Josh Smith Cap question...

greekalex21 · Post #1 » by **greekalex21** » Thu Dec 25, 2014 6:44 am

With the Pistons using the stretch provision to lessen the cap hit of waiving Josh Smith, will his currently salary be deducted from the dead money he'll be paid?

Given the Rockets are paying him 2M, and it's safe to say he'll make that much annually over the next 5 years, does that 2M come off the dead money cap hit the Pistons have on the books for the next 5 seasons for 5M and change per season?

need4detroit · Post #2 » by **need4detroit** » Thu Dec 25, 2014 7:28 am

Im not 100 % sure but I believe we pay what we owe smith subtracted by a set off which is calculated as such.
Set-off = (New Salary – Applicable Minimum Salary) x 0.5

So we would have to pay: 5.4 mil - ( 2mil - 1.4 mil) * 0.5. This equates to about 5.1 million.

sfballa13 · Post #3 » by **sfballa13** » Thu Dec 25, 2014 9:07 am

"So the decision was made to use the NBA's stretch provision to waive Smith. The Pistons will pay him the remainder of his $13.5 million owed this season, but can stretch the remaining $27 million over the next five seasons, a cap hit of $5.4 million until the 2019-20 season – although that will likely be offset some when Smith signs his next contract this summer. The better Smith performs, the bigger the contract he signs, the less of a cap hit the Pistons take."

Does this mean if Smith signs a 5-8M deal we would only be on the hook for like 3-4M instead of 5.4

Brapman · Post #4 » by **Brapman** » Thu Dec 25, 2014 3:42 pm

Canadafan · Post #5 » by **Canadafan** » Thu Dec 25, 2014 5:56 pm

Sweet! So this year not so much of a savings but future years I'm sure he will get the MLE of $5mil which would save us $1.8mil. ($5-$1.4=$3.6÷2=$1.8) Not too bad really. Let's hope he has a better year and somebody offers him a 4year deal worth $11/yr and we don't have to pay him anything

Brapman · Post #6 » by **Brapman** » Thu Dec 25, 2014 6:33 pm

The thing is, a lot of contenders were after him. If that holds true this summer, there'll be something of a bidding war for him. He might get in the $7 to $9 million range. We might be only 1 - 3 million in the hole for him in years 3-5.

This was a VERY smart move by the Pistons - freeing up a lot of cap the next couple seasons, ridding ourselves of a very high useage (very inefficient) player who's in the way of the development of our young guys and preferred style of play (long-term), and NOT giving up any draft picks.

Josh was THE biggest problem contract on this roster. The rest are easy-peasy to get rid of over the next season or so. We have a total reset right now, plus Drummond, Meeks, KCP and Dinwiddie to build around, plus a high lotto pick, a high second round pick, PLUS a high pick (very likely) in the 2016 draft.

This is as good a situation for a rebuild as on any team in the league. SVG now has to make solid drafting and personnel decisions from this point forward - and there are no barriers to get in our way.

GreekAlex · Post #7 » by **GreekAlex** » Thu Dec 25, 2014 7:44 pm

Brapman wrote:The thing is, a lot of contenders were after him. If that holds true this summer, there'll be something of a bidding war for him. He might get in the $7 to $9 million range. We might be only 1 - 3 million in the hole for him in years 3-5.

This was a VERY smart move by the Pistons - freeing up a lot of cap the next couple seasons, ridding ourselves of a very high useage (very inefficient) player who's in the way of the development of our young guys and preferred style of play (long-term), and NOT giving up any draft picks.

Josh was THE biggest problem contract on this roster. The rest are easy-peasy to get rid of over the next season or so. We have a total reset right now, plus Drummond, Meeks, KCP and Dinwiddie to build around, plus a high lotto pick, a high second round pick, PLUS a high pick (very likely) in the 2016 draft.

This is as good a situation for a rebuild as on any team in the league. SVG now has to make solid drafting and personnel decisions from this point forward - and there are no barriers to get in our way.

What insentive does Josh Smith have to sign for a higher salary when it's going to be less than what he's owed by the Pistons?

Couldn't he just sign with whatever team he prefers for the league minimum and have the Pistons make up the difference?

RexRyan · Post #8 » by **RexRyan** » Thu Dec 25, 2014 8:25 pm

GreekAlex wrote:
Brapman wrote:The thing is, a lot of contenders were after him. If that holds true this summer, there'll be something of a bidding war for him. He might get in the $7 to $9 million range. We might be only 1 - 3 million in the hole for him in years 3-5.

This was a VERY smart move by the Pistons - freeing up a lot of cap the next couple seasons, ridding ourselves of a very high useage (very inefficient) player who's in the way of the development of our young guys and preferred style of play (long-term), and NOT giving up any draft picks.

Josh was THE biggest problem contract on this roster. The rest are easy-peasy to get rid of over the next season or so. We have a total reset right now, plus Drummond, Meeks, KCP and Dinwiddie to build around, plus a high lotto pick, a high second round pick, PLUS a high pick (very likely) in the 2016 draft.

This is as good a situation for a rebuild as on any team in the league. SVG now has to make solid drafting and personnel decisions from this point forward - and there are no barriers to get in our way.

What insentive does Josh Smith have to sign for a higher salary when it's going to be less than what he's owed by the Pistons?

Couldn't he just sign with whatever team he prefers for the league minimum and have the Pistons make up the difference?

Josh can make a whole lot more money out of this deal - there's a ton of incentive for him to take a higher salary.......

MotownMadness · Post #9 » by **MotownMadness** » Thu Dec 25, 2014 8:41 pm

Brapman wrote:The thing is, a lot of contenders were after him. If that holds true this summer, there'll be something of a bidding war for him. He might get in the $7 to $9 million range. We might be only 1 - 3 million in the hole for him in years 3-5.

This was a VERY smart move by the Pistons - freeing up a lot of cap the next couple seasons, ridding ourselves of a very high useage (very inefficient) player who's in the way of the development of our young guys and preferred style of play (long-term), and NOT giving up any draft picks.

Josh was THE biggest problem contract on this roster. The rest are easy-peasy to get rid of over the next season or so. We have a total reset right now, plus Drummond, Meeks, KCP and Dinwiddie to build around, plus a high lotto pick, a high second round pick, PLUS a high pick (very likely) in the 2016 draft.

This is as good a situation for a rebuild as on any team in the league. SVG now has to make solid drafting and personnel decisions from this point forward - and there are no barriers to get in our way.

I didnt think we would be in this position for a few more years. Im so thrilled about the waiving and im alot more optimistic moving forward now seeing the FO trying to rebuild properly. We have all our draft picks, Drummond and alot of capspace so hopefully we can get this thing back on track. Stan can now build his own roster.

Brapman · Post #10 » by **Brapman** » Thu Dec 25, 2014 8:56 pm

I'm pretty sure that he gets paid from us - ALL his money on his Piston's contract - PLUS whatever he signs for. We waived him. No team picked him up. He gets paid twice.

Am I incorrect?

RexRyan · Post #11 » by **RexRyan** » Thu Dec 25, 2014 10:09 pm

He's making out like a bandit, yes. But what he signs for starting next year will help reduce our stretch obligation

need4detroit · Post #12 » by **need4detroit** » Thu Dec 25, 2014 10:22 pm

Brapman wrote:I'm pretty sure that he gets paid from us - ALL his money on his Piston's contract - PLUS whatever he signs for. We waived him. No team picked him up. He gets paid twice.

Am I incorrect?

Yes you are incorrect. The larger the contract he obtains from a different team, the larger the set-off, and the less the Pistons have to pay him.

whitehops · Post #13 » by **whitehops** » Fri Dec 26, 2014 12:18 am

GreekAlex wrote:What insentive does Josh Smith have to sign for a higher salary when it's going to be less than what he's owed by the Pistons?

Couldn't he just sign with whatever team he prefers for the league minimum and have the Pistons make up the difference?

he is getting every penny that he signed for from the pistons and will get every penny he signs for with his new team. if i'm not mistaken the cap hit is the only thing that is offset, and regardless the part that's offset is miniscule. it's half the difference between his new salary and the minimum salary for smith (which is $1.5 million next year). if he's making, say, $3 million next year it's only going to decrease our cap hit by $750k, but he'll still get his $14 million from us and the $3 million from his next team.

Brapman wrote:I'm pretty sure that he gets paid from us - ALL his money on his Piston's contract - PLUS whatever he signs for. We waived him. No team picked him up. He gets paid twice.

Am I incorrect?

I believe you are correct, it is only his cap hit for us that gets diminished based on his new contract.

my interpretation is based on this source, it's on page 14, section M (1) Right of Set-Off: http://www.nba.com/media/CBA101_9.12.pdf

DBC10 · Post #14 » by **DBC10** » Fri Dec 26, 2014 12:32 am

Yep as N4D and hops noted, he will get the full money that he's owed by the Pistons, just it won't affect our cap if he somehow does get paid from a contender down the line. Players if I recall correctly, cannot double dip so to speak.

GreekAlex · Post #15 » by **GreekAlex** » Fri Dec 26, 2014 1:02 am

I wonder why they couldn't work out a buyout because he knows he's going to get at least 2M per season for the duration of the contract from another team.

So if he's owed by the Pistons 8.9M for the rest of this season and 13.5M next year and 13.5M the year after totaling 35.9M, wouldn't a buyout of 30.9M (1M this year and 2M for 2 more years=5M) from another team) make sense?

Or would that prevent them from using the stretch provision and using the stretch provision provides more flexibility?

Canadafan · Post #16 » by **Canadafan** » Fri Dec 26, 2014 5:30 am

GreekAlex wrote:I wonder why they couldn't work out a buyout because he knows he's going to get at least 2M per season for the duration of the contract from another team.

So if he's owed by the Pistons 8.9M for the rest of this season and 13.5M next year and 13.5M the year after totaling 35.9M, wouldn't a buyout of 30.9M (1M this year and 2M for 2 more years=5M) from another team) make sense?

Or would that prevent them from using the stretch provision and using the stretch provision provides more flexibility?

Yep, that would prevent us using the stretch provision

Canadafan · Post #17 » by **Canadafan** » Fri Dec 26, 2014 5:33 am

he is getting every penny that he signed for from the pistons and will get every penny he signs for with his new team. if i'm not mistaken the cap hit is the only thing that is offset, and regardless the part that's offset is miniscule. it's half the difference between his new salary and the minimum salary for smith (which is $1.5 million next year). if he's making, say, $3 million next year it's only going to decrease our cap hit by $750k, but he'll still get his $14 million from us and the $3 million from his next team.

Pretty sure he only would get our $14 plus the $750k

The Penguin · Post #18 » by **The Penguin** » Fri Dec 26, 2014 5:35 am

GreekAlex wrote:I wonder why they couldn't work out a buyout because he knows he's going to get at least 2M per season for the duration of the contract from another team.

So if he's owed by the Pistons 8.9M for the rest of this season and 13.5M next year and 13.5M the year after totaling 35.9M, wouldn't a buyout of 30.9M (1M this year and 2M for 2 more years=5M) from another team) make sense?

Or would that prevent them from using the stretch provision and using the stretch provision provides more flexibility?

Buyout would prevent the stretch.

Set off affects both cap figure and real salary owed.

If we owe him 5.4 mil in a year
He signs for 7 mil
Min is 1 mil
Set off is 3 mil (7-1 / 2)
We owe him/his cap figure would be 2.4, the new team pays him 7 and he'd get 9.4 for the year.

I'll be real curious if he stays with Houston knowing he gets guaranteed money from us or if he takes the highest pay day. Will say a lot about him.

Brapman · Post #19 » by **Brapman** » Fri Dec 26, 2014 5:37 am

Smith DOES get to double-dip. He was waived and his waived contract wasn't picked up and it was guaranteed money.

We WILL get relief on our cap hit in successive seasons = 50% times his new contract over the minimum salary for a 1 year veteran.

http://www.cbafaq.com/salarycap.htm#Q65

"If another team signs a player who has cleared waivers, the player's original team is allowed to reduce the amount of money it still owes the player (and lower their team salary) by a commensurate amount. This is called the right of set-off. This is true if the player signs with any professional team -- it does not have to be an NBA team. The amount the original team gets to set off is limited to one-half the difference between the player's new salary and the minimum salary for a one-year veteran (if the player is a rookie, then the rookie minimum is used instead)."

Brapman · Post #20 » by **Brapman** » Fri Dec 26, 2014 5:44 am

So, he doesn't get to double-dip $ for $. He double dips 50 cents on the dollar (over and above the minimum salary for a 1 year veteran. Josh has every incentive to sign the biggest contract he can get. And he will - he wants respect. He has to be a starter and all that bullcrap.

Teams are climbing all over him - he'll get a contract that shocks us. The Pistons are going to make out like bandits, and so will Smith.

Teams around the league will take note. The stretch provision can be used up to 15% of a team's payroll (or capped payroll - not sure), so, I think we can use it on Jennings. The rule is you get to stretch it over double the remaining length of the contract + 1 year. Smith had 2 years, so 2x2 +1 = 5. Jennings has 1 remaining so it's 2x1 +1 = 3. The thing with Jennings is I don't know that teams will be willing to pay him a large contract. So, if we stretch him, we won't likely get any additional salary or cap relief aside from the stretch itself. His 8 million would be stretched to 2.7 million per year for 3.