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updated: 2/8/2014 10:21 PM

Avoiding luxury tax key for Bulls

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  • Carlos Boozer probably won't play today against the Lakers.

      Carlos Boozer probably won't play today against the Lakers.
    Associated Press

 

Carlos Boozer missed practice and appears doubtful to play Sunday against the Los Angeles Lakers, but the Bulls appear to be in no hurry to add any extra players.

Power forward Toko Shengelia also left the team Friday for family reasons, but he rarely plays anyway and should be back in a few days.

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There's a reason the Bulls are waiting to expand the roster. It's not so much that they don't want to pay the luxury tax this season. By avoiding the tax this year, they could be in a better spot if they decide to become big spenders in the future.

Here's a rundown of the Bulls' luxury tax situation: They paid the tax last year ($3.9 million worth) for the first time ever. This year, their tax bill was set to be around $20 million, but the Luol Deng trade erased that burden and the deal sending Marquis Teague to Brooklyn gave the Bulls a little bit of cushion under the tax threshold.

ShamSports.com posted a story detailing the situation, calculating that the Bulls are $678,000 below the tax line. That's plenty of money to sign someone for the rest of the season.

But one reason why they might be hesitant is an incentive clause in Taj Gibson's contract. Gibson reportedly gets a $250,000 bonus if he is named second team all-defense, and another $250,000 if he makes the first all-defensive team.

First team all-defense is probably more realistic for Joakim Noah. But Gibson should get some support from league coaches, who vote for that honor, and could make the second team. If Gibson earns a bonus, it becomes part of the Bulls payroll and could push them into luxury-tax territory.

That's probably why the Bulls didn't re-sign Cartier Martin or Mike James when their 10-day contracts expired in recent weeks. Martin joined the Atlanta Hawks after leaving the Bulls, while James is no doubt back at home in Houston waiting the inevitable next call from the Bulls.

The Bulls are allowed to keep a roster of 12 players for two weeks, but need to add a 13th player by Friday. So barring an injury, they'll probably push it to the limit, sign someone else to a 10-day contract, then wait two more weeks after that deal expires.

Eventually, James is likely to sign for the remainder of the season. But the longer the Bulls wait, the better they'll protect that luxury-tax cushion. They also want to have flexibility in case some untimely injuries create a need to add multiple players. More injuries wouldn't be out of character for these Bulls.

Before the newest collective bargaining agreement was negotiated (see the lockout of 2011-12), the luxury tax wouldn't have been a deterrent. The Bulls probably would have signed a couple players, paid a minimal tax bill and moved on.

But the new CBA punishes teams that repeatedly pay the luxury tax. A team becomes a "repeater" if they pay the luxury tax in three of four seasons.

Repeater teams pay a stiffer tax -- $2.50 per dollar above the tax threshold, compared to $1.50 for non-repeater teams. And that's just for the first $5 million above the tax threshold. The higher a team's payroll, the more expensive the tax gets, which is why Brooklyn ended up with a payroll of $100 million and tax bill of $80 million this season.

In addition, taxpaying teams can't use the biannual exception, they get a smaller midlevel exception, can't receive players in sign and trades, and have a smaller window for salaries to match in a trade.

So the reason the Bulls are waiting to add extra players really isn't about this year's tax. They'll be happy not to pay it, especially since the teams below the tax line will get roughly $3 million each when the tax money is distributed.

But not paying the tax this year could pay dividends in the future. As vice president of basketball operations John Paxson said after the Deng trade, the money they saved will be put back into the team.

The Bulls won't get a chance to deliver that promise until the summer.

• Follow Mike's Bulls reports on Twitter @McGrawDHBulls.

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