The Nuggets Hate Being Called Cheap/ The Nuggets Will (Probably) Duck The Tax

Don't duck the tax.

Photo by Gio Bartlett on Unsplash

In the weeks since Denver’s governor Josh Kroenke, front office of Ben Tenzer and Jon Wallace, and David Adelman met with the media, a couple of things have become clear from interpreting their comments and the reporting of the Denver Post’s Bennett Durando.

They are not trading Nikola Jokic and expect him to sign his super-ultra-maxxest-of-the-maxxes extension this summer.

They are open to doing anything that will “improve the club.”

They are not ruling out cutting costs to get out of the repeater tax.

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My read on the presser and the entire offseason comes down to this: savvy¹ businessmen aim to spend less, make more.²

The Nuggets have always taken the approach of spending on players. They have not shied away from spending into the tax for good players to build a good team. This is their very reasonable defense against criticisms.

The problem is that the repeater tax is not being spent on players. It’s not even spending on taxes for spending on players. It’s just an additional fee. That’s the kind of thing that’s antithetical to how KSE has operated, at least during my time here.

At the presser, Josh Kroenke scoffed at the joke that they spend only on players, not on off-court resources.

The sentiment I’ve gathered KSE holds is that spending on those things is just spending to spend; it is not an objective good to spend on things that don’t matter. And front office salaries, resources, facilities, staff, and auxiliary spending simply don’t matter.

The proof is in the pudding in that regard. They’ve won three titles. In the NFL, they spend because it makes a meaningful difference. In the NBA, they spend on players because it makes a meaningful difference. In the NHL, they don’t spend because it doesn’t make a meaningful difference.³

KSE will spend on what it decides it needs to spend to compete, and the repeater tax simply isn’t that.

So they are likely leaving the repeater.

It’s been considered a near certainty that if the Nuggets can retain Peyton Watson in free agency, it’s Cam Johnson who will be sacrificed.

Johnson played well by the end of the year, and the impact numbers with him were terrific; he was one of the few players who really played well to end the Wolves series.

But his fit wasn’t as seamless as you would have liked. It’s not that he didn’t fit; it’s that he didn’t fit well enough. And the 30-year-old wing on an expiring contract is simply the easiest to move.

However, the problem is that, I’ve said since the deadline, that’s not going to be enough.

From Durando at the Post:

Now, consider that even if the Nuggets are able to reduce their payroll by most of Johnson’s $23 million salary, they would still be a few million over the tax.

Sacrificing him isn’t enough. The math simply doesn’t add up. If you completely ignore NBA trade rules and other teams’ priorities, and if you subtract Johnson’s salary and Nnaji’s from $230 million without adding a single cent back, you still end up around $199.5 million with four open spots. Four veteran minimum free agents later, you’re paying $209.3 million for a roster with no salaries between $5 million and $21 million.

If the financial goal is merely to avoid the $222 million second apron, deciding between Johnson and Watson should suffice.

But the only way to actually duck the repeater tax, barring a miracle of front-office work by Jon Wallace and Ben Tenzer, is to dump Johnson and lose another valuable player. Maybe that means letting Watson go in free agency, or maybe that means trading Murray or Gordon.

Just so we’re clear here, the options are to give up Johnson in what will be as close to a salary dump as possible, and then also:

a. trade Aaron Gordon, the team’s heart and soul who exemplifies sacrifice, who is Jokic’s closest comrade on the team, a guy Joker has said is his favorite teammate, and a player with whom the team has dominated but who obviously is over 30 with soft tissue injuries that have derailed two seasons

b. trade Jamal Murray, the franchise point guard and the emotional leader of the team who just put in his first All-NBA season and the homegrown talent who has constantly dealt with the pressure of being the No.2 guy where all the blame goes

c. try and pull off a miracle trade for distressed-asset Christian Braun at age 25 coming off his worst season following a major injury and move Zeke Nnaji who literally no team has been willing to trade for going on two years

All in the pursuit of saving money in the Nikola Jokic Era.

And when they do so, they will try to spin to you, the fan, that they made the team better.

That was my big takeaway from the presser. They previewed change being necessary because of the team’s failures, which allows them to make changes and argue that the team is better now, because the previous version (which was also under the tax, mind you) was not good enough, so different is better.

Even if it’s cheaper.

The problem is not with breaking up the core. It can no longer be argued, even by AG apologists and veteran advocates like myself, that moving on from Gordon due to his injury history is not worth considering. It is what it is at this point.

For 15 years of my career, veterans were the ones who on you titles, and youth and depth were overrated concepts that fans excited by the prospect of what could be rather than what is would use to argue giving unqualified players more opportunities.

But that’s not shifting, it has shifted. From True Hoop:

The way we did this research involved 86 tests–different start years, different lag lengths. Every single one was positive. The more you play young players, the better your team ends up performing, in 86 out of 86 tests. The effect was most muted in the time of the Heatles, Kobe’s great Laker teams, and Boston’s big three. The effect is strongest in the wake of special draft classes like 2003 (LeBron, Wade, and Bosh), 2014 (Embiid, Jokic, Wiggins) and more recently the arrival of Luka Dončić, Trae Young, Ja Morant, and of course Shai Gilgeous-Alexander. These days—perhaps because the faster, more intense game favors youth—the effect is as strong as ever.

Jamal Murray has become the target of ire for Nuggets fans after being a certified playoff killer. They blame his conditioning, his attitude, his game. No matter what goes on, Murray is the one who gets the most blame. It took a few days after the first-round exit to the Wolves but despite everyone on earth seeing Jokic’s passive, lackluster first four games, the conversation turned to Murray in some version of this:

“Joker wasn’t good enough, no question… but the real problem was Murray.”

And if the problem is that the two-man game has failed in the postseason, and you’re obviously not changing anything with Jokic, Murray is the natural part to swap out.

And if the Nuggets were to have come out and said “it’s time for a new era of Nuggets basketball” without outlining what that means, then that’s great. You could still trade AG for valuable components. You could still trade Murray for what is likely a relative haul.

I’ve been saying since we realized the full impact of the CBA that you could not have three top-heavy contracts; you can only have two. The Nuggets currently have 3.5 with Braun, and are facing a fourth with Watson, depending on what it costs.⁴

So moving one of AG and Murray, to break them into smaller pieces, makes sense.

The difference, however, is that you don’t have to break them into smaller pieces in the aggregate return. The Nuggets could trade Murray for several contracts that make up 110% of his contract value, giving them more assets to move for other components they need. They could trade AG for draft capital they are desperately in need of.

At the presser, Kroenke referenced the term that makes my eye twitch under the new CBA: “flexibility.”

So I want to outline this extremely clearly:

When the Nuggets let Kentavious Caldwell-Pope go in free agency two summers ago, I explained the reasoning I was given.

The second apron, because of the inability to trade for anything but 100% of the return value, the inability to trade one player for multiple in return, and the inability to sign buyout free agents, all made it the right decision to let him walk and start ownership’s preferred replacement, Christian Braun. ⁵

But the Nuggets are below the second apron. They are below the first apron. Even with Peyton Watson, if they traded Cam Johnson, they could be below the second apron.

The luxury tax itself does not limit your flexibility, beyond the prospect of having first-round picks frozen and eventually moved to the end of the first round. You’ll note, of course, that half of the Nuggets’ first-round picks through 2031 have already been traded, and that there really isn’t room to add a 26th-pick into the rotation, no matter how good young players have been.

The Nuggets getting out of the luxury tax does not improve their ability to add players. It just saves ownership money.

What’s the alternative?

Spend. You want to improve the team, you think it’s time to break up the core?

Trade Gordon for draft picks and swing for a star in a multi-team deal with Murray. Trade Murray for various role player components and assets, then package those with Gordon for another star. Hell, even just try the Jokic Stan’s preferred outcome: just surround him with high level defenders who will make every shot he passes to them and make sure he doesn’t have to do anything defensively.

Keep Peyton Watson. Keep Cam Johnson. Add to your available options so that in a playoff series you can search for and find alternative combinations that give you an advantage. Go into the second apron, since the last time you ducked it you didn’t actually use any of that flexibility anyway, and spend to win with Nikola Jokic.

While we’re at it, overhaul the training staff, get the practice facility built by hook or by crook, and expand the scouting department.

That’s the alternative.

Josh Kroenke said at the presser that they will explore all options, including running it back. This is where the limits of their frugality do hit a barrier. I don’t believe the Kroenkes would “salary dump” Jamal Murray or Aaron Gordon to get under the tax.

If a deal that doesn’t make sense for them isn’t there, they may just move Johnson, re-sign Watson, and go into the first apron. The Nuggets could have said at that presser that they will absolutely not pay the repeater. In some ways, I would honestly respect that because it treats fans with respect by being upfront about your intentions.

If they pay the repeater, if they spend into the first or second apron, I’ll credit them for that decision because it’s the right one. It may not win you Jokic’s second title, but it means you tried.

And I’ll admit I was wrong in my reading of the situation.

But if the Nuggets make moves that look like they made the team better just by swapping out good parts for slightly worse ones that are just different, I will not parrot the idea that the team is better if they leave meat on the bone.

This is the Nikola Jokic Era, and no matter what Joker looked like in Game 1-3, he’s still one of the greatest players of all time and has between three and four more truly great seasons in him. The organization, not just for Jokic⁶, but for themselves and the fans are obligated to contend to the furthest limit they are able to in that time period.

You want to duck the tax when Jokic is 35 and just a good player like Dirk was in the late 2010’s? No problem. There will come a time when it will make sense to not order the appetizer and the desert because you’re on a budget.

That time is not now.

As we enter what feels like a desperate and desperately hopeless summer for Nuggets fans, what I want to know from ownership is this:

If not now, when?

1. Some might say greedy. Not me, but some. You know, people. The folk. The proletariat, so to speak.

2. I don’t actually believe this: Steve Ballmer has talked about the value of investing in growth and things that don’t bring actual returns. You spend money on research and development, training, tools, because it increases what you’re capable of and that leads to a better product/result.

3. I have no idea about Arsenal.

4. Last summer, I advocated for squeezing Braun in free agency for just this reason. I believe restricted free agency is unethical and artificially suppresses young players' salaries, which affects the raises they receive for the rest of their careers. But since the owners built this system to artificially suppress salaries and kept RFA in place to enforce it by force, the only rational choice is to do so.

5. Now, the way it was done was awful. Calvin Booth barely spoke with KCP on the way out, league sources said, and was unavailable traveling when KCP’s representation was ready to accept the Magic offer. It was pretty unprofessional towards a player who had been a consummate professional for Denver.

6. This is what fans miss. You should not win titles “for Jokic” you should win titles for everyone in the organization as well as the fans. Jokic is the reason you really can.