FanPost

Salary Cap Rumors and the NBA CBA

Patrick McDermott

[Bumped to the front page - Brian]

Opinion is the medium between knowledge and ignorance.

-Plato

Welcome to the internet. Specifically a site dedicated to a professional sport's team. I would reckon that 80-90% of what is discussed on a typical blog dedicated to rooting for any sports team vacillates between opinion and ignorance. The remainder focuses on knowledge. Things such as statistics, wins and losses, salary cap implications, and the list goes on. But all of those data points, actual knowledge, is then used forge opinions. Or, sadly in many cases, ignorance. Let us all hope that I can avoid the latter this afternoon.

First let me focus on the knowledge, things we either know to be true or have good reason to believe to be true in the future. Incredibly important information for all NBA teams has leaked this weekend. The expected salary cap for this coming season (2013-2014) along with an estimate from noted NBA CBA guru Larry Coon about what the 2014-2015 season might look like.

This is excellent news for New Orleans on a number of fronts. The amount of available free agent money has decreased compared to expectations. Most NBA writers had operated under the assumption of a $60 Million Salary Cap. A reduction of $1.5 Million does not seem significant. But multiply that amount by the 30 teams in the NBA. $45 Million is a significant number which will reduce the amount received by free agents. Not for Dwight Howard and Chris Paul, and not players who will be signing for close to the minimum. Everyone else, the "middle class" of the NBA. Role players throughout the league will now face even more difficult decisions about how much money they are willing to leave "on the table" in order to sign with a contender.

The amount to be left is going to be considerable. The Miami Heat, Brooklyn Nets, New York Knicks, and Chicago Bulls are already into the luxury tax next season. The Los Angeles Lakers and Oklahoma City Thunder are already over the salary cap with contributors not included (Dwight Howard and Kevin Martin) which likely will push them into the luxury tax. The Los Angeles Clippers will be over the cap if they resign Chris Paul.

NBA CBA FAQ

Teams who are below the "apron" ($4 Million or less above the luxury tax) can use the standard Mid-Level Exception. This gives some of those teams $5.150 Million in salary cap room. As Larry Coon discusses in the above link, the key is where the salary puts the team afterward. So any team cannot go above $75.6 Million by using the full MLE. This means that the Heat, Nets, Knicks and Bulls can only use the tax payer exception $3.183 Million. Any salary beyond that must be added through drafted rookies or minimum veteran contracts. The Lakers would also be subject to such limits should they resign Dwight Howard. The Clippers will have access to the full MLE even after they resign Chris Paul, but only that exception and then to add minimum contracts.

The absolute maximum a free agent can receive to go to Los Angeles, New York City, Chicago, or to play with LeBron is $5.150 Million, and that means going to the Clippers. Outside of that, the amount shrinks to $3.183 Million. The veteran minimum maxes out at $1.399 Million, assuming 10+ years in the NBA.

New Orleans is currently slotted an 12 man roster with a total cap hold of $46.488 Million. This assumes options are exercised on Robin Lopez, Jason Smith, Lance Thomas, Terrel Harris, Brian Roberts, and Darius Miller. It also assumes that the #6 pick is used and signed by New Orleans. The salary floor next season is $52.65 Million, 90% of $58.5 Million. Already GM Dell Demps is required by the CBA to spend at least $6.162 Million in free agency. A full million dollars more than the Clippers can offer and nearly double what any of the other leading contenders have available. This also gives Demps $12.012 Million in total cap room before utilizing any exceptions. The Pelicans can use that cap space now to front load a contract if necessary to win a bidding war without damaging its long term financial outlook.

NBA CBA FAQ

This tidbit of information is critical to New Orleans Pelican fans and one I do not believe we have covered thoroughly enough. Both the NBA or the NBAPA (the union) can opt out of the current CBA after the 2016-2017 season. Many NBA fans remember the free agency season of 2010. That is when LeBron James famously announced that he was "taking my talents to South Beach". In a related move, Kevin Durant quietly announced that he agreed to a five-year contract extension on Twitter. Platitudes were drawn about the two players and their contrasting styles.

Not so eagerly covered was why Kevin Durant was agreeing to a contract extension an entire year before he was eligible to become a restricted free agent. Of course, on July 1, 2011 the NBA announced the beginning of the lockout. Kevin Durant had deftly signed his contract extension under the old CBA for a greater amount than he could have after the lockout. This also allowed the Thunder to then use their "designated player" contract on Russell Westbrook, giving him a fifth year guaranteed.

Why are these two things related? Anthony Davis will be a restricted free agent in the summer of 2016, before either side can opt out of the CBA. The New Orleans Pelicans will not only be eligible to offer him a five year contract with more guaranteed money than any other team in the NBA. Forgoing that contract in the face of a new and uncertain CBA could potentially cost Anthony Davis millions of dollars. Not only did the Pelicans win the lottery for the right player, they won at exactly the right time.

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