The Nuggets officially signed rookie forward Jarred Vanderbilt Wednesday morning for a three-year contract worth $4M. The move fills Denver’s active roster at 15 spots with Thomas Welsh already occupying one of the two-way deals. It also raises Denver’s salary sheet up to $136,759,768 which puts them just over $13M above the luxury tax line.
What This Means for Vanderbilt
Vanderbilt is an exciting prospect. So exciting that the Nuggets made sure they could secure him by moving up two spots in the second round in this year’s draft. At Kentucky, Vanderbilt excelled as a rebounder between injuries, but it’s safe to say he still didn’t get a chance to show off his full skill set, and the Nuggets know that.
Vanderbilt can rebound and push the ball in transition with great passing vision and a feel for the game to make the correct pass. It’s a skill that makes players like Ben Simmons so valuable in the league. Vanderbilt has defensive versatility that he can develop throughout his time in Denver that he can combine with his size to become an all around playmaker down the road.
All of this makes Vanderbilt seem like he should have been a first round pick. The problem is Vanderbilt’s foot injury that will likely make him just as great, if not a greater, threat than Michael Porter Jr. to red-shirt his rookie season.
Vanderbilt has a history of injury in his left foot, and as recently as Summer League Mini-Camp Vanderbilt was wearing a walking boot and using a scooter to get around. The overwhelming consensus is that Vanderbilt working with the Nuggets training staff for the full year will be the most valuable part of having him on a full-time deal. With all of these factors it’s hard to imagine the Nuggets wanting Vanderbilt to come back this season unless he is unquestionably 100 percent.
Could this mean two red-shirt rookies for the Nuggets? It’s possible, but after seeing Michael Porter at least getting some work and some shots up in recent weeks I think it’s likely that he returns at some point late in the season. The Nuggets will have some decisions to make during the summer of 2019 as they finalize their roster. Paul Millsap’s $30M team option will be the first domino to fall, and depending on the outcome of that Vanderbilt could be seeing a heavy workload in 2019-20.
Necessary Roster Moves
The roster now sits at its cap of 15 active players. The only reason this is a problem is because Monte Morris has shined in Las Vegas for the Summer League. It’s become more than clear that Morris has rightfully won the backup point guard spot for the Nuggets. The issue right now is that he could only be offered the two-way spot the way the roster currently sits which would only afford him 45 days of NBA service. Morris will clearly be signed to an active roster spot, but for this to happen a trade or waive must be made.
Monte Morris now with 13 to cap that 9-0 run before commercial. It’s early even by Summer League standards, but Morris looks plenty capable of being a backup PG in the league right now.
— Patrick Arsenault (@parsenault19) July 7, 2018
It seems like Kenneth Faried has been on the block for years now without much success of a trade from the Nuggets. Faried has even asked to be traded and asserted that he could start for some teams, all the while still being a good teammate, even showing up to Summer League last night. Of course, Faried has been a fan favorite since he was drafted out of Morehead State, but his $13.8M contract has become a major burden for a team that is now facing the luxury tax because of committing $20M to two power forwards that barely logged minutes in the 2017-18 season.
The other forward in that combo is veteran leader Darrell Arthur who has a salary just about half the size of Faried, but would still accomplish the goal of making room for Morris if he was dealt or waived. Mason Plumlee is another name on the trade block for his contract, but I would doubt the Nuggets want to trade Plumlee until they are absolutely sure that Thomas Welsh is ready to assume the role of backup center full-time. With that said, the Nuggets are almost surely focusing their efforts on moving Faried.
Truthfully, Atlanta and Sacramento are the only teams in great position to make a deal to take on Faried’s salary without giving anything up. Unfortunately, the price to take Faried on will likely be much larger than the two second rounders that were given up with Wilson Chandler. It’d be hard to see the Hawks not wanting a first-round pick attached to accept a deal. Atlanta’s GM has even mentioned wanting to have more draft picks to increase the chances of hitting on players in the draft. At this point I believe that Denver has revealed that they’re willing to part with a pick or other high-value asset to dump Faried’s salary and I fully expect a deal to be done sometime in the coming weeks.
Luxury Tax Implications
If the Nuggets do not make any moves they will face a decent-sized luxury tax bill for the first time. Because the Nuggets are non-repeaters they will face a smaller tax rate than other teams. The first $4,999,999 of the $13M will be taxed at $1.50 per dollar for a total of $7.5M. They would then be taxed $1.75 for the next $5M for an additional $8.75M. That leaves about $3M to be taxed at $2.50, which is a massive increase that the Nuggets should try to avoid. In this scenario that tax rate would add $7.5M for a grand total about $23.75M of luxury tax payments.
Fortunately if the Nuggets move Kenneth Faried’s contract as described above they would be below the luxury tax momentarily before signing Monte Morris to a deal. That deal would likely only put them between $1-3 million above the luxury tax line, so the effects would not be nearly as harsh as $23.75M.
Just as Wilson Chandler’s trade to the 76ers saved Nuggets ownership $50M, a Kenneth Faried deal of similar structure would save the team about $37M of salary and taxes combined.
Navigating the Cap After a Deal
Because it is still unlikely for the Nuggets to sign Monte Morris and remain entirely under the luxury tax the Nuggets would have to weigh their options for Darrell Arthur’s contract. They can either retain Darrell Arthur and pay the repeater luxury tax beginning next season, or stretch Arthur’s contract to get under the tax this season, but have to pay Arthur’s contract out over the next three seasons.
If they do stretch a player, Arthur’s contract wouldn’t be too much of a burden for the next three seasons as it would be paid out in equal payments of about $2.5M per year, which would be similar to the first round pick salary that the Nuggets would possibly have to give up in a Kenneth Faried deal. As far as the math is concerned, the Nuggets would save almost exactly $5M which would be plenty to be under the luxury tax for this season with room for a veteran minimum contract.
The issue is that it seems like the Nuggets love Arthur’s veteran presence and stretching him means they wouldn’t be able to re-acquire him until next summer. To simplify the decision, it essentially comes down to if replacing Arthur with another veteran is worth as much as $10M in combined salary and taxes.
It’s hard to believe that the Vanderbilt signing was the piece that set all of this in motion, but if anything the Nuggets did need a little push to start making some roster moves to clear up some of the clutter.