What is the amnesty clause?
- the really short explanation - lakers get to waive one player from their roster and can eliminate that player's contract off the cap.
- the long explanation - http://www.cbafaq.com/salarycap.htm#Q67
Why would a team want to use the amnesty?
- two main reasons, to create capspace by lowering the number of contract obligations and to reduce their luxury tax hit by once again lowering the number of contract obligations. team still pays the player his contract. we'll go more into detail on why the lakers would use it in the next section.
Who is eligible to be amnestied?
- Players currently playing under a contract signed before the new CBA. For the Lakers that means Kobe Bryant, Pau Gasol, Metta World Peace, and Steve Blake. All 4 have one yr left on their current contracts.
When can a team use the amnesty?
- Amnesty window is the 1st week after the July moratorium. For this upcoming season, the first week after the moratorium will fall on the dates of July 10th - 16th. This is the only time the amnesty can be used.
When can a player return to the team after being amnestied?
- Player can't return to his team until his amnestied contract would have expired. For the Lakers, they all have contracts that expire in summer of 2014, so all the players could return for the 2014-2015 season.
Why use the amnesty?
Making trades and signing player
- before discussing the monetary implications of using the amnesty and trying to get out of the lux tax, i quickly want to mention how being a lux tax team hurts the lakers. 1st, they can't acquire players through sign n trades or sign n extend. 2nd, they can't offer the full mle, only the "mini mle". this puts them at a competitive disadvantage. on to the $$$...
New Luxury Tax
- next season, the new tiered luxury tax finally kicks in. previously, any dollar amount above the luxury tax threshold ($70.3 mil) was taxed at a dollar for dollar rate. (ie. if your team salary was 73.3 mil, which is 3 mil over the luxury tax, you paid 3 mil in tax.) starting next yr, teams will be taxed at different rates depending on how far over the cap they are. for the 1st 5 mil over the tax, you're taxed 1.50 for each dollar. for 5mil to 10mil, you're taxed 1.75 per dollar. here's a table that gives the basic set up:
*for each additional 5 mil over the tax, the tax increases by 50 cents (i.e 20-25 mil over tax = 3.75 tax)
How it affects the Lakers
This season, the Lakers team salary is around 100.3mil, we'll use that number to keep things simple. This puts the Lakers 27 mil over the luxury tax threshold. Using this yr's tax rate, the lakers would need to pay 27 mil in luxury tax (dollar for dollar rate).
If the Lakers were to have the same team salary next yr, and if the lux tax threshold stayed the same (it'll be something close to what it is this yr), the lakers would be looking at a much higher tax rate...lets see how much.
if they're 27 mil over the tax...
for the 1st 5 mil they'd owe 7.5 mil
for 5-10 mil they'd owe 8.75 mil
for 10-15 mil they'd owe 12.5 mil
for 15-20 mil they'd owe 16.25 mil
for 20-25 mil they'd owe 18.75 mil
for 26-27 mil they'd owe 8.5 mil
for a total luxury tax hit of 72.25 mil. this is about 45 mil more than what the same roster would cost them this yr.
The EVIL Repeater Tax rate - long term outlook
If you previously looked at this table, you might have seen the column "repeater tax rate"
This higher repeater tax rate is for teams that have been over the luxury tax in 4 of the previous 5 seasons. Luckily for the Lakers, this doesn't kick in until 2014-2015. The Lakers have been in the luxury tax for awhile, but hopefully by that season they are no longer in the lux tax. Many have mentioned that the contract flexibility and cap space in the summer of 2014 is crucial to the rebuild, but its also crucial to getting out of the luxury tax and not having to pay it at the increased repeater level. Under the repeater tax rate, the lakers, with their current salary, would be looking at a 100 million luxury tax hit.
So who gets amnestied?
As mentioned earlier, there are 4 candidates, all with one yr left on their contracts.
Kobe Bryant 30.4 mil
Pau Gasol 19.3 mil
Metta World Peace 7.7 mil
Steve Blake 4 mil
Without trying to get too specific and detailed with the numbers, the following rough estimates give an idea of how much savings the lakers would get by amnestying each player. This doesn't take into account other players getting signed, other player's scheduled pay raises, the lux tax threshold changing by a few mil, etc.
Kobe Bryant: By eliminating his contract, lakers would roughly be eliminating their entire lux tax hit, which would mean about 70-75 mil savings.
Pau Gasol: Getting rid of his 19 mil contract would result in about 60 mil savings.
Metta World Peace: getting rid of his 7.7 mil contract would result in about 25-30 mil savings.
Steve Blake: getting rid of his 4mil contract would result in about 15 mil savings.
Final Thoughts
Seeing these numbers and the savings they provide, i can't imagine the Lakers not using the amnesty. Some people have thrown Kobe's name out, but that was when some believed he'd miss the entire next season anyway and the lakers and kobe could come to an agreement, but with him looking at being ready for the opener, its not a consideration. mitch has stated as much.
This leaves pau, mwp, and blake. Pau gives about 60mil savings, which is HUGE, but he's also still a very good player and one of the team's stars. getting rid of him def. hurts the on court talent and there's no way to replace him. he's also a movable asset if the team chooses to try to trade him. this leads me to the obvious candidate, MWP. he gives about 30 mil savings, which is a good chunk of money (roughly equal to the total lux tax hit the team is paying this yr). he doesn't really provide much on the court anymore and is easily replaceable.
if mwp chooses t0 opt out and look for a contract with more guaranteed yrs but at a lower salary with some other team, i can see blake getting amnestied...but i'd be shocked if MWP went that direction seeing as he could get that contract after getting paid his 8mil by the lakers to walk away.
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