The Nuggets Desperately Wanted To Avoid The Luxury Tax

The Denver Nuggets pulled off a midnight trade this morning, sending the expiring contracts of Kenneth Faried and Darrell Arthur to the Nets in exchange for guard Isaiah Whitehead, who was promptly waived. That the Nuggets didn’t receive much of anything in return might not make sense at first, but it was actually a calculated move to save a relative pittance for billionaire owner Stan Kroenke.

For dumping approximately $21 million in salary onto Brooklyn, Denver was forced to also send a top-12 protected first-round pick in the 2019 draft, as well as a future second-round pick. While the Nuggets were previously around $13 million over the luxury tax, on account of a maximum five-year, $148 million deal for big man Nikola Jokic, they’re now $8 million below the tax, with a $2.5 million taxpayer mid-level exception and one open roster spot.

The Nuggets were so desperate to save money that they got rid of their first-round pick to dump two contracts that were going to be off the books after this season anyway. Kroenke, who’s accustomed  to  doing this with his sports teams for quite some time, now doesn’t have to pay approximately $20 million in taxes. The dude is worth $8.3 billion and also owns the Los Angeles Rams, the Colorado Avalanche, and Arsenal. He would’ve been just fine.

One thing worth considering is the repeat offender tax mark, which penalizes teams that pay the tax too often, but that wouldn’t have applied to the Nuggets. They haven’t paid the tax since the 2009-10 season. The value of a first-round pick is far higher than the possibility of having to pay a few extra million in taxes several years down the road, or even a few million dollars this year.

Ducking the tax is not noble in any way—it’s an explicit effort by management to reduce costs in order to maximize profit. The Nuggets just mortgaged a piece of their future in order to avoid paying a tax for no meaningful basketball reason. At least they signed Isaiah Thomas at his nadir.