Like the majority of small-market teams, this offseason will be defined by the luxury tax for the Thunder. Riding Russell Westbrook’s immense clutch performance, the Thunder won 47 games but had the statistical profile of a 43-win team, putting them in the middle-of-the-pack of the Western Conference without a true shot at representing the West in the NBA Finals. While ownership has shown the willingness to spend into the tax when they had a true championship contender — they were a tax team in 2014-15 and 2015-16 — it’s hard to imagine paying the punitive luxury tax penalties for a middling playoff team.
The Thunder currently sit just $8.1 million from the luxury tax, with key free agents Taj Gibson and Andre Roberson still to be paid. Massive extensions for Steven Adams and Victor Oladipo, signed last October, kick in next season, pushing their incumbent salary to north of $110 million.
It’s really ugly for Oklahoma City, who will either have to go into the tax to retain this team or take a large step backwards and risk losing Westbrook, who has a player option next summer. He’s said all the right things and signed an extension last year to reignite his commitment to the Thunder, but in reality this could once again be his final season in Oklahoma City. Under the new Collective Bargaining Agreement, which goes into effect on July 1, Sam Presti and Thunder management can sit down with Westbrook and discuss a super-max extension, a behemoth five-year, $207.1 million contract, which would solidify his status but would almost certainly push the Thunder into the tax for the next few years. If Westbrook isn’t open to signing the Designated Veteran Extension, then he should immediately be on the trading block.
Gibson brings an element to the Thunder that they desperately need — he can play the 4 with either Adams or Kanter at the 5 or Oklahoma City can go small and play him at the 5. However, he’ll be looking to cash in on his final large contract at age 32, and the Thunder aren’t going to go deep into the tax to bring him back. They’ll instead go out on the market and try to find a cheaper guy to try to fill out the team. Roberson is a restricted free agent and should command an offer sheet in the $10-12 million range, though there’s always the chance a team with cap space will fall in love with his defensive ability and roll the dice that they can fix his offensive woes, pushing his price into the $15 million range to try to scare the Thunder off of matching.
If Westbrook does extend, re-signing Roberson to a four-year, $53.8 million contract would push the Thunder into the tax both this year and next year, with a strong possibility of being in the tax through 2021.
If Westbrook is willing to sign the extension, it would probably come with an implicit promise that the Thunder would do everything they can to put a contending team around him, which would include bringing back Roberson. Finding a quality backup point guard so non-Westbrook lineups don’t hemorrhage points would be the next course of business, as well as a cheap replacement for Gibson to soak up minutes at the 4. The Thunder would still have their taxpayer mid-level exception to find a veteran backup for Westbrook, starting at $5.2 million for next season. They won’t be in the game for a high-quality backup, but anything is better than what they got from Semaj Christon last season. Backup big options will be scarce as well, but a shooter would make sense for them as someone who could space the floor around Westbrook.
One last note on Jerami Grant, whom the Thunder acquired in an early-season trade with Philadelphia: Oklahoma City holds a team option on his minimum salary for 2017-18, but if they were to decline it, he becomes a restricted free agent, whereas if they pick it up, they get him for one more year at the minimum but he would then be unrestricted next summer. Either way, the Thunder would have full Bird rights on him. Pushing him into restricted free agency this summer has its benefits: Oklahoma City could lock him up to a cheaper contract than if they were to wait, both because of his restricted status and the possibility that he breaks out next year and earns a massive contract next summer. However, these benefits come with a heavy cost because pushing his salary past the minimum for this season increases that luxury tax bill.
The Thunder are in a precarious situation that hinges on multiple factors and will either constitute a complete rebuild or a punitive luxury tax bill for the next few years. As with quite a few other teams in the not-quite-contenders-but-solid-playoff-teams tier, Oklahoma City falls into the trap of the heavier luxury tax penalties instituted in the 2011 CBA and retained in the new agreement that effectively put a hard cap on teams that don’t have tangible title hopes but want to build around their respective superstar player, as the Thunder have in Westbrook.
Some owners are willing to stomach the bill and Oklahoma City has paid up in the past, but it’s far different to pay for a 45-50 win team around Westbrook than a 55-60 team built on the foundation of Westbrook and Kevin Durant.