In case you missed it, LeBron James is going home. Well, after he goes to Brazil to watch the World Cup. He announced yesterday that he will sign with the Cleveland Cavaliers. Cleveland had some work to do in order to create the necessary cap space, and it appears that Dell Demps was immediately on the phone.
#Pelicans officially announce the have acquired SF Alonzo Gee from Cavs for future considerations.— nakia hogan (@nakiahogan) July 11, 2014
#Cavs will also get a $3 million trade exception in Gee deal with Pelicans, according to a source.— Jason Lloyd (@JasonLloydABJ) July 12, 2014
The trade, as announced by the Cleveland Cavaliers, entails the Pelicans sending out the Clippers 2016 Second Round pick (top-55 protected) for Alonzo Gee. Well, with all respect to Mr. Gee, the trade is for his $3 Million unguaranteed contract. That contract will become incredibly valuable when attempting to execute the Omer Asik trade. Another move was necessary, as the Pelicans did not have the cap space to trade Gee into, which also recently occurred.
Pelicans renounced Jason Smith, Al-Farouq Aminu and James Southerland.— Mark Deeks (@MarkDeeksNBA) July 12, 2014
It was inevitable that unless a sign-and-trade could be worked out that these players would be renounced. At least in the case of Aminu and Smith. Southerland is a more interesting case, but let's take a look at what these moves created so far.
[EDIT - Updated to include Morrow signing with OKC]
The bleeding edge of the salary cap right there. Please note that the amounts listed for Miller and Roberts are their salary cap holds, not actual contracts. Combine the news that Cleveland is receiving a $3 Million trade exception with the renouncements and we can determine that the Gee trade was made into cap space.
In order to do a trade into cap space a team must exist beneath the cap. Once a team makes moves below the cap they also renounce both the Mid-Level Exception and the Bi-Annual Exception. This is outlined, as always, at Larry Coon's CBA FAQ. Farewell MLE and BAE, we hardly knew ye.
One other thing, operating under the salary cap does open up a couple new options for Dell Demps. These are also outlined in the CBA FAQ.
In addition, teams cannot trade players under the following circumstances:
For two months after receiving the player in trade, if the trade aggregates the player's salary with the salaries of other players. However, the team is free to trade the player immediately, either by himself or without aggregating his salary with other salaries. This restriction applies only to teams over the salary cap.
While taking on Gee's salary under the cap means the team loses both the MLE and BAE, it also means his unguaranteed salary can be aggregated with other outgoing salaries immediately. This would not be the case if the team remained above the salary cap. Somehow acquiring Gee and remaining above the salary cap would serve no purpose, as he could not be traded until September at the earliest in such a scenario.
Building the Asik Trade
Despite these moves, the Pelicans are not in the clear yet. Gee is most reasonably being traded for to be included in the Asik trade. Unfortunately, he does not make quite enough to balance the trade equation, outlined here. Including the contracts of Gee, Melvin Ely, and Luke Babbitt result in the following trade formula.
($3,000,000 + $1,316,809 + $981,084) x 150% + $100,000 = $8,046,839.50
Asik’s cap hit is $8,374,646. At this time the Pelicans do not have enough salary outgoing to make a legal trade with the Rockets without also including an additional player. Who that player is is anyone's guess, it might not be someone currently on the roster.
By maintaining the cap holds for Brian Roberts and Darius Miller (this is different from their qualifying offers, which are larger and would make them restricted free agents) the team continues to hold their Early Bird Rights. Despite dipping below the salary cap the team can still sign (or sign and trade) either of these players and exceed the salary cap in doing so. The maximum salary either can be signed for (beginning in year one) is $5,632,000. Explanation of Early Bird Rights can be found here; average salary (which determines how much an early bird player can be offered) can be found here.
It would be possible, hypothetically, to do a sign-and-trade of one of Roberts or Miller (hopping over the salary cap), bring back a near minimum unguaranteed salary back (jumping back under the salary cap), and then aggregating that salary with Gee and Ely (and Babbitt if necessary) to execute the Omer Asik trade. After that, the team could then re-sign whoever is left of Roberts and Miller using their early bird rights.
Of course, that might not be the case. The ability to aggregate recently traded salaries may be determined by the position a team is in after the trade. Trading for Omer Asik in this scenario (with unguaranteed contracts) would still put the Pelicans over the salary cap afterwards. If the rules break that way (and I could not find a definite answer in the CBA FAQ) then acquiring Gee may make no sense whatsoever.
Topping it Off
These rather complex machinations of the salary cap are probably much more common than we realize when they occur outside of our team. It is part of the job of a GM to wring out the maximum amount of flexibility within the confines of the CBA. Dell Demps, for better or worse, appears on his way to using everything in his power to maintain as much of the core of this team as possible while obtaining Omer Asik.
Depending on your opinion of Asik and how dire you view the needs at small forward, he is likely a genius or an idiot in your mind. Scratch that, you probably made that determination much earlier. Probably last summer. Or maybe even the summer before that when he elected to match Eric Gordon's salary.
Much of that opinion will also bias your opinion of current events. Is he desperate to save his job and throwing a Hail Mary? You probably did not like some combination of matching Gordon, trading for Jrue Holiday, or signing Tyreke Evans. Think Demps is the next coming of Bobby Fischer at the chess board? You're probably a dedicated supporter of nearly every move. Except the Eric Gordon one.