Posted by: Kingsguru21 | April 8, 2010

Some Salary Cap goodies and terminology

Management has brought it to my attention that a pretty unusual event called the 2010 FA class is coming up. As such, they would prefer that I write about some technical bullshit called the Collective Bargaining Agreement. In case you’re unaware of this phenomenon, come on down. Bring some Tylenol or Maalox, you might really need it.

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Since I tend to use a lot of acronyms, I’ll define them here.

FA = Free Agent
BYC = Base Year Compensation
MLE = Mid Level Exception (Also look here for a definition of Bird Rights and Early Bird Rights.)
Bi-A = This is the Bi-Annual Exception (it’s not as well known as the MLE), but I’ll be referring to the Bi-A occasionally

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Okay, back on planet Earth where my voices haven’t taken over my fingers, awhile ago on StR I wrote the FAQ for some possible noted things about the salary cap.

So let me update a few things before moving on.

Is Francisco Garcia still BYC? What’s up with that?

I haven’t updated that FAQ on StR to reflect this, but at one point Garcia was not BYC. However, because the Kings are now over the salary cap as the result of the Landry-Martin trade, Garcia is BYC. BYC isn’t a function of the salary a player makes when they get a raise like some out there may believe. (Of which I was one.) It’s a function of that raise the player gets AND the team being over the salary cap. Think of it as a penalty for being over the salary cap if that helps. Because the Kings have been over the cap, and under the cap at different times this season, that’s why Garcia was BYC, not BYC, and now BYC once again. (Don’t worry if it confuses you. It’s a minor issue. I’m just trying to clean up some loose ends for the 5 or 6 people who understand this.)

In case you’re wondering if I think this matters, I don’t. No team would like consider taking Garcia without doing a ton of tests on his wrist anyway. Plus, the worst that can happen if a team really wants Cisco is that they have to wait until July to acquire him when the BYC is no longer an issue.

As a heads up, I feel obligated to warn you that if you use the ESPN Trade Checker or the Real GM trade checker, they have not updated this. So any trade scenario you try using either of those will come up wrong because Garcia is now BYC again.

Okay, now onto the real stuff.

What are cap holds? What is this stuff about teams losing cap space when they don’t have 12 players?

You’re going to hear a lot about cap holds, and the cap holds that exist when teams don’t have 12 players on their roster. A WHOLE LOT. So, either ignore it, or know ahead of time the rules.

As far as the 12 roster spots go, each team is required to have 12 players under contract OR 12 spots with cap holds. The Nets may have this issue (but they have multiple draft picks that are going to eat up many of those spots so it’s not a major issue for them), but it’s mostly going to affect the Knicks and Heat.

This is what happens as far as the NBA is concerned when they consider how much a team can spend when it’s under the salary cap to sign a player. All players under contract factor in, draft picks (Miami has 2 1st rounders and 2 2nd rounders too), plus the veterans with cap holds (like Dwyane Wade, Jermaine Oneal and Udonis Haslem).

If you look at the Sham link I linked to just above, you’ll notice how few players are under contract for Miami next season. That’s by design as Miami has looked to maximize their cap space this summer by being as far as they can by being able to sign a FA Still, in order to maximize their space they will have to renounce their FA’s and sign a big name of the Chris Bosh variety.

New York is in a different scenario if only because they will only have 2 2nd round picks to eat up their cap room. (But they don’t have Dwyane Wade either.) Sham has a nice tally for you that should be able for you to follow. New York has 2 2nd round picks, and they cost the same as a rookie minimum cap hold (about 450K this past season–will likely be between 420 & 430 K next season).

So New York will have 4 players under contract, the 2 2nd round picks and their cap holds, whatever contracts they don’t renounce (everybody but David Lee will be guaranteed to be renounced regardless of what happens), and the 6 cap holds (roughly 2.7 million if you use the 450 K figure) to get them to 12. According to my calculations, with cap holds, the Knicks will be considered to have 20.48 million counting against the cap. (Note, the 6 cap holds are not monetary, but just simple cap devices to keep loopholes from being exploited. The Knicks do in fact have about 17.7 million in committed salary.)

Sham has a great explanation of cap holds here. I suggest reading it if I’ve confused you.

When the Kings waived Joey Dorsey, Kenny Thomas and Larry Hughes, does that mean they have to renounce them too?

No. Don’t let this confuse you. The only players the Kings have to renounce is Dominic McGuire, Ime Udoka, Sean May and Jon Brockman. Assuming the Kings don’t pick up Carl Landry’s team option (which they would be insane to do which I’ll explain in a minute), that would be another player to renounce assuming the Kings needed that cap space. (Insane. Insane. Insane.)

The simple answer though is that cap holds in fact pertain to bird rights. Because Bird Rights are the exception that allow the team to give a player a very high salary (like Miami with Dwyane Wade for instance) without regard to the salary cap, those rights are valuable. It isn’t in the NBA’s best interest to allow teams to not be penalized when faced with the option of resigning their own player and another teams free agents.

In fact, however, when you waive a player you’re eliminating the right to sign this player using bird rights. It is why you don’t have to renounce the player. The only difference between renouncing rights to a player and waiving a player is that with waiving a player you’re still paying him. Renouncing players rights only remove the cap holds that would keep a team from utilizing the cap room to sign a player.

Simply put, take the Knicks. They have David Lee and his Bird Rights to give him a big raise if they so choose regardless of whether they have cap room. If you didn’t have cap holds taking away available cap space to sign Free Agents, that would make it much easier for the Knicks to sign players from other teams. However, because Lee has a cap hold and would have to be renounced for the Knicks to sign 2 max FA’s with the amount of cap room the NY’ers have this summer. This is one of the biggest changes the NBA has made in the last 15 years from the last time a major Free Agent changed teams and switched the power of the league: Shaquille O’Neal. Because Rookies and Free Agents did not have cap holds then, it allowed the Lakers to sign O’Neal to the same amount of money (and years) that the Magic could offer. Now with cap holds, and the rights to offer more years and dollars than other teams, this gives teams re-signing their own Free Agents a tremendous advantage. Now the Lakers and Knicks can’t own teams in Free Agency. They have to play on the same field as everyone else does. (And before you go well what about Pau Gasol? So what. Look at the Kevin Garnett and Pau Gasol trades. Which team got more for each player? I would argue Memphis got more.)

Back to the Kings for a moment. Right now they have all the following players under contract next year:

Andres Nocioni, Beno Udrih, Francisco Garcia, Tyreke Evans, Spencer Hawes, Jason Thompson, Omri Casspi and Donte Greene. Factor in the 1st round pick, the 2nd round pick (or the cap hold it represents) and that makes 10 players. If the Kings offer Jon Brockman a qualifying offer (for cap purposes it would be cheaper to renounce him and re-sign him when the bigger names and/or trades have been completed–his QO is twice what a rookie minimum cap hold would be), that makes 11 players.

Then you have Carl Landry. He has a team option for 3 million dollars. I’ll literally fuck a monkey if the Kings decline that team option. I’ll tape it and everything. Fortunately, I’m 10000000% certain the Kings are exercising his option next year.

So why do I say that? There is no upside to declining a cheap option on a player you like in Landry’s case when what he does is valuable (post scoring mainly). Yes, Landry may not be the greatest rebounder or post defender there is, but consider that Al Jefferson is making 12 million this season. Landry is more valuable than Al J is, I believe, and that’s at 1/4 the monetary value. Guys like Landry are not dime a dozen (despite his weaknesses). As I said, I’ll fuck a monkey if the Kings decline Landry’s option.

So, that’s pretty much the case in how the Kings will get to 12 players without having to worry too much about the minimum cap holds. In case you’re wondering, that’s a very good thing. It means you have talent on your roster.

You just said renounce Jon Brockman. How dare you diss Nessie like that?

Relax. Bird Rights are nice for players like Tyreke Evans, Kevin Martin or this years high draft pick. In the case of Brockman, the Kings are not likely to pay him much money now or at any point in his career. So having bird rights makes no real difference. But, in case you’re worried about his long term bird rights, Larry Coon has the blurb that should soothe your feelings on this point:

If the player does not sign with any team (his prior team or any other team) for the entire season, then his renouncement continues. In other words, the team is not permitted to renounce a player, let him lie idle for the year, then re-sign him the following summer using Bird rights. However, if the player re-signs with his prior team, then his renouncement is no longer in effect when his contract ends. For example, if a team renounces their Larry Bird rights to a player, then re-signs that player to a one-year contract using cap room, then the player is once again a Larry Bird free agent the following summer.

So relax.

Will the Kings have enough to sign a max player?

Probably. Some of this will depend on where the Kings select in the draft, and where the salary cap is set come July. I’ll be talking about that when the time comes. Now is not that time.

Are there teams out there that the Kings can take advantage of who will be over the luxury tax?

Absolutely there will be teams over the tax. Most projections have the salary cap at somewhere around 53.5 million, and if that’s the case, the luxury tax will be around 65 million or so. Here are the teams that are likely to be over that monetary threshold by July 1st:

Boston, Dallas, Denver, Indiana, LA Lakers, New Orleans, Orlando, Philadelphia, and Utah (if they re-sign Boozer).

If you notice a common theme, most of those teams are competing something. Also, I won’t bore you with my dreams of Troy Murphy. Well, not today anyway.

Is there any advantage in terms of having more cap room in not signing your draft pick before a major free agent?

Nope, that’s what I mentioned up a few paragraphs ago. The cap hold is the same as 100% of the salary you can offer a rookie (you can offer 120% of the scale to every rookie taken in the 1st round–you can also offer 80% of the scale to any rookie also).

Do the Kings have cap room so they can take a big contract during the draft?

Nope, the Martin-Landry trade took the Kings over the cap and the Kings won’t have cap room to absorb a salary and take a draft pick. This is only true during draft time, and not after July 1st though. It’s wise to keep the 2 dates separate for that reason.

Is there such a thing as a minimum cap?

Yes there is. If the cap is set around 53 million, the minimum cap will be likely in the range of 39 million or thereabouts. The Kings will get there very easily because they only would need 6 million in committed salary before getting to that limit. The 1st round pick alone will likely take half, or even 2/3 of that salary as it is.

Just in case you’re wondering, the minimum cap number every team will have to be at it 75% of the salary cap. (This will get discussion as well. Just not now.)

Why do you always refer to completing deals after the July Moratorium instead of saying July 1st like other people?

Because the July Moratorium kicks in July 1st, and deals aren’t actually completed until the Moratorium is lifted. This has happened a few times the last few years (Jamal Crawford to Atlanta for instance) and is not entirely uncommon. Also, you can sign Draft Picks during this period.

Now, it doesn’t mean teams can’t talk and negotiate (or announce) trades during this period. It just means they can’t technically be completed until the Moratorium is no longer in effect.

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I think that’s pretty much what I wanted to talk about today. You can go ahead and pop the Tylenol now. There is no more abuse coming.

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Responses

  1. I never thought I’d say this or even think it, but I’m all in for the Kings renouncing Carl Landry’s option.

    • Why BJ? I know typing hurts, but why? I can’t see a single advantage for the Kings to do that. They will already have max cap space to sign another Free Agent as it is WITH Carl Landry’s salary on the books for next season.

      So it comes back to why BJ. I just can’t figure out why the Kings would renounce Landry’s option.

      Trading Hawes or JT, or even Landry if the option presents itself (although I doubt that), seems more likely to me at this point.


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