"Maximizing Cap Space"

[BrianFromWA]

Hopefully this helps a bit: maybe instead of a thread it could be an article post, b/c this will probably be pretty long. But this way you can ask questions.

1. Guaranted roster spots
As the roster currently stands, there is $43.2M committed to the following 8 players:
Aldridge: $14.6M
Batum: $11.3M
Matthews: $6.9M
Lillard: $3.2M
Freeland: $2.9M
Leonard: $2.2M
Claver: $1.3M
Barton: $0.8M

The non-guaranteed contract of Pavlovic is another $1.4M, unless he is released. I need to verify the "if-by" date but I'm assuming June 30 (Jeffries' was earlier this week, but most are June 30--see Blake and Webster--while a occasionally they're non-guaranteed if a player is released before Opening Night). I'm assuming he will either be traded or outright waived by June 30. To "maximize" space, he will simply be waived or traded for a 2nd-rounder (which doesn't have a cap number assigned). So running cap number is still at $43.2M.

The likely (> 0.05%) draft picks are #1, #2, #3, #10, and #11. These carry a hold of between $1.8M (for the 11th pick) and $4.4M (for #1). Most likely (~87% chance) is the #10 pick, for a $1.9M hold. Running cap number is between $45.0M and $47.6M, most likely $45.1M.

$490k hold for each unoccupied roster spot under 12. With the 8 guaranteed players and the draft pick, that leaves 3 holds at $490k apiece or $1.47M. Once someone is signed (or another hold is enforced, like a free agent hold for Hickson or Maynor) then that $490k hold goes away. "Maximizing space" would add $1.47M for the 3 cap holds. Running cap number is now between $46.5M and $49.1M, most likely $46.6M.

2. Uncertain (Potential) free agent cap holds: Hickson's cap hold is $7.6M (190% of his salary this year--as a Bird below-average contract NOT following rookie contract) if the team chooses to keep his Bird rights. This would be useful if we plan on signing him over $7.6M a year. If we keep this cap hold, it takes the place of one of the $490k roster holds and add $7.1M to the cap number.

Maynor's cap number is $5.85M (250% of his salary this year--as a below-average salary following 4th year of rookie contract). The Blazers must offer a qualifying offer to make him an RFA (which has been reported by Freeman to be $3.4M, but CBA states that it's 125% of his $2.34M contract, or $2.9M. He doesn't meet "starter criteria" for a higher QO). If he signs the QO, the $5.85M hold goes away and the $2.9M contract becomes the new cap number and one of the roster holds goes away.
Olshey has stated that the QO situation with Maynor is "strategic" and many feel that it will not be offered.

3. 2013-14 Salary Cap
This year's salary cap number was $58.044M, a luxury tax line of $70.307M and the apron of $74.307M. For 2013-14, it will be 53.51% of BRI (minus benefits) divided among the 30 teams. As a rough calculation (NOT the official one) I use 1.21*(salary cap projection) to get my luxury tax projections. If the 60M salary cap projection is to be believed, then the tax line would be about 72.6M and the apron would be 76.6M. This year is the first year of the "incremental" tax rate, and 2014-15 will be the first year of the the "repeater rate" penalty.

4. Other tidbits:
Moratorium is July 1-July 9. First available time to sign is July 10 12:01. New free agents can be visited 12:01am EST July 1.

The non-taxpayer MLE is $5.15M.
The taxpayer MLE is $3.183M.
The room exception (for teams that started out below the salary cap): $2.652M. Can only be a maximum of 2 years.
The BAE (if you are below apron--$4M over tax-- and didn't use whichever MLE or room you qualified for) is $2.016M.
The draft picks cap holds are as follows:
1: $4.4M; 2: $4.0M; 3: $3.6M; 10: $1.9M; 11: $1.8M

To receive a player in a S&T, you cannot end up above apron after your trade, and cannot have used MLE already.

Cash available for trades $3.2M total for the year. You cannot buy a pick for $3.2M, sell a pick for $3.2M, and buy a new one for $3.2M.


5. Conclusion:
Haynes has reported cap space numbers of $11.8M and $13.1M, but the analysis above doesn't quite support that. Olshey has stated $11.6M.

The most likely scenario (keeping the lotto pick, which ends up at #10, and renouncing Pavlovic, Hickson and Maynor) means a cap number (including roster holds) of $46.6M. You would subtract this number from whatever the new salary cap is to get your "cap space". My guess is that people have been using the $58.044M salary cap from 2011-12 and 2012-13 in their analyses, (because they aren't "projections"), when the cap is almost certainly going to be higher (perhaps, if you believe Stern's remarks from November, MUCH higher). Assuming this cap of $58.044M is applied next year as well, then the cap space in the most likely scenario is $11.4M. If the Blazers don't use their draft pick, then that moves to $12.7M (remember, if the pick is traded, that incurs a $490k "roster" hold instead of the $1.8M hold--so you're basically giving up a lotto pick for $1.3M in space).
However, I think it highly unlikely that the cap doesn't go up to at least $60M, which would give the Blazers $13.4M in space in the "most likely" scenario and $14.7M if the team trades its pick for nothing.

 

[Mediocre Man]

1st question

What is he rule about teams being under the cap unable to use one of the exceptions? Also something about being under, then going over to use it?

 

[BrianFromWA]

The Room Mid-Level Exception is what you're asking about, I think.

This exception is available only to teams that drop far enough below the cap to use cap room, and lose their Bi-Annual, Non-Taxpayer Mid-Level and Taxpayer Mid-Level exceptions (see question number 26). This exception cannot be used if the team has already used the Bi-Annual, Non-Taxpayer Mid-Level or Taxpayer Mid-Level exceptions. This exception becomes available once the team salary drops far enough that the team loses its other exceptions, and expires following the last day of the regular season.

So we can renounce all of our holds, etc and have, say, 13M in space. We can get 13M worth of players, then use the room exception go over the cap to sign another for ~2.5M. As well as any veteran minimum players.

 

[Mediocre Man]

So the large exception can only be used by teams over the cap....right?

 

[BrianFromWA]

The biggest is for those below the apron but over the cap (for 2012-13, between 58M and 74M---probably b/w 60 and 76M this summer). It's called the non-taxpayer and starts at $5.15M, and is what you probably think of when you hear "MLE".
The taxpayer MLE is $3.183M, for teams that are over the "apron"--or have a cap number above about 76M this summer.
The room exception (for teams that started out below the salary cap) is $2.652M, and can be used after you fill up all your cap space.

 

[illmatic99]

Can't rep you apparently, but I really needed this. Thank you.

 

[illmatic99]

This needs to be stickied until after the FA period.

Questions now. Assume this following scenario:

1. We draft a player at #10.
2. After the moratorium, we trade that draft pick + Joel (2.9) for McGee (10.7), and are left with a cap number of [(43.2 + (10.7 - 2.9 - 1.3)] = 53.1
3. We use ~6mil of that space to sign a player outright without any exceptions and still stay slightly below the cap so that we can still S&T players

Now can we trade Hickson and go above the cap but below the luxury tax level or the apron? Also, I'm guessing we would lose the ability to use the room exceptions now as we are over the cap, but how else can we fill the remaining two spots?

 

[Natebishop3]

Isn't 14 million the most you can offer someone without bird rights?

 

[Shooter]

Good work, Brian. Must have taken you hours to compose your original post.

 

[BrianFromWA]

Isn't 14 million the most you can offer someone without bird rights?

No. If you have the space it's limited to the "maximum contract" available to a player, which is based almost entirely on time in the league, with a couple of exceptions. The max salary in the NBA is also based as a % of the salary cap, subject to a fixed maximum.
What does that mean?

For someone with 0-6 years of service, you can only offer 25% of the salary cap, which last year was about $14.5M, AND has to be below the league fixed amount for your time in service unless it's 105% of your last year's salary. Hibbert's contract last year actually only starts at the max of $13.67M, which was a "max" for a player with 4 years in the league.
For someone with 7-10 years it's 30%, or $16.4M, whichever is lower, unless you made 16M or more the year before, in which case you can get 105% of your last salary.
For someone with 10+ years, it's 35%, or 19.1M, whichever is lower, unless you made around 18-19M or more the year before, in which case you can get 105% of your last salary. Which is why K*be, even though his "max" is 19.1M per the CBA, can have a contract paying him 30.4M next year.

So technically, we could offer Dwight Howard a contract starting at 20.4M a year if we had about 7M going back to the L*kers in trade, even though 16.4M is the "max" for a 9-year player.

Also, Bird rights don't matter in setting a starting salary, but if you have them your raises can be 7.5% instead of 4.5%.

 

[BrianFromWA]

This needs to be stickied until after the FA period.

Questions now. Assume this following scenario:

1. We draft a player at #10.
2. After the moratorium, we trade that draft pick + Joel (2.9) for McGee (10.7), and are left with a cap number of [(43.2 + (10.7 - 2.9 - 1.3)] = 53.1
3. We use ~6mil of that space to sign a player outright without any exceptions and still stay slightly below the cap so that we can still S&T players

Now can we trade Hickson and go above the cap but below the luxury tax level or the apron? Also, I'm guessing we would lose the ability to use the room exceptions now as we are over the cap, but how else can we fill the remaining two spots?

Here's the problem as I see it in your scenario. If you want to S&T Hickson (if I'm reading the CBA right), you either must have the cap hold taking up that 7.6M in space (which you don't in your scenario) or you have to use cap space to sign him in order to trade him. In your scenario, you've already used up almost all of your space, so after spending 59 of the 60 million you can't sign JJ to, say, an 8M starting salary and trade him to somewhere.

But let's say that we traded the pick, Joel, and Claver for McGee. Now we are at a cap number of 51.8M, and have 8.2M in space. We can then "un-renounce" JJ for the 7.6M hold (leaving us 600k in space), give him a contract starting at 10M, and trade him for a player/players making 12.6M (125%+100k), as long as the receiving team doesn't go over the apron (which I assumed at around 76M). We then have Lillard/Wes/Batum/LMA/McGee/12.6M player and still can use the room exception of 2yrs/5.4M or so.

 

[Natebishop3]

No. If you have the space it's limited to the "maximum contract" available to a player, which is based almost entirely on time in the league, with a couple of exceptions. The max salary in the NBA is also based as a % of the salary cap, subject to a fixed maximum.
What does that mean?

For someone with 0-6 years of service, you can only offer 25% of the salary cap, which last year was about $14.5M, AND has to be below the league fixed amount for your time in service unless it's 105% of your last year's salary. Hibbert's contract last year actually only starts at the max of $13.67M, which was a "max" for a player with 4 years in the league.
For someone with 7-10 years it's 30%, or $16.4M, whichever is lower, unless you made 16M or more the year before, in which case you can get 105% of your last salary.
For someone with 10+ years, it's 35%, or 19.1M, whichever is lower, unless you made around 18-19M or more the year before, in which case you can get 105% of your last salary. Which is why K*be, even though his "max" is 19.1M per the CBA, can have a contract paying him 30.4M next year.

So technically, we could offer Dwight Howard a contract starting at 20.4M a year if we had about 7M going back to the L*kers in trade, even though 16.4M is the "max" for a 9-year player.

Also, Bird rights don't matter in setting a starting salary, but if you have them your raises can be 7.5% instead of 4.5%.

Okay, the difference between bird rights and non-bird rights is about 3% raise?

 

[Denny Crane]

The 3% is significant over the term of the contract.

Brilliant work Brian!

 

[Natebishop3]

The 3% is significant over the term of the contract.

Brilliant work Brian!

Well ya. And doesn't bird rights entail an extra year on the contract as well?

 

[RR7]

So Brian, am assuming then that though you can S&T a player you have renounced the rights to, you still need to have the space to sign him to that contract, since renouncing him essentially removes your bird rights to him, right?

 

[Natebishop3]

So Brian, am assuming then that though you can S&T a player you have renounced the rights to, you still need to have the space to sign him to that contract, since renouncing him essentially removes your bird rights to him, right?

I think he addressed this a while back. Renouncing removes bird rights.

My question would be, can you sign and trade a player that you don't have bird rights with?

 

[BrianFromWA]

So Brian, am assuming then that though you can S&T a player you have renounced the rights to, you still need to have the space to sign him to that contract, since renouncing him essentially removes your bird rights to him, right?

As I see it, yes. Kind of like last year when we renounced JJ's rights, then just signed him like a normal UFA. In this case, we would sign him like a normal UFA and then trade him.

 

[Natebishop3]

As I see it, yes. Kind of like last year when we renounced JJ's rights, then just signed him like a normal UFA. In this case, we would sign him like a normal UFA and then trade him.

There aren't any rules about that? I don't think I've ever seen a team with cap space sign a free agent and trade them, unless they already had their bird rights.

 

[BrianFromWA]

I think he addressed this a while back. Renouncing removes bird rights.

My question would be, can you sign and trade a player that you don't have bird rights with?

Yep, Coon #89 deals with that specifically:

To qualify for a sign-and-trade, all of the following must be true:

The player must re-sign with his prior team -- a team cannot include another team's free agent in a sign-and-trade.
The player must finish the preceding season with that team (deals are no longer allowed that sign-and-trade players who are out of the league, such as the sign-and-trade that sent Keith Van Horn from Dallas to New Jersey as part of the Jason Kidd trade in 2008).
The player cannot be a restricted free agent who has signed an offer sheet with another team (see question number 43).
Starting in 2013-14, the team receiving the player cannot be above the "apron" ($4 million above the tax level) after the trade1, 2.
Starting in 2013-14, the team cannot receive a player in a sign-and-trade if they have used the Taxpayer Mid-Level exception (see question number 25) that season.1
The trade must be completed prior to the first game of the regular season (sign-and-trades are not allowed once the season begins).
The player cannot be signed using the Non-Taxpayer Mid-Level exception, the Taxpayer Mid-Level exception, or any exception that cannot be used to offer a three-year contract (see question number 25).
A sign-and-trade deal can be made with a free agent who has been renounced, as long as all the above criteria are met.

 

[BrianFromWA]

the issue with Bird Rights in this case, Nate, is that the starting salary would have to fit under your cap if you don't have them. So no one can sign-and-trade JJ from under us (the re-sign has to be with the current team) and we either have to have his cap hold in order to make him an offer that would go over our cap (which we'd be allowed to do) or have the space to sign him outright if he's renounced.

 

[illmatic99]

Here's the problem as I see it in your scenario. If you want to S&T Hickson (if I'm reading the CBA right), you either must have the cap hold taking up that 7.6M in space (which you don't in your scenario) or you have to use cap space to sign him in order to trade him. In your scenario, you've already used up almost all of your space, so after spending 59 of the 60 million you can't sign JJ to, say, an 8M starting salary and trade him to somewhere.

But let's say that we traded the pick, Joel, and Claver for McGee. Now we are at a cap number of 51.8M, and have 8.2M in space. We can then "un-renounce" JJ for the 7.6M hold (leaving us 600k in space), give him a contract starting at 10M, and trade him for a player/players making 12.6M (125%+100k), as long as the receiving team doesn't go over the apron (which I assumed at around 76M). We then have Lillard/Wes/Batum/LMA/McGee/12.6M player and still can use the room exception of 2yrs/5.4M or so.

Gotcha. Thanks!

Looking at the rosters of potential destinations for JJ, I don't see any team willing to give up a 8mil + player for him when they can just sign him outright.

I wonder if Philly would be willing to give us Turner for JJ.

 

[Natebishop3]

Yep, Coon #89 deals with that specifically:

Gotcha.

 

[Denny Crane]

The strategy is to make the QO to guys, then look for S&T opportunities using the cap space.

It basically turns ~$15M into $22.5M you can take back. Plenty to get you Dwight.

 

[magnifier661]

Wow thanks for the well written explanations Brian! Kudos!!!!!

So if I read this correctly, we should retain hickson because he could possibly net us a more valuable player like Howard?

 

[BrianFromWA]

I don't think we should retain Hickson.

First, I don't think his market is high enough to use him for something like that. If he would've blown up into a near-max player (think someone like Josh Smith or Ellis or 2009 LMA) then keeping him as a S&T would be useful, b/c they hold would "only" be 7.6M but we could sign him for 14M or so and trade him for 17+M worth of players coming back. But that's not the case.

Realistically, I could see him making about what his hold is. I don't think he's making Batum money. In that case, having the space available and able to be used for 13+M of player seems more beneficial than only being able go get an MLE-level player (5.4M or so) and then trade JJ for something around 10M coming back (assuming a salary of 8M/yr) at the absolute max.

I think it's better to trade someone like Wes + our cap space for someone like Howard, or to get someone like Bynum with all of the space and trade Wes for an S&T'd Redick or Evans or something.

 

[magnifier661]

I don't think we should retain Hickson.

First, I don't think his market is high enough to use him for something like that. If he would've blown up into a near-max player (think someone like Josh Smith or Ellis or 2009 LMA) then keeping him as a S&T would be useful, b/c they hold would "only" be 7.6M but we could sign him for 14M or so and trade him for 17+M worth of players coming back. But that's not the case.

Realistically, I could see him making about what his hold is. I don't think he's making Batum money. In that case, having the space available and able to be used for 13+M of player seems more beneficial than only being able go get an MLE-level player (5.4M or so) and then trade JJ for something around 10M coming back (assuming a salary of 8M/yr) at the absolute max.

I think it's better to trade someone like Wes + our cap space for someone like Howard, or to get someone like Bynum with all of the space and trade Wes for an S&T'd Redick or Evans or something.

But let's say a team like lakers may lose Howard all together. Wouldn't it be better for them to agree to a sign and trade with us; using our pick, hickson and maybe claver?

 

[Denny Crane]

Gasol and Hickson might actually be a decent combination for the Lakers next season.

I was pointing out that you don't have to look at $13M in cap space and target some FA. You can trade a 2nd round pick for any player making $13M or 150% of $13M.

I read the discontent with Matthews often on the board, and I don't get it. The guy would be really hard to replace.

 

[magnifier661]

Gasol and Hickson might actually be a decent combination for the Lakers next season.

I was pointing out that you don't have to look at $13M in cap space and target some FA. You can trade a 2nd round pick for any player making $13M or 150% of $13M.

I read the discontent with Matthews often on the board, and I don't get it. The guy would be really hard to replace.

I would rather have Matthews than batum.

 

[KingSpeed]

Why does Freeland get paid so much?

 

[Sinobas]

Why does Freeland get paid so much?

I think the Blazers would just cut him to take back his salary if they could. He was a good player in Europe, so was making a nice salary there, they had to pay him enough to lure him away. We should have just left him there though.

I hope the Blazers trade their pick for a center, resign Maynor, then use the MLE to sign Corey Brewer. With that bench, the starters wouldn't need to play so many minutes.

Lillard/Maynor
Matthews/Barton(3rd string)
Batum/Brewer
LA/Claver
Gortat/Leonard