The Timberwolves spent big, and those investments will soon require big decisions

TORONTO – With Jaden McDaniels signing a five-year contract Monday that could be worth up to $136 million, the Timberwolves now have a more solid idea of what their finances will be for next season and beyond.

For this season, the Wolves will be under the luxury tax and will not incur any tax to be competitive. However, that will change next year if the Wolves want to keep the core of their roster intact and remain a competitive playoff team. It's unclear whether new ownership under Marc Lore and Alex Rodriguez, who are set to become controlling owners in 2024, will commit to paying the luxury tax if the Wolves have a contending roster.

This analysis is a look at some of the relevant numbers the Wolves are looking at for next season (2024-25) in the wake of McDaniels' and Anthony Edwards' extensions this offseason. First, it's worth noting that Edwards' contract number is not finalized. As of now, he will make 25% of the salary cap under the terms of the maximum extension he signed this summer. That number is around $35.5 million, according to Spotrac. However, if he makes an All-NBA team this season, he will make 30% of the salary cap, or $42.6 million. That could have a significant impact on where the Wolves end up next season based on the numbers below.

Looking ahead to 2024-25:

* If you assume Edwards does not make an All-NBA team next season: if you combine the money due Edwards ($35.5 million in this scenario), McDaniels ($22.6 million), Rudy Gobert ($43.8 million) and Karl-Anthony Towns ($49.7 million) next season, that adds up to around $151.6 million the Wolves will have due to only four players.

* The salary cap is estimated to be $142 million with the luxury tax line at $172 million.

* The key number that has been the buzz of the NBA since the new collective bargaining agreement went into effect this summer is the so-called "second apron," which will be around $190 million. This is an important number to remember in the Wolves' case, because there are significant penalties that can occur if a team is over the second apron — they lose the ability to use a midlevel exception, they can't take on salary in a trade, sign buyout players and they can't trade first-round draft picks more than seven years away. (As a reminder, the Wolves have already traded every other first-round pick until 2029 in the Gobert deal.)

* So, with nearly $152 million owed in 2024-25 to Gobert, McDaniels, Towns and Edwards, the Wolves are already over that estimated salary cap number and headed toward the luxury tax line. Some players are set to be free agents and have contracts that will come off the books, such as Kyle Anderson, Mike Conley and Jordan McLaughlin. But if you add in the seven other deals that could be on the books for the rest of the roster, even those who are assigned to team options such as Troy Brown Jr. and Shake Milton, the Wolves have potentially $185.3 million committed for 11 players contracts — less than $5 million below that second apron and well into the luxury tax.

You can see where the math becomes a problem. That's before you add in a potential extra $7.1 million for Edwards if he makes an All-NBA team.

This is why many have speculated the Wolves might have to part ways with one of their significant large salaries, such as Towns or Gobert, and receive multiple players back in the trade to fill the salary and their roster with more than minimum-earning players. Shedding Towns or Gobert's salary, for example, could allow the team to fill its remaining spots with players who command eight-figure salaries instead of close to the minimum.

And this math all assumes ownership will sign off on going into the luxury tax in the first place, which is a necessity for any team that is trying to put together multiple years of deep playoff runs.

The good news for the Wolves is they don't have to worry about that this season, and how they perform now will go a long way toward determining the direction President Tim Connelly takes this team in the future. But the bill will eventually come due.