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Why haven’t the Sixers spent their mid-level exception yet? Blame James Harden

With James Harden’s future still up in the air, the Sixers are too close to the second apron to comfortably spend their taxpayer mid-level exception.

Boston Celtics v Philadelphia 76ers - Game Six Photo by Tim Nwachukwu/Getty Images

More than a month into free agency, the Sixers have yet to do much. Outside of matching the three-year, $23.6 million offer sheet that Paul Reed signed with the Utah Jazz, the Sixers have signed Patrick Beverley, Mo Bamba and Montrezl Harrell to one-year, veteran-minimum contracts and signed Filip Petrusev to a two-year, lightly guaranteed min deal.

James Harden likely deserves the lion’s share of the blame for the Sixers’ inactivity.

When Harden unexpectedly picked up his $35.6 million player option with the intention of being traded to the Los Angeles Clippers, he effectively ground the Sixers’ other offseason business to a halt. The uncertainty surrounding his future is limiting what else the Sixers can do in free agency for the time being, particularly when it comes to their $5 million taxpayer mid-level exception.

Under the NBA’s new collective bargaining agreement that went into effect on July 1, teams under the first salary-cap apron (roughly $7 million above the luxury-tax line) have access to the non-taxpayer mid-level exception. Teams over the first apron but under the second apron ($17.5 million above the tax line) have access to the taxpayer MLE. When a team uses either the non-taxpayer MLE or the taxpayer MLE, it becomes hard-capped at the first or second apron, respectively. That means its payroll cannot exceed that amount—roughly $172.3 million for the first apron or $182.8 million for the second apron this season—until the end of the league year on June 30.

With 14 players under contract (not counting two-way deals), the Sixers are currently about $300,000 above the first apron and $10.15 million below the second apron. Since they’re over the first apron, they do not have access to the $12.4 million non-taxpayer MLE, but they could still spend the $5 million taxpayer MLE and stay comfortably below the second apron.

If the Sixers sincerely believed Harden was open to returning this season, perhaps they would have already spent the taxpayer MLE. However, that clearly isn’t the case for now. League sources recently told Jake Fischer of Yahoo Sports that Harden “still intends to play” for the Clippers this upcoming season, and he and his representation “have maintained a confidence he will ultimately join the Clippers.”

The Clippers have plenty to offer for Harden, including Norman Powell ($18.0 million), the expiring contracts of Marcus Morris ($17.1 million), Nicolas Batum ($11.7 million) and Robert Covington ($11.7 million) and younger players such as Terance Mann ($10.6 million), Kobe Brown ($2.4 million), Bones Hyland ($2.3 million) and KJ Martin ($1.9 million). The two sides should be able to make the salary-matching math work on a trade, although Harden’s 15 percent trade kicker could complicate that.

Since the Clippers and Sixers are both above the luxury-tax line, they can take back no more than 110 percent of the salaries they send out in a deal, plus $250,000. Harden will count as $35.6 million of outgoing salary for the Sixers, but he’d count as nearly $41 million of incoming salary for the Clippers if he refuses to waive his trade kicker. In other words, the Clippers would have to send out at least $37.0 million in salary if Harden is the only player whom they take back in a deal, while the Sixers could take back no more than roughly $39.5 million if Harden is the only player whom they send out.

P.J. Tucker has also reportedly come up in Harden trade talks, which could give the two sides a bit more salary-matching wiggle room. Tucker and Harden combined would count as nearly $46.7 million of outgoing salary, which means the Sixers could take back almost $51.6 million in return. If Harden didn’t waive his trade kicker, he and Tucker would count as $52.0 million of incoming salary, which means the Clippers would have to send out at least $47.0 million.

Either way, the Clippers have enough medium-sized contracts on their books to find a middle ground with the Sixers. (Granted, their reported refusal to include Mann in trade talks suggests they aren’t all that serious about going after Harden for now.) Still, it’s unclear how much salary the Sixers might be sending out and taking back in an eventual deal, which likely explains their reluctance to use the taxpayer MLE for now. There’s no sense in hard-capping themselves and limiting their possible return in a Harden trade unless they’re signing an absolute steal at that price.

The Sixers also need to maintain their flexibility in terms of roster spots.

“Everything has been in a bit of a holding pattern because of (James Harden’s) trade request,” a source told Spotrac’s Keith Smith. “We can’t sign a bunch of guys, then do a 3-for-1 trade and not have the roster spots.”

Petrusev is the only player under contract with the Sixers who isn’t on a fully guaranteed deal. They’d be left with a $560,000 dead cap hit if they waive him before January, which is what they did with Trevelin Queen ($330,000) last year. But if the Sixers need to swing a 3-for-1 or a 4-for-2 (if Harden and Tucker both head to L.A.), they’d either have to waive a player on a fully guaranteed deal or try to salary-dump them elsewhere. Using the taxpayer MLE to sign a free agent would only add another variable into that roster-consolidation mix.

The free-agent market is largely barren at this point, although there are still a handful of players—Kelly Oubre Jr.? Christian Wood? Hamidou Diallo?—who might be looking for more than a minimum contract. If the Sixers still have an open roster spot after resolving the Harden trade saga, perhaps they’ll turn their attention to signing someone then. They could also save the taxpayer MLE to use on the buyout market after the trade deadline. But if they’re over either apron at the time, the new CBA will prohibit them from signing someone who was earning more than the non-taxpayer MLE before they got waived.

Either way, the Sixers should have options. Just because they haven’t used the taxpayer MLE yet doesn’t mean that they won’t at all this year. During his interview with 97.5 The Fanatic’s Anthony Gargano last week, team president Daryl Morey hinted that more moves are eventually coming.

“Obviously, right now, things aren’t looking perfect,” he said. “You have to squint to sort of figure out how it’s all gonna work out. But at the end of the day, try not to focus too much on the roster in July. People are focused on, ‘Oh, you have too much of this or not enough of that.’ Try to focus on how the roster looks during the season.”

Don’t expect the Sixers to use the taxpayer MLE until they resolve Harden’s future one way or the other, though. It wouldn’t be wise for them to hard-cap themselves at the second apron before knowing exactly how much salary they’re taking back in a Harden trade.

Unless otherwise noted, all stats via NBA.com, PBPStats, Cleaning the Glass or Basketball Reference. All salary information via Spotrac or RealGM.

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