Knicks cap room

[LarryCoon]

My recent article for Hoopsworld (LINK) generated a lot of questions on the difference between my first and third scenarios, so I thought I'd address the issue here.

The short answer, if you don't want to read it all the way through, is that I wasn't comparing apples to apples. If you carry out the first scenario so that it results in the same signings as the third scenario, the numbers work out the same.

To review, here are the two scenarios in question:

1. Renounce everyone/everything to gain as much cap room as possible, then sign free agents.

3. Take advantage of temporarily being over the cap by using the Mid-Level and Bi-Annual exceptions, THEN renounce everyone/everything you can, and use the rest for free agents.

The master plan in either scenario is to sign LeBron James and fill in the rest of the roster with what cap room remains, so I'll work through each scenario in detail, using LBJ as the first signing.

I'm going to assume the cap comes in at exactly $53 million.

We have the following players under contract:

Curry: $11,276,863
Gallinari: $3,304,560
Chandler: $2,130,482
Douglas: $1,071,000
Total: $17,782,905

I'm going to assume they don't keep any potential free agents, including Lee and Rodriguez. I'm also going to assume they waive Bill Walker prior to July 7.

Scenario 1:

Start with the $17,782,905. Since this is for four players, we need to add eight cap holds at $473,604 each, totaling $3,788,832.

So the team salary is $21,571,737. With a $53 million cap, this leaves $31,428,263 cap room.

Assuming LeBron James signs for $16,568,908, this leaves $15,332,959 in cap room (after removing one cap hold to account for the James' signing).

Scenario 2:

Sign players with the MLE ($5,730,000) and BAE ($2,080,000). The team salary is $25,592,905 plus six roster charges for $2,841,624, for a total of $28,434,529. With a $53 million cap, we have $24,565,471. After James signs for the same amount as in Scenario 1, we have $8,470,167 in cap room (again, after adjusting for one cap hold).

Now let's look at what we spent or have to spend (after signing LeBron James, which is common to both scenarios and can be factored out):

Scenario 1: $15,332,959

Scenario 2: $8,470,167 + $5,730,000 + $2,080,000 = $16,280,167

So let's say that with both scenarios the team uses their remaining cap room to sign one free agent. They indeed will have spent $947,208 more on free agents under Scenario 2. This was the ending point of my analysis for the article.

However, a couple of astute people pointed out that I wasn't comparing apples to apples. If you carry Scenario 1 a step further by signing two players to amounts equivalent to the MLE and BAE, and then look at the resulting cap room, you end up with the same amounts with both scenarios.

In other words, starting from Scenario 1's $15,332,959, sign MLE & BAE players for $7,810,000, and this leaves you with $8,470,167 in cap room, after adjusting for two cap holds. This is the same amount of resulting cap room as Scenario 2.

So when comparing apples to apples, they are indeed the same. Thanks for the catch, guys.

[answerthink]

If it helps, another way to explain it would be to say that offseason roster charges are added to team salary when the team falls below 12 players… and are subsequently removed when it builds back up toward 12 players.

The rationale for the team having $947,208 more to spend in Scenario 1 vs. Scenario 3 is because they would have 2 fewer players under contract (i.e., 2 more roster charges). But roster charges only restrict the amount that can be spent on the next player added; they do not reduce a team's total available cap space. And so, the two scenarios eventually lead to the same place.

[D21]

But said you start scenario 1, and get James at max, then another player at 15,332,959, you have no cap room left, actually 473,604 as you have one roster charge less.
then you start to fill the roster with veteran minimum contract, counting for a two-years veteran at 854,389 each.
If you add 8 players like that, you will have 13 players with spending $55,665,495
(17,782,905 + 16,568,908 + 15,332,959 + 7x854,389 )

If you use scenario 2, with 17,782,905 + 5,730,000 + 2,080,000 + 16,568,908 + 8,470,167 + 5x854,389
you have 13 players for $54,903,925.

So it can make a difference at the end, even if it doesn't make one until you spend all the cap room.

[answerthink]

D21,

I am not quite sure what point you are making. The Knicks’ total available cap space would be the same in both of your scenarios. Allow me to demonstrate:

Scenario 1
Curry: $11,276,863
Gallinari: $3,304,560
Chandler: $2,130,482
Douglas: $1,071,000
James: $16,568,908
Another: $15,332,959
Roster Charges (6): $2,841,624
Cap Position: $52,526,396

Scenario 2
Curry: $11,276,863
Gallinari: $3,304,560
Chandler: $2,130,482
Douglas: $1,071,000
James: $16,568,908
Another: $ 5,730,000
Another: $2,080,000
Another: $8,470,167
Roster Charges (4): $1,894,416
Cap Position: $52,526,396

Teams are required to carry a minimum of 13 players during the season, so eventually the roster charges above will be replaced with player salaries.

Also notice that the difference between the cap positions and the salary cap in these scenarios is $473,604 – the value of the cheapest possible 13th player. This is intentional, and the reason why roster charges are valued as they are.

Of course, teams can always exceed the cap to sign minimum contract players. Therefore, if they are signed after all cap space is utilized, such players would not impact a team’s total available room.

[D21]

I agree on the cap position, that's why I said it doesn't change "until you spend all the cap room", because it's once you can only sign minimum salary that it can change something, and in this case, it's the number of available roster spots, with in the end, a different cost for a 13 players roster.
It's not a big difference, but it can count.

Actually, it's not a scenario 1 Vs scenario 2 problem, it's just how you spend your cap room because in this case using exceptions is like using cap room and sign players for the same amount than these exceptions. NYK doesn't need to use exceptions to sign 3 players for 2,080,000, , 5,730,000 and 8,470,167, they can do it with cap room.

So the only difference is only in number of roster spots filled for the same amount.
But I must admit that I am starting to forget my initial point

[answerthink]

I believe the original point was that roster charges only restrict the allocation of cap space among a team’s players; they do not reduce a team’s total available cap space. This is the reason why the two scenarios described by Larry eventually lead to the same place. In fact, in neither scenario is the team required to utilize an exception to round out its 13-player roster unless it chooses to do so.

I believe the point you are bringing out, which is also extremely important, is that teams can choose to utilize their available cap space in many different ways. In fact, when a team below the cap chooses to utilize any of the various exceptions available to it, the team can even end up with a total salary exceeding the cap.