2013 NBA Offseason: Grantland's Zach Lowe explains the long and the short of the James Harden incident

Gary A. Vasquez-US PRESSWIRE

The James Harden saga, now stretching into a second season, continues to question how the Thunder ended up where they are now. Zach Lowe connects the dots to discover how close reality is to perception.

James Harden is not walking through that door (TM Rick Pitino). Most of us have come to terms with this reality, actually. In fact, we did it approximately 8 months ago when Harden suited up in Rockets red and the Thunder depressingly responded by winning 60 games, were a top 3 offense AND defense, and posted one of the best scoring margin differentials in NBA history.

However, there are still plenty of Thunder fans and NBA fans in general who remain angered and frustrated at the idea that the Thunder essentially let one of the 25 best players in the NBA walk out the door for assets that are not commensurate with Harden's value, and even some others who will openly mock the Thunder faithful for NOT being more angry at the Thunder's front office decision makers.

Grantland's Zach Lowe, who has chronicled the Thunder inside and out over the past 12 months, writes a definitive piece today about the Thunder's situation, their judgment, and the different hypothetical scenarios that might have played out had OKC done things differently. In fact, I would offer to you that if anyone still demonstrates a lack of understanding of the complexities that surround the Thunder's financial situation (for example, Mr. Lowe's esteemed boss), email them Lowe's piece and then talk through it with them.

Thunderball: Examining the tricky financial future in Oklahoma City and the inescapable legacy of the James Harden trade | Grantland

While most of this piece is rehash if you've been reading this space for any length of time, Lowe does connect some crucial pieces together that bring greater clarity to the Thunder's situation. In fact, it begins not at all with Harden's demand for a max contract, but instead Kevin Durant's amended contract.

As we have written about before, the NBA allowed Durant to amend his current contract, negotiated before the new CBA but taken into effect after the new CBA. In doing so, Durant pocketed an extra $15 million and the Thunder took an additional $3 million per year hit to their salary structure.

This is a slippery slope that draws some false equivalences from the Durant situation, which is very nearly a one-off - a strange case of the league agreeing to a last-minute pay bump for one player based on contract language open to interpretations.

[..]

The Harden "What if?" is sexier, but the math says it probably also misses the point. It was going to be impossible for the Thunder to give Harden a max deal and avoid annual payrolls well over the league's tax line - set for next season at $71.748 million. This would have been so even if the Thunder had amnestied the hideous contract of Kendrick Perkins and replaced Perkins with a player at the veteran's minimum.

(emphasis mine)

Lowe then proceeds to break down the approximate salary cap scenarios if: a) Durant had kept the lower contract; b) Harden had been signed to a max contract; and c) Perkins had been amnestied.

Scenario 1: Durant keeps lower contract value (25% of cap)

2013-14: $86 million if Perkins is kept; $78.5 million with a Perkins amnesty.

2014-15: $89 million if Perkins is kept; $80 million with a Perkins amnesty.

Scenario 2: Durant takes higher contract value (30% of cap)

2013-14: $95-$100 million if Perkins is kept; $85 million with a Perkins amnesty.

2014-15: $100-105 million if Perkins is kept; $88 million with a Perkins amnesty. (my loose approximation since Lowe does not calculate)

Under each of these 4 scenarios, is ANY of them realistically tenable for a small market team like the Thunder? Even in the absolute best case scenario where Durant takes less and Perkins is amnestied, they're still $7 million over the cap, which translates to an additional luxury tax of around $11 million in the first year alone, as well as triggering the repeater tax clock.

Doubters will argue, "But the Thunder made money last year!" To which I counter 2 basic points:

1) How do YOU know? The Thunder don't release their financials to the press, so the only thing we have to go on is Forbes' calculation of operating income, which may not even translate into profit at all, (Please read this if you don't understand the difference between operating income and net income; i.e. profit) and Lowe's assertion that:

Oklahoma City paid into the league's revenue-sharing system last season instead of getting a boost from it, according to several sources with knowledge of the plan.

His statement alludes to the league's revenue sharing plan. It is a bit complicated, but the crux of it is, teams that make money are required to share their profits with teams that did not, thereby subsidizing the league as a whole to make it more financially stable. Of course the downside to all of this is, a team like the Thunder, conservative and cost-conscious, could end up subsidizing a big market team like the Nets, who willfully chose to operate at a loss.

2) Paying the luxury tax, which would escalate exponentially both due to the incremental increases in the tax, and then even more so when the repeater tax kicks in, would be crippling for the Thunder and put them in an untenable situation.

Lowe concludes:

Which is to say, the only way it would have been workable for Oklahoma City to keep all four of its young stars would have been the double-win of keeping Durant's old salary on the books and convincing Harden to take significantly less than the max. Going 1-for-2 probably wasn't enough. Going 2-for-2 and amnestying Perkins would have at least raised the possibility of staying below the tax and bringing the total payroll bill (including Perkins's salary) down into the $76 million range for both 2013-14 and 2014-15 - still a tough sacrifice, but one the Thunder might have at least contemplated, with the expiration of Perkins's contract finally coming after the 2014-15 season.

But Harden wanted a max deal, and he deserved one. Given that basic reality, the four-star dream was financially unattainable.

His conclusion is the same one we've reached over and over again, both by the basic numbers as well as sources that have always indicated that there was no way that the Thunder would or could ever pay Harden the max. He'd either take a pay cut, or he would be shipped out.

Now, let's get back to wondering about important things, like what outfit Russell Westbrook is going to wear after his first game back.

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