Even as the favorites to win their third NBA title in four years, the Golden State Warriors have work to do, including difficult decisions to make on Draymond Green, Klay Thompson and the rest of the roster over the next three years.
Golden State's front office, led by GM Bob Myers, knows that the salary cap and luxury taxes will challenge its ability to keep this group together and that the financial penalties will be significant if the Warriors retain their core.
Including an expected $168 million in salary and tax this season, Golden State projects to spend more than $1.1 billion through 2020-21. As one league executive told ESPN, "Finances are the only thing that will break up this Warriors team."
Let's look at all the likely and potential maneuvers, decisions and costs facing the Warriors as they try to continue their historic run.
The returning roster
The 2018 offseason script will look familiar to last summer's for the Warriors.
Curry is not a free agent, but a focal point once again will be Kevin Durant's player option, along with replenishing what could be a depleted bench while faced with luxury tax restraints.
With their top six players returning (including Durant either opting in or signing a new contract), the Warriors have $128 million in salary committed, $5 million above the projected luxury tax line.
The options for Durant
Durant will essentially face the same three options as last summer, albeit with more long-term consequences and a higher salary amount:
Opt in to his $26.3 million contract
Sign a one-year, $30 million contract (with a player option for a second year)
Sign a four-year, $158 million contract with a starting salary of $35.4 million
The first two options would have Durant enter the summer of 2019 with full Bird rights, eligible to sign a five-year, $219 million contract when the salary cap is projected to rise from $101 million to $108 million. Durant is not eligible to sign a five-year max contract in July because he has early Bird rights.
Of course, Durant could bypass all three options and sign another discounted contract. However, unlike last summer, when his lower salary helped the Warriors keep the bench intact, Golden State's owners would really see only tax savings if Durant took a discount again.
The Thompson and Green super-max dilemma
The Warriors are on a collision course when it comes to the designated player veteran extension (DPVE), otherwise known as the super-max contract.
If Klay Thompson and Draymond Green both earn All-NBA honors this season or Thompson is All-NBA while Green is named Defensive Player of the Year for a second consecutive season, the two will become DPVE eligible -- Thompson in 2018 and Green the following year.
Curry is in the first year of a $201 million super-max contract signed in July, while Durant is not eligible for one after signing as a free agent. Because teams are permitted to sign only two super-max contracts during the life of the current collective bargaining agreement (until 2024), Golden State will face a decision to choose Thompson, Green or neither.
A Thompson extension next summer would be for five years and $219 million, with a starting salary of $37.8 million beginning in 2019-20. If there is no extension in place, Thompson would enter unrestricted free agency in 2019, though super-max-eligible only with Golden State and only if he has hit the All-NBA criteria. The Warriors could offer the shooting guard a five-year, $188 million contract with a starting salary of $32.4 million in 2019-20 if the super-max is off the table.
The other alternative for Golden State would be to move Thompson before he reaches free agency. Although it's hard to imagine the Warriors breaking up the Splash Brothers, a trade could either significantly trim a luxury tax bill that could exceed more than $200 million in 2019-20 or return multiple pieces to bolster the rotation around Curry, Durant and Green.
Thompson will be highly sought after in 2019 if the Warriors bypass an extension but don't pursue a trade. Teams such as the Philadelphia 76ers and Los Angeles Lakers could roll over cap space next summer to 2019 with the opportunity to sign the best shooting guard on the market. However, signing with a new team might reduce Thompson's guaranteed money by about $50 million, given that a new contract elsewhere would be worth four years and $139 million.
Building the bench
The draft
A key reason for the San Antonio Spurs' sustained success has been their ability to identify first-round talent late in the draft. When an injury sidelines two starters (Tony Parker and Kawhi Leonard), former first-round picks Dejounte Murray (No. 29 in 2016) and Kyle Anderson (No. 30 in 2014) are ready to step in.
Golden State has not found that same success in recent years. Although 2015 first-rounder Kevon Looney is averaging a career high in minutes (10.4), Golden State elected not to pick up his fourth-year option for next season. Additionally, 2016 first-round pick Damian Jones has not appeared in a game this season, spending the season with the Warriors' G League team in Santa Cruz.
With $100 million tied up in four players, the Warriors have to hit on draft prospects to have some type of stability in building the bench. If they don't, the focus shifts to one-year minimum contracts and a continual turnover of players.
After not having first-round picks in 2014 and 2017 because of the 2013 Andre Iguodala trade, the Warriors own all their future first-rounders.
Golden State has found success buying draft picks in the second round. In consecutive seasons, Golden State drafted Patrick McCaw and Jordan Bell; both picks were bought for a combined $5.9 million. The Warriors are without a second-round pick in June (traded to Denver) and will have $5.1 million at their disposal to purchase a pick.
The restricted free agent: Patrick McCaw
The former second-round pick has early Bird rights based on his signing a two-year contract in 2016, so Golden State can offer a contract up to $8.7 million (105 percent of the average player salary).
After breaking into the rotation last season, McCaw has seen inconsistent playing time this season. Still, the 22-year-old is regarded as a top target for teams in July based on his age and versatility, even with the restricted tag.
Because the Warriors are protected by the Arenas provision, another team can sign McCaw to an offer sheet starting at only $8.6 million (the non-taxpayer midlevel), but a team with cap space can backload the contract in Years 3 and 4 to make things more difficult for the Warriors (as the Nets did to the Heat with Tyler Johnson).
Golden State would have the right to match the offer sheet and average the contract over four years for cap purposes ($10 million per season). By letting McCaw go, the Warriors would have only the minimum to replace him.
Other free agents
Golden State will need to make decisions regarding its veteran free agents: Zaza Pachulia, Nick Young, David West, Omri Casspi and JaVale McGee.
The Warriors can bring back a group that has an average age of 32.8 (albeit with championship experience) or turn to free agency and look to get younger. The youth movement would come with restrictions. Because of the high salaries of their stars, the Warriors will have only the $5.3 million taxpayer midlevel and minimum exceptions.
Golden State does have more flexibility when it comes to bringing back its own free agents, though that would come at a cost. Pachulia, West and McGee have early Bird rights and can be signed to new contracts up to $8.7 million. Young and Casspi have non-Bird rights and can receive a 120 percent increase of their previous salary (Young up to $6 million and Casspi up to $2.8 million).
Where Golden State does have an advantage in free agency is the potential of a nuclear summer. With cap space crunched, 20 teams are expected to have only the taxpayer or full midlevel to sign free agents, so the Warriors can snag a key contributor who wants to join a title contender, as they did with Pachulia, West and Casspi.
How much will everything cost?
Let's say Durant opts in on his $26.3 million contract and the Warriors elect to sign McCaw to a starting salary of $6 million, while using the $5.3 million taxpayer midlevel on another piece and going bargain shopping with the minimum exception to fill out their bench. Factor in their first-round pick, and the Warriors' payroll next season projects to be $147.3 million. Golden State would have a luxury tax bill of $61 million, an increase of $29 million from the 2017-18 season.
That's a conservative projection; the cost could run higher. The tax figure would increase to $77 million if Durant were to opt out and sign a one-year, $30 million contract with non-Bird rights. And a combined $93 million in projected luxury taxes in 2017-18 and 2018-19 is only the tip of the iceberg.
The $400 million team
By virtue of being in the tax three of the past four seasons (2015-16, 2017-18 and 2018-19), Golden State would be considered a repeater tax team for the 2019-20 and 2020-21 seasons.
If they don't ink Durant to a long-term deal in 2018 and extend Thompson or Green, three of their four core players -- Durant and Thompson in 2019 and Green in 2020 -- will become unrestricted free agents with the chance to walk. Those luxury tax concerns won't go away even if all three players reach new, discounted deals.
Combined with Durant's and Thompson's projected max salaries and the repeater tax, Golden State is expected to have a record-high $225 million in tax penalties and $178 million in team salary. That, of course, is if both players are signed for the max.
On the low end, let's say both players shave $7 million off their projected first-year salaries and expand that cut across the length of the deals. Although the Warriors' payroll would drop to $164 million, Golden State would still have a $133 million tax bill for a total savings of $106 million. The Warriors can also find some savings by cutting Shaun Livingston's $7.7 million salary (only $2 million guaranteed), not using the taxpayer midlevel and declining Jones' fourth-year $2.3 million option, replacing those roster spots with minimum contracts.
Keep in mind that that there is no installment plan when you pay the luxury tax. During the summer of 2020, Golden State would wire the NBA a league-record $225 million if Durant and Thompson are signed for the max. Even with revenue from a new building and the current national television contract, Warriors owner Joe Lacob will have a hard time hitting the send button.
Here's how the salary sheet would look in 2019-20 if the Warriors can bring everyone back at expected value:
Looking ahead to 2020-21, the Warriors' total costs could drop significantly, even when factoring in a $33.7 million max contract for Green. That's because the luxury tax threshold is expected to rise from $131 million (2019-20) to $136.7 (2020-21), making the Warriors' massive salary less punitive. Golden State projects to have a smaller luxury tax bill of $177 million.
The downside is the loss of Iguodala and Livingston. The Warriors would then have to rely on the development of McCaw as well as their 2018, 2019 and 2020 first-round picks when it comes to bench production.
For comparison, the Boston Celtics -- with the best record in the NBA and a stable of players either on the rise or in their primes -- are projected to spend $600 million less over the same period, with no luxury tax payments.
Golden State does not absolutely have to trade one of its four All-Stars, but keeping them together will cost in terms of finances, roster flexibility and the bench. Warriors ownership will need to weigh the tax hit versus the ability to put a championship product on the court each season, and the front office will have to hit on draft picks or find useful minimum contract players to have any kind of depth.
But as one league executive told ESPN, "There are 29 owners that would take this Warriors roster even if the cost was $495 million in luxury tax penalties."