Posted by: Kingsguru21 | June 7, 2009

Some CBA notes, tidbits, and other schnuffathingyz

As per request of some confused folks at Sactown Royalty, I’m going to lay out some of the important notes to make regarding the CBA and how it will work for the Kings this summer. I promise to lay it out in section by section so you can refer to it.

First, resources. Larry Coon’s FAQ is my main source (and everyone else’s), and unless you speak legalese, it’s wise to refer to the FAQ. If you’ve learned most of the FAQ (and I haven’t yet, but I haven’t tried), then you might want to read the actual CBA.

For now, what I generally use off the Players Union site is the salaries for prospective draft picks. (That’s how you can project a salary total.)

One thing I will tell you, from experience, is that Hoopshype salary site is wack. I’ve compared figures from the Kings and other teams, and they are just consistently off. Don’t use them. I literally scowl anytime I see someone using salary information from Hoopshype. One of the best things about the blogosphere is that we have learned to use which places work best.

Sham Sports is my current favorite, but Draft Express has a good salary site, SacBee has salary information that is going to be the most accurate until Sham gets it, and beyond that, everything is what it is. StoryTellers, if you use that, has accurate information as well. Wyn, of Canis Hoopus, has a great salary spreadsheet to show information. (There are things that can be mis-leading though with his stuff so it’s best to keep it simple. But, if you understand it, it’s great stuff nonetheless.)

If you want to keep it simple and not click on these links, I have my sidebar set up so you can click on any of these links and they will pop up.

Other useful data references (other than Knickerblogger which is listed as a Knicks team page) like 82games.com, Doug Steele’s stats page, the APBR forum, Draft Express, and what not, are also there. (They are also on Sactown Royalty. The difference is that they don’t pop up a separate page there. I would, though, bookmark this stuff if you want to remain serious about any of this stuff.)

Now, onto the meat of this whole deal.

How is the salary cap set?

Per Mr Coon:

Each July the league projects Basketball Related Income (BRI) and benefits for the upcoming season. They take a defined percentage of projected BRI (see the chart below), subtract projected benefits (about $112 million in 2005-06), and make adjustments based on whether the previous season’s BRI was above or below projections. They then divide by the number of NBA teams (except expansion teams in their first two seasons) to arrive at the cap. The salary cap adjusts each year on the first day following the July Moratorium (see question number 90).

BRI is Basketball Related Income. Read more on BRI here. In simple terms, it’s whatever you sell and make income off. Tickets, Jersey’s, TV Money, Parking, that whole ball of wax. (If you click on the link, the whole breakdown is there.)

The reason that you see a lot of people saying “If the Salary Cap is set at 57 million like many think it will be” being talked about by various bloggers/media members (some are both), that’s because that’s the guesstimate that some people have told them. It’s a credible guess. NBA revenue is done, and that’s what drives the salary cap.

Keep in mind this is with a TV contract that is getting higher each season. That’s how bad revenues were this past season for the NBA. And, if you’re in the mindset of Bill Simmons, it will only get worse.

This is one reason so many people were hoping for a LeBron-Kobe 7 game epic Finals. So it would help raise the income level of the total NBA. As is, if the Magic recover, the NBA could be in for one hell of a boon anyway. Anytime a series goes at least 6 games, it’s very good on money terms. The 7th game is what the NBA really needs.

Anyway, that’s all hyperbole.

The important point is that that the salary cap is set at 57% of BRI, and the luxury tax is set at 61% of BRI. That’s why it’s so simple. Once you know those levels, you know what kind of moves you can make. (Unlike the previous CBA where the luxury tax was set after the season.)

The salary cap this season was at 58.68 million, and the Luxury Tax limit is at 71.15 million.

The luxury tax is not the salary cap. Don’t confuse the two. The salary cap has 2 important points. It sets the maximum amount of money you can have before you’re unable to sign Free Agents. It also sets a minimum level of salaries (75% of the total Salary cap, and if it was set at 57 Million, that minimum level would be 42.75 million level–more on that in a minute) so teams know what levels they have to work with.

Historically, only a couple teams have ever flirted with the low salary level, and one was Utah in 2003-04. It’s why they were able to make that Keon Clark deal with the Kings. They were able to absorb his deal, and the Kings made the trade to eliminate his salary because of luxury tax obligations.

Memphis is the only team that can even flirt with that low salary level, and as of today, June 7th 2009, are about 4 million under the salary cap until July 1st. This is important because even though they will have the most salary cap room of any team in the NBA over the summer, it won’t kick in until July 1st.

The reason this is done is so teams can’t load up on draft picks for taking on salaries. This may be changed in the future CBA that comes up in 2011, but I heavily doubt it. It benefits most teams to have this particular system set up this way.

What is Luxury Tax?

It is simply a dollar for a dollar tax that is triggered when your salary is over a certain limit. Let’s say, for instance, that the Luxury tax is set at 75 Million Dollars. The salary for your team in this upcoming season is 80 million. You’re going to be paying 5 million in luxury tax, or in all actuality, 85 million for the total roster when you account for the luxury tax. (You see a lot of writers, Marc Stein in particular, write it this way.)

I hope that clears up any confusion. Now moving on.

Cap Holds and Salary Set-Off’s

Cap Holds are tricky maneuvers. If you want to read more about set-off’s, I suggest reading Tom Ziller’s piece a few months ago about how much money the Kings would potentially make off a minimum salary for Mikki Moore. It is a very good explanation. Far better than the one I would come up with anyway.

As far as cap hold’s, aye carumba. Simply put, they are what they sound like. What’s different about cap holds is that they hold more room against the cap than the actual salary does.

This is done to keep teams from holding onto their Free Agent rights while trying to see other team’s Free Agents. The only way to keep this from happening is to renounce their rights. (This is also true of trade exceptions that the Kings have gotten from various deals in the last few months/year like the Ron Artest deal. Although I’m unclear as to how much those exceptions cap hold’s actually have. I would imagine it’s pretty close to the actual exception money amount, but I’m not sure. It really doesn’t matter because these will keep the Kings from having cap room they would prefer anyway.)

According to DX, Ike Diogu has a cap hold of 11,840,622, Rashad McCants has a cap hold of 10,933,785, Bobby Jackson has a cap hold of 9,731,832, and Calvin Booth has a cap hold of 2,295,066.

Forget the draft picks for a moment, if you only have 12 million or 13 million in cap room before those holds, how are you going to have any with those holds existing?

This will be worth watching to see if the Kings bother to pursue any Free Agents (highly unlikely given how much cap room they will likely have after draft picks anyway) after any potential deals they may do around draft time.

How do draft picks count into the equation?

Draft picks count money. They all count towards the team salary, and they also have cap holds until you sign them. Which is why it’s very likely they will be signed before the Moratorium is lifted so the Kings can figure out if they want to sign anybody on the FA Market. (Very unlikely, I repeat again.)

The Kings currently have the 4th overall pick, the 23rd overall pick, and the 31st overall pick in the draft. The 4th pick’s salary is, without the 20% included, 3,008,400, and with the 20% you can add to any draft picks salary, would be 3,610,080.

The 23rd pick is not likely to have that 20% bonus (Donte Greene currently is not getting it) and that pick’s base salary is 972,500.

Now, I’m going off last year’s salary for 2nd round picks/undrafted salary scale, but it would seem that that pick would be around 450,000 (450 K).

That’s 5,032,580 adding to the current salary. And, the cap holds are higher than that when you combine them. So, that keeps a team from not signing a draft pick to save money on a FA signing. Smart, eh?

So what is the Kings salary looking like

Well, right now according to Sham, they have 45,025,690 in committed salary. That doesn’t include Shareef Abdur-Rahim’s salary (which was taken off due to his medical retirement, and unlike Darius Miles, I doubt he will even attempt to come back), but does include the amount of money Mikki Moore was to get (2 million) if he was waived before June 20th.

The current players have salary, and unless they’re traded, will be on the roster next season:

Kevin Martin (9,680,170)
Kenny Thomas (8,775,000)
Andres Nocioni (7,500,000)
Beno Udrih (6,031,800)
Francisco Garcia (5,800,000)
Spencer Hawes (2,332,800)
Jason Thompson (2,035,920)
Donte Greene (870,000)

A note on Moore’s setoff. He’s not likely to be picked up early on in the FA process, and as such, any set-off will come late in the game. It’s not likely to be more than a 100K, which only is important to the Maloof’s in saving money and not cap room, which is the only reason I bring this up again. That 2 million will definitely be there come July 10th or whatever day the July Moratorium is lifted.

You’re looking at a likely salary, if you include all 3 draft picks, of about 50,058,270. Say the Salary cap is about 57.3 million. What exactly are the Kings going to do with 7.1 million dollars of cap room?

But, again, this is where the cap holds come into play. It also means they can’t use any of their exceptions to sign players (Mid Level Exception namely) that they could if they were over the cap.

With only 11 players under contract, or soon to be signed to a contract, come July 1st, this makes the deal of how the Kings look at their current summer differently. Do they try to negotiate a sign & trade with Diogu and McCants? Do they renounce all their exceptions and players in the hopes to make a big splash trade? Would they? Do they have any deals that could save them money that are flying under the radar?

To answer the questions I’ll do it bit by bit in each paragraph.

To answer the McCants/Diogu question, I think the draft will dictate some of that. But, Geoff Petrie in his interview with Jason Ross indicated that there was depth at the PG & PF positions. Since the Kings have Martin and Garcia at the SG already, it makes little sense to have a guy who doesn’t set up his teammates in McCants.

Diogu, on the other hand, could be in the mix if only because guys with his skills are rare. Yet, at the same time, if you’re the Kings, how many risks do you want to take? You’re going to have a young raw PG through the draft at the 4th spot (or most likely will), going to have another player potentially like such at the 23rd and 31st spots too, and do you want to play those players or Diogu initially?

I think all the signs point to Petrie renouncing both and thanking them for their time as Kings.

That leaves Bobby Jackson and Calvin Booth. I can’t see Bobby Jackson staying, and I can’t see Booth staying for anything more than the veterans minimum (which I think the Kings would still be able to sign him with after renouncing him). However, Jackson would probably like to play on a team where they aren’t terrible each & every night. Booth is in Italy and maybe trying to latch on over there. I don’t blame him. He can still play, and Europe is the kind of place where a guy who does what he can do (grab some boards, hit the mid range J) is valuable. Look no further than David Andersen.

Which brings me to the important point. There is no advantage to keep Jackson around except at a drastically reduced price. Ditto with Booth (who wasn’t signed to anything more than what the vet’s minimum anyway).

Summary

Whatever happens with the salary cap, and the draft obviously, will shape how they pursue Free Agents. Because the Kings are in the early stages of rebuilding, it’s going to be tough for them to draw any high profile Free Agent here (which there aren’t many anyway), and it’s going to be just as tough for them to draw any player in the Mid Level Free Agent market that would be truly enticing and worth it (Trevor Ariza/Marcin Gortat to name two).

Because of cap holds, and because of player fit, it’s not like any of the remaining Free Agents will be part of anything more than simply being renounced. It doesn’t benefit the Kings to keep their Mid Level Exception, and it doesn’t benefit them to really sign a player to a Mid Level’ish contract with any cap room they do have.

That’s why I think you’ll see most of the action with the Kings come on draft day if there is any, and if there isn’t any, that’s because there probably wasn’t a deal worth doing.

I hope this helps. If there are any questions, please leave them here, and I would be happy to answer them in the comments. (It’s very easy to sign up for an account if you do not have one.)

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