Summer 2008 Cap Room, by nate33

[FGump]

Nate33 began this on the realGM GeneralNBA board, and it sounded like the kind of thing we talk about all the time here with issues we like to nitpick and correct as needed. So I'm bringing it over here. But credit to him as the original author. Hopefully we can keep it on the front page so that as teams make moves, we can have an ongoing informed dialogue on upcoming cap issues without having to repeatedly redo all the calculations from scratch.

I have double-checked only a few (as noted) of the numbers or calculations below, but his methodology and basic understanding looked pretty accurate, and he went back and amended it as some readers brought up corrections, so I'll start with the belief that these are all pretty solid until someone here tells me otherwise. I've also edited the free agent list by adding in some significant names that were overlooked.

Nate included some explanations of how the cap works and so on, which I've deleted from this opening post since those are already well-understood issues here. But I will print them in their entirety in a follow-up post, for those who want them. I've retained his assumptions on league numbers in this opener, however. I've also edited in some input of my own already.
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ASSUMPTIONS
1. Salary cap - I'm going to assume that the salary cap next year is $58M, an increase of roughly the same amount as last year.

2. Assume that the MLE will be $5.5M next year. (So effectively, a team isn't really under the cap until they have more than 5.5M in cap space. Anything less would mean that it's more advantageous to use the MLE rather than cap space.)

3. Therefore, any team with a payroll of $52.5M or greater will not be a significant player in free agency and we'll consider them to be over the cap for the purposes of this analysis.

TEAM BY TEAM CAP PROJECTION

Teams Over the Cap:

The following teams are well over the cap. There aren't any foreseeable trades or transactions that could conceivably get them under the cap. They will only have the MLE available to them in free agency. (And many will choose not to use it because of luxury tax ramifications.)

Boston
Cleveland
Dallas
Denver
Detroit
Houston
Indiana
L.A.Lakers
Memphis
Miami
Milwaukee
Minnesota
New Jersey
New Orleans
New York
Orlando
Phoenix
Portland
Sacramento
San Antonio
Toronto
Utah


Teams that Could Get Under $52.5M, but Probably Won't

Charlotte
FG edit: Charlotte should be in the ballpark of $45M next team if they keep Harrington and Davidson, plus a high draft pick. That doesn't include a cap hold for Okafor (RFA) which will be about $14.5M. Okafor will almost surely get resigned, but if he doesn't, or if somebody else offers more money and Charlotte declines to match, then Charlotte could end up with about $13M in cap space.

Chicago
FG edit: Chicago has a projected payroll next year of about $48M. That salary figure does not count cap holds for Deng, Gordon, Krhyapa, and Duhon who are all free agents, and they may also have another high pick with salary to add. The holds for Deng and Gordon are huge: $9.9M for Deng and $14.4M for Gordon. So the Bulls are well over the cap until they make a decision on both players, and unless they choose to jettison them all and get nothing in return (which is absurd), they won't have spendable cap room.

Golden State
FG edit: Golden State has a projected payroll of $50M, but that includes Baron Davis who has an ETO. They'll also have cap holds for a slew of free agent players: Biedrins, Ellis, Pietrus, Barnes, Azuibuike, and more. But the key is Davis. His salary is $17.8M and nobody else would figure to offer him anything near as much in free agency, but who knows, he still might opt out in hopes of a much longer deal. If the unlikely event he both opts out and leaves GS, the Warriors will have all sorts of ways they can free up cap space, starting at a base (if Davis gets away and they renounce everyone) of only about $32M (that includes no free agent holds but does include set-asides for empty roster slots and a draft pick). If that happens but they keep the rights to Biedrins and Ellis (both highly prized) and Azuibuike (cheap) they'd still be only at about $40M and have enough room for a max free agent. But since I think they won't let Davis get away and he'll get more than $12.5M from them if he opts out, I don't see them as ending up below $52.5M and able to spend more than the MLE.

L.A.Clippers
FG edit: The Clippers are locked into $29M in payroll with big question marks on 3 players: Livingston (RFA), Brand (ETO), and Maggette (ETO). Livingston and Brand are coming off severe injuries. Even if they give up their rights to the injured Livingston, by the time you add in roster slot holds and picks, they'll be without cap space unless Brand or Maggette opts out and they renounce those rights so there isn't any cap hold.

Current reports say Maggette is considered a virtual certainty to opt out, and if they then renounced their rights to both Maggette and Livingston they'd have about $10M to spend. But the Clipps have also indicated that if Maggette opts out, they want to resign him, which means there will be no renouncing, and which also means they won't have cap space unless he signs elsewhere. The same applies to Brand of course, but his issues are clouded by his injury and the ensuing uncertainty over whether he'd even opt out. At this point, the Clippers don't look like they'll have more than the MLE, but a change in attitude towards Maggette or Brand could give them a very different situation: if they both left and Livingston was renounced, they'd be at about $32M and have in excess of $25M of spendable cap room.

Washington
Jamison is a free agent and Arenas is opting out. That leaves Washington with a payroll of $42.1M. Add in a cap hold for their draft pick and a minimum salary vet and it's about $44M, giving the Wizards about $14M in cap room. However, it is highly likely that both Jamison and Arenas will resign, rendering the Wizards over the cap. (Note, the cap holds for Arenas and Jamison are easily enough to keep them over the cap. The Wizards would have to renounce both Jamison and Arenas to have cap room. That's not happening.)

One interesting wrinkle is that there is the potential that Etan Thomas retires because of his heart condition. If he does, his $6.8M salary comes off the books. If Etan departs, Jamison is renounced, and Arenas resigns for a somewhat low figure of about $12M, the Wizards could have about $8M in cap space.

Teams that Could Get Under $52.5M, and Might

Seattle
Seattle has a cap figure of $53.7M which jumps to about $57.2M if you add in the cost of a #4 overall draft pick. They have no significant free agents that they would be looking to resign. They do have a boatload of draft picks and a handful of players on relatively short contracts whom they might be able to unload at the trade deadline. Guys like Ridnour and Watson ($6.5M and $6.2M respectively) are reasonably effective players whom they might not be able to dump outright, but they could probably bribe someone to take off their hands if they sacrifice one or two of Phoenix' first round picks.


Teams that Should Definitely Be Under $52.5M

Atlanta
Atlanta has a projected payroll of $39.9M. They traded their pick to Phoenix so they won't have a high pick to tack onto their cap figure. Their cap figure does not include Josh Smith, Josh Chidress or Anthony Johnson, all of whom are free agents. Josh Smith will almost certainly be resigned. Interestingly, his cap hold is only $6.7M, which is likely to be less than his future salary. If Atlanta operates quickly, they may be able to grab a free agent before resigning Josh Smith and having to utilize his new salary for his cap number. Childress's cap hold is much higher: $10.9. His cap hold puts them over the cap. If the Hawks renounce Childress, their cap figure will be $46.6M, giving them $11.5M in cap space. If they sign him to a modest deal of about $4M, they'll have $7.5M in cap space. If they renounce both Smith and Childress, they'll have $18M in cap space.

Philadelphia
Philadelphia's projected payroll is just $34.6M, but that doesn't include Iguodala and their draft pick. Iggy's cap hold is roughly $8.4M, which is probably what he'll cost as a free agent. Their draft pick will cost about $2M. Their payroll next year should therefore be about $47M, giving them $11M in cap room. However, they will probably make a move to dump Andre Miller by the trade deadline. If they can unload him for expiring contracts, they'll add another $10M in cap room. Louis Williams is also a free agent, but his cap hold is just $750K. They should have plenty of breathing room to make a free agent acquisition, and then turn around and sign Williams using Early Bird rights.


GOOD FREE AGENTS

The following players are notable free agents who could be in the running to get a deal for more than the full MLE. Many are restricted, meaning that their initial teams have the right to match any offer.

There are a bunch of other free agents (see link below), but we've only included the ones thought to have some sort of a shot at MLE-or-more deals.

Josh Childress (RFA)
Josh Smith (RFA)
Emeka Okafor (RFA)
Luol Deng (RFA)
Ben Gordon (RFA)
Andris Biedrins (RFA)
Monta Ellis (RFA)
Nenad Krstic (RFA)
Ryan Gomes (RFA)
Craig Smith (RFA)
Louis Williams (RFA)
Andre Iguodala (RFA)
Jose Calderon (RFA)
Ronny Turiaf (RFA)
DeSagana Diop
Kwame Brown
Jason Williams
Grant Hill
Antawn Jamison
Mikhael Pietrus
Bonzi Wells
Ricky Davis
Kurt Thomas
Elton Brand (possible ETO)
Gilbert Arenas (possible ETO)
Ron Artest (possible ETO)
Baron Davis (possible ETO)
Jermaine O'Neal (possible ETO)
Corey Maggette (possible ETO)
Stephon Marbury (possible ETO)
Shawn Marion (possible ETO)

The full free agent list is here http://sports.espn.go.com/nba/news/stor ... FreeAgents


[Note: As needed, I will edit this thread with corrections or additions from feedback, and changes in cap situations that occur due to trades and the like. FG]

[grizzfan1204]

Well done sir.

[Dunkenstein]

FG, I like what you and nate33 have done.

It seems to me if you're a team like Charlotte (with Okafor), Chicago (with Deng and Gordon), Golden State (with Biedrins and Ellis), Philly (with Iguodala), Washington (with Arenas) or Sacramento (with Artest) there are likely only two teams who will be able to offer more than $10 to entice your free agent away from you: Philly and Atlanta.

That probably means that most of the players like Gordon, Deng, Iguodala and Okafor (who reportedly turned down $10M+ contracts last summer) will have to rely on the generosity of their current teams if they still hope to make $10M+ contracts. And that other players who have POs or ETOs better have a pretty good understanding of the market (or a wink-wink-nod-nod offer from another team) before opting out. Otherwise the player could end up being next summer's Earl Boykins.

[Three34]

It makes that game of hardball that Chicaog played - and for which they were villified - jus tlook that much more justified.

^ Staunch John Paxson supporter ^

[FGump]

Sham, I do think the game of hardball (some of it arising from "because we can" but other of it arising from "because we have to financially") is actually part of the landscape now. AndIi don't begrudge any team from being as fiscally smart as they can.

Dunk,

However ....

.... at the same time, my historical observations tell me that things won't be quite as dire as it looks on the surface, and teams will have to be careful how they play it.

The reason is, even if for example you only have ONE team that has max cap room, and there are 5 "max-worthy" free agents out there, ALL of those 5 teams who have free agents have to be worried and step up to the plate. If they don't, they could be the one to lose their irreplaceable guy - and you don't necessarily get cap room to replace your guy if you lose him.

So it only takes one team who is able to pay what you don't want to to change the dynamics and urgency for multiple teams who can't afford to lose their talent. Suddenly teams without cap room (the old teams, with Bird rights) step up and grab what they can.

On the other hand, once those teams with over-MLE cap room finish shopping, the pendulum swings drastically in favor of playing the hardest hardball you want (a la Varejao, Pietrus, Pavlovic, Barnes, and so on). It makes an interesting economic dynamic.

[Dunkenstein]

FGump, since all of the FAs who reportedly turned down $10M+ contracts are restricted, their current teams really aren't in danger of losing them. Their biggest worry is having to match (or not match) an offer they think is more than the player is worth. So why go out and overpay a player "for fear of losing him"?

I can see several GMs offering their RFAs a reasonable offer (maybe not even as large as they were offered last year) and if it's not accepted, sitting back and see what other teams are willing to offer their player. Danny Ferry did that last year and neither Varajao nor Pavlovic got an outside team to make them an offer.

[FGump]

Dunk, with RFAs, you're exactly right. In the statements above, I was thinking primarily about the dynamics of the UFA market. The ROFR certainly changes a lot.

[nate33]

Nice job FGump. You definitely improved upon my initial post.

[FGump]

With the Gasol trade, Memphis signal their intent to be a factor this summer, as they just went from "will definitely be over the cap" to "will definitely have cap room to spend."

Counting draft picks, they are now looking to be at about $47M for 12 players, with about $11M to spend on a premium free agent. If they make another medium sized moved, they are easily in range of room for a max free agent.

If Stoudemire accepted much of a discount in his buyout, they could already be partly there.

[Dunkenstein]

Watch the Grizz make a move on Monta Ellis who as a Mississippi boy is almost a local.

[loserX]

Watch the Grizz make a move on Monta Ellis who as a Mississippi boy is almost a local.

That's possible, although the last thing the Grizz need right now is more guards.

The Gasol trade wasn't about "capspace", it was about "saving money", which is not the same thing. I doubt they make any big moves in FA this year.

[grizzfan1204]

I agree on that point, but I emphatically hope that unless they are going after Arenas, O'Neal, Marion, Davis, or a big, BIG time free agent, they do not make a move...otherwise, Memphis will have a repeat of last summer, i.e. having money to spend, and spending it on, ooohhh, coveted Darko Milicic!

[FGump]

Reports out of Miami today saying a Shaq trade, for Marion/Banks, is in the "serious" stage (to the point they've told Shaq he might get traded.

If that happens and Marion opts out, that could add Miami as a team with summer cap room.

[Dunkenstein]

I can't believe Marion would opt out of a $17M year. I'm sure his agent has researched the league (as we have in this thread) and realizes that there will not be any teams with $17M in cap space this summer. I think a move to Miami (if it happens) where he'll be the #2 option should be enough to keep the Matrix happy.

[Three34]

They're probably just using it as leverage to wangle an extension. If he does opt out, he's......a fool.

[CRHeel94]

I could see Brand heading East. Washington could be an interesting place for him.

[johnbragg]

Shouldn't this just be stickied?

[Three34]

It might be if there was a moderator, but it's not like it's not going to get too caught up n the wave of traffic we have here.