NBA Finals: Bucks to pay luxury tax after Jrue Holiday Championship bonus pushes team past threshold

NBA owners often say they’re willing to pay the luxury tax for a team capable of playing in a championship, but never has this qualifier applied as directly as the Milwaukee Bucks. By defeating the Phoenix Suns on Tuesday and winning the franchise’s first title since 1971, the new NBA champions must now pay the luxury tax for the 2020-21 season. Why? Because, according to ESPN’s Bobby Marks, Jrue Holiday has a $ 1 million championship incentive in his contract that kicked in when the Bucks won it all.

Milwaukee actually started the season well above the luxury tax line. They made a series of aggressive moves out of season, including the addition of Holiday, which almost pushed them all the way to the hard ceiling line of the apron (a figure that’s typically around $ 6 million above of the tax). This was done in part to help convince eventual Final MVP Giannis Antetokounmpo to re-sign with the Bucks ahead of his possible free agency in 2021. He ultimately did, which gave the Bucks a bit more. freedom to lose their salary.

This is exactly what they did on the deadline. The main motivation in trading for PJ Tucker was of course competition. He bolstered Milwaukee’s rotation in front of the court and proved to be a vital cog in their elite defense. But the Bucks traded both DJ Augustin and DJ Wilson to acquire Tucker and Rodions Kurucs (which was later waived). The two players they sent cost about $ 1.5 million more than the players they brought. Milwaukee continued to lose his salary by trading Torrey Craig to the Phoenix Suns without getting any money back. This decision turned out to be almost fatal. Craig was a key part of Phoenix’s rotation in the final against Milwaukee, but ultimately the Bucks were still able to beat the Suns.

In total, these measures pushed Milwaukee to about $ 1.25 million below the tax threshold. They spent some of that play on the midseason signings, with Jeff Teague being the most notable, but Holiday is ultimately the player who ended up pushing the Bucks over the line. He received a bonus of $ 100,000 when he was named First-Team All-Defense, a bonus of $ 200,000 when Milwaukee reached the NBA Finals, and then an additional $ 1 million when they actually won. the title, according to Marks.

To make it absolutely clear, there isn’t a basketball team that wouldn’t willingly pay the luxury tax if they knew it would guarantee a championship. It was essentially Milwaukee’s proposal. The Bucks knew they wouldn’t have to pay tax unless they paid Holiday all of those bonuses. Winning this title will end up being very, very profitable for the team. Home playoff games are a financial gold mine and titles tend to justify price hikes on future ticket sales. Fans spend more money on champions. It’s not just about a team spending more money on a better product on the pitch. This extra money they spend will also have tangible financial benefits.

But it also creates future costs, and this championship could end up costing Milwaukee dearly across the board. The repeat tax is significantly more punitive than the typical luxury tax and is triggered when a team has paid the tax in three or more of the previous four seasons. It doesn’t matter how far they went in tax in any of those seasons, just that they paid it off at all, which is what the Bucks have now. For some teams, this may not be a problem. Teams often go out of their way to come down below the line in a single season just for the purpose of delaying the repeat clock. But that’s not an option for Milwaukee.

The Bucks are already well above the expected tax threshold for next season thanks to new expansions for Holiday and Antetokounmpo. Resigning PJ Tucker and / or Bobby Portis would only push the Bucks deeper into fiscal territory, and the fact that Holiday, Antetokounmpo, and Khris Middleton are all signed for at least three more seasons suggests the Bucks are extremely likely. will pay. the tax in each of these seasons. In other words, by the 2023-24 campaign, the Bucks will almost certainly pay the repeaters tax rate. Depending on what other contracts they sign before then, they could end up paying him off for several seasons.

Again, obviously the Bucks are okay with that. They knew it as the playoffs approached, and most owners are happy to pay a little more for a championship. This one just isn’t cheap.