poessessions. With Marco it was -3.4.
Now, we have moved to +4 with Rip, and -2.8 with Marco.
Simply put, our main lineup wins with Rip and loses with Marco.
Q5: But... but... Marco is younger! Marco hasn't gotten hurt in two years! Great. Let him play a bunch in the regular season. We're making the playoffs either way. Let the younger, healthier guy go play and save the older guy so he'll be fresh for when his experience, which is vast, really counts. This is exactly what good teams do to maximize their chances when they hit the playoffs. This is what we should do.
Q6: But... Marco Belinelli sucks unless he's the starter. Have you noticed, he magically sucks when he doesn't start? So we need to rearrange our entire roster to maximize the potential of one guy (who's pretty marginal) even though the overall evidence is that the other guy produces much better results. That makes no sense; it is saying "If I start A, he produces 6, but if I play him off the bench, he produces 4. If I start B, he produces 7. You start B because it maximizes your production, which is what you're really going for.
Less obviously, if the guy is that much of a screw off, do we want him as our first line of defense in the playoffs? No.
Q7: But... I really like Marco! That's not a question. And I don't see why. But fine... you like him. That's nice, but the question isn't so much about Marco as about Kirk Hinrich and Daequan Cook. Even in a shortened playoff rotation, you aren't getting minutes for Marco when you trade Rip. You're getting minutes for Cook or Hinrich. Yuck.
Q8: But... we really need a better backup big than Nazr. Can't we trade Rip for a backup big man? Well, theoretically, there are several problems with this. First we're operating under the same financial constraints either way. So the big we get back has to conform to those same constraints. Second, since we've already identified that we play much better with Rip, we're filling one whole by creating another.
Q9: OK, I don't care, I want to trade Rip Hamilton because I like to make trades and I want a big back. What can we get for him? By himself, not much. There are two obvious reasons for this. If a team wants Rip because he's an expiring contract, it's obvious they want to send salary back to us for next year. Which we can't afford in the first place. So that sort of trade is out. The other sort of team that would want him is a team that will go deep into the playoffs and, unlike us, wants a smart player who can help in the playoffs. Because that team would know that you need to have every weapon possible when heading into the playoffs. And that sort of team is obviously not going to trade someone that would help us very much in our playoff run.
Q10: Are you saying he's untradeable? No, I'm saying that the market for him is composed of teams that won't offer what we want. So if we were to trade him, we'd have to include future assets, such as a pick. Or a couple million in cash to cover his salary. Or both. All of which would pretty much drastically undercut the financial incentive to trade him in the first place.
Q11: But... but... LUXURY TAX! Sit back and hope for the best. Just like with Boozer, there's not much to be done. I didn't like signing Rip much in the first place. But, he's here, we just got two players selected to the All-Star team, and our NBA MVP Derrick Rose should be back after the all-star break. I'm not sure we're really contenders, but we certainly have a puncher's chance. If something happens to Miami and we have any luck at all with Derrick, we ought to reach the finals. It'd be absolutely foolish to undercut that chance by setting back the team on the court to make a financial move that doesn't even save that much money in the first place. While the Bulls have a long and proud history of financial championships, I see their string of financial dominance ending this year, abandoned in the chase for Kirk Hinrich's grit. I guess they could trade Rip by giving up a pick (their only way to bring in cheap young talent) and cash (where every dollar they give up lessens the worth of trading him in the first place), but at this point their bed seems pretty well made to pay the tax, and spending a bunch to avoid it would be nearly as costly.