Another question about Room Exception

[Breeze_56]

Before I proceed I just wanna say I'm new and I really appreciate these forums and the expertise you guys have gathered here...

(My sources for all these are Basketball Reference's salary list, Spotrac's transaction ticker, and Coon.)

Trying to understand the Room exception here. Please correct any of these statements if they are wrong:

1) On July 20th of the offseason, the Jazz sigh Ekpe Udoh to a Room exception contract. http://www.spotrac.com/nba/transactions/utah-jazz/ https://www.basketball-reference.com/contracts/UTA.html

2) That means that at some point from July 1st (when the Salary Cap Year begins) to July 20th, the Jazz lost their other exceptions (MLE, BAE, TE) entirely because "team salary is so low that when the exceptions are added to the team salary, the sum is still below the salary cap." (Coon 26)

3) The calculation for said point below which exceptions are lost would be: team salary, waived/retired players, cap holds for RFA/FA and draft picks, holds for roster charges, plus the addition of unused exceptions: non-taxpayer MLE, BAE, and TE. If this sum were less than the 2017-2018 salary cap ($99m), they would lose their exceptions, correct?

[DBoys]

You paint the picture as if the Jazz accidentally found themselves in a situation where they lost their NT MLE and BAE, and I doubt that was actually the case. (You do understand the basic concept - which is, if the total of all your contracts plus all your non-contract roster charges adds up to less than the cap, then you get cap room instead of the annual exceptions, and will be able to use a Rm MLE when you have exhausted all or almost all of your cap room.)

But "exceptions were lost" is not really how it works in a practical sense in quite a few situations, ie the concept of it happening to a team outside their control. Sometimes teams can make a choice of being over the cap, or under the cap. So it can be more like "non-contract roster charges were in the way of what they wanted to do, so they discarded the ones they needed to discard."

I don't follow UT closely, so I don't know the event that triggered their desire to be under the cap. But I'm guessing it was a need to have a way to sign both Jerebko and Sefolosha, whose 2 contracts totaled around $9M in 1st year salary, which was more than the NT MLE. So they got rid of enough non-contract roster charges to open up cap room in the needed amount.

[Smitty731]

Without getting too deep into it, Utah essentially went under the cap when Gordon Hayward signed with the Celtics, thus removing his large cap hold from the Jazz cap sheet. That was what triggered them having the cap space to sign Sefolosha and Jerebko and then having the Room Exception.

As an aside, this is why sequencing moves is very, very important. It mattered a ton for the Celtics this summer. The Jazz also held onto Ingles' smaller cap hold until they were done using their cap space. Then they used part of the Room Exception to sign Udoh and re-signed Ingles.

[DBoys]

Without getting too deep into it, Utah essentially went under the cap when Gordon Hayward signed with the Celtics, thus removing his large cap hold from the Jazz cap sheet. That was what triggered them having the cap space to sign Sefolosha and Jerebko and then having the Room Exception.

As an aside, this is why sequencing moves is very, very important. It mattered a ton for the Celtics this summer. The Jazz also held onto Ingles' smaller cap hold until they were done using their cap space. Then they used part of the Room Exception to sign Udoh and re-signed Ingles.

Actually I believe UT was officially an Over-Cap team until they started clearing room to be able to sign all 3 of Sefolosha, Jerebko, and Udoh. Even without Hayward they had possible Team Salary of as much as about 111M, and almost certainly a bit over 101M including the two exceptions, and had no need to clear room until reaching deals with those 3 that were too big to all fit into the NT MLE and BAE slots.

[Smitty731]

Without getting too deep into it, Utah essentially went under the cap when Gordon Hayward signed with the Celtics, thus removing his large cap hold from the Jazz cap sheet. That was what triggered them having the cap space to sign Sefolosha and Jerebko and then having the Room Exception.

As an aside, this is why sequencing moves is very, very important. It mattered a ton for the Celtics this summer. The Jazz also held onto Ingles' smaller cap hold until they were done using their cap space. Then they used part of the Room Exception to sign Udoh and re-signed Ingles.

Actually I believe UT was officially an Over-Cap team until they started clearing room to be able to sign all 3 of Sefolosha, Jerebko, and Udoh. Even without Hayward they had possible Team Salary of as much as about 111M, and almost certainly a bit over 101M including the two exceptions, and had no need to clear room until reaching deals with those 3 that were too big to all fit into the NT MLE and BAE slots.

It was the combination of Hayward signing with Boston and Hill signing with Sacramento, along with Mack to Orlando, that pushed them under. I would have to check the timing, but I am almost positive those all happened before they signed any of the UFAs they signed.

But it really is semantics. They were able to sequence everything up as necessary.

[DBoys]

"It was the combination of Hayward signing with Boston and Hill signing with Sacramento, along with Mack to Orlando, that pushed them under. "

Nope. They still weren't under. If you do the payroll math (which I did, just to see), we discover that the Hayward loss to Boston did not cause Utah to lose their exceptions. Even after GH signed with the Cs on the 14th (which was preceded by Hill and Mack signings, and the Diaw waiver), their Team Salary (the total of contracts plus holds plus exceptions) would have still exceeded $101M. And that TS may have been even more (if they had TEs on the books).

How do we know they wouldn't have already discarded those exceptions prior to the GH signing? Well first of all, as I'm sure you're quite aware, teams don't do that until they actually need the room, in case their plan changes - and as it turned out, they didn't need cap room until the 17th. But more importantly, until GH signed, they were considering a S&T with Boston, in which case they would have ended up well over the cap with some combo of incoming players and TE - which means their MLE and BAE would still have been in place until that outcome was completely done.

So at the end of the GH deal, they're still at $101M. Over cap. With exceptions. No reason yet to make a decision on whether to use them as is, or discard them.

Then, at some point thereafter, in a deliberate act most likely done on the 17th before signing JJ (since we all know a team would do this at the last minute), they renounced those exceptions in order to create cap room instead.

That's takes us back to and confirms my original point. Point being, the Jazz did not and would not have unintentionally "lost" their exceptions at any point due to the size of their payroll being too low. They went away because the team chose to throw them in the trash and have cap room instead.

[Breeze_56]

Nope. They still weren't under. If you do the payroll math (which I did, just to see), we discover that the Hayward loss to Boston did not cause Utah to lose their exceptions...

They went away because the team chose to throw them in the trash and have cap room instead.

Okay, that makes me feel better because I did the math and I didn't see them going under either. And thank you for the correction: I saw the loss of exceptions as a penalty not a trade off between exceptions and cap. They couldn't sign Sefolosha and Jerebko with exceptions so they take the cap.

So I take it there is no reliable source for when teams renounce said restrictions?

[Breeze_56]

As an aside, this is why sequencing moves is very, very important. It mattered a ton for the Celtics this summer.

I also am a Celtics fan, I've read your articles about the Celtics, and without looking at the transaction ticker I'm generally familiar with what went down over the summer, but I'm not a cap expert. With that being said, can you allude to why sequencing was important for them? I know they had to have the cap for Hayward, didn't want to let go of O'lynyk before they were sure about Hayward and that generally other contracts had to wait for him; is there more I'm missing? Are there things that had to happen in a specific order?

[Smitty731]

As an aside, this is why sequencing moves is very, very important. It mattered a ton for the Celtics this summer.

I also am a Celtics fan, I've read your articles about the Celtics, and without looking at the transaction ticker I'm generally familiar with what went down over the summer, but I'm not a cap expert. With that being said, can you allude to why sequencing was important for them? I know they had to have the cap for Hayward, didn't want to let go of O'lynyk before they were sure about Hayward and that generally other contracts had to wait for him; is there more I'm missing? Are there things that had to happen in a specific order?

Sequencing is important because you do one move out of order and you could blow the whole plan. For example, it was announced a week or so in advance that the Celtics were signing Aron Baynes for $4.3 million. It was immediately assumed that would be for the Room Exception.

Now, as was well covered, the Celtics had to basically clear the deck, plus more (Bradley trade), to create cap space to sign Hayward. Let's say they signed Baynes before Hayward, now all of a sudden you have $4.3M on the books and that is $4.3M less you can give to Hayward. So Boston got all the space they could, signed Hayward, then signed Nader and Ojeleye for more than the minimum, and then moved on to using the Room Exception to bring in Baynes.

[Breeze_56]

As an aside, this is why sequencing moves is very, very important. It mattered a ton for the Celtics this summer.

I also am a Celtics fan, I've read your articles about the Celtics, and without looking at the transaction ticker I'm generally familiar with what went down over the summer, but I'm not a cap expert. With that being said, can you allude to why sequencing was important for them? I know they had to have the cap for Hayward, didn't want to let go of O'lynyk before they were sure about Hayward and that generally other contracts had to wait for him; is there more I'm missing? Are there things that had to happen in a specific order?

Sequencing is important because you do one move out of order and you could blow the whole plan. For example, it was announced a week or so in advance that the Celtics were signing Aron Baynes for $4.3 million. It was immediately assumed that would be for the Room Exception.

Now, as was well covered, the Celtics had to basically clear the deck, plus more (Bradley trade), to create cap space to sign Hayward. Let's say they signed Baynes before Hayward, now all of a sudden you have $4.3M on the books and that is $4.3M less you can give to Hayward. So Boston got all the space they could, signed Hayward, then signed Nader and Ojeleye for more than the minimum, and then moved on to using the Room Exception to bring in Baynes.

Thank you!