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NBA Players Association rejects cap smoothing, how it affects Pelicans and Anthony Davis

There is less ambiguity on the salary cap going forward now. Let's check in on the Pelicans.

Derick E. Hingle-USA TODAY Sports

The largest current contract in the NBA, in total dollars, is the five year, $124 million contract Carmelo Anthony signed this past summer. Two players, Kobe Bryant and Joe Johnson, make more this season than Carmelo. Their contracts expire after next season, however. The largest contract in the NBA will be in new hands this summer.

The NBA Players Union rejected another attempt at "smoothing" the salary cap increases by the league Wednesday afternoon. The salary cap without smoothing has already been projected. The jump from this summer's expected $66 Million to the summer of 2016's $87 Million or more is why LeBron James signed his odd two year contract this summer instead of locking himself into a long term deal.

The new CBA (signed in 2011) means no player beyond their rookie scale contract has much use for signing an extension. Extensions can only be for three new years; a total of four with the remaining year on the old contract. Reaching free agency allows their own team to offer a five year contract while potential suitors can offer a four year new deal. This may be enticing for veteran rotation players but for superstars holds no real value.

Rookie contract extensions, however, are very different. Instead of three new years in the extension with players still on their rookie contract teams can offer up to five new years from July 1st until October 31st. A five year extension must be for at least the rookie max (25%), as the Denver Nuggets found out with Kenneth Faried. This brings us to Anthony Davis.

Maximum Extension and the Rose Rule

On July 1st the Pelicans will be able to offer Davis an extension for up to five years. Davis is very likely to qualify for the "Rose Rule" extension, increasing the maximum offer from 25% of the cap to 30%. This is not as easy as 87,000,000 x 30% as Larry Coon shows here in the NBA CBA FAQ.

They use a different cap calculation to determine the maximum salaries, which is based on 42.14% of projected BRI rather than 44.74%. In 2005 the sides negotiated a different formula for setting the salary cap but not maximum salaries, so the two became decoupled, and this continued in the 2011 agreement. For this reason the maximum salaries are not actually 25%, 30% or 35% of the cap, and instead are a slightly lower amount. For example, even though the salary cap for 2011-12 is $58.044 million and 25% of this amount is $14.511 million, the 0-6 year maximum salary is actually $12,922,194. In addition, for 2012-13 a 5.8% increase in maximum salaries was agreed to, even though the salary cap stayed the same as 2011-12.

Michael McNamara and Jason Calmes of Bourbon Street Shots laid out a number of potential cap estimates for Anthony Davis in this excellent and detailed post this summer. With an $85 Million cap they estimate Davis could begin as high as $24 Million with the full 30% allowed.

Two recent players to sign extensions did not get the full 30%. Paul George compromised for 27%. Kyrie Irving went slightly higher at 27.5%; unfortunately since he was not elected a starter for the All-Star game he will only receive 25% as he does not qualify. George has a player option in the fifth year (2018-19) while Irving does not (2019-20).

If the Pelicans offer Davis the full amount (which I have every reason to expect they will) the top end of this contract will be over $140 Million for five years. The richest contract in the NBA this summer will be his with a the stroke of a pen.

As Kyrie Irving's story (published at 1:33 AM, just an hour and a half after negotiations were permitted to begin) demonstrates, there is little reason to delay. Not only that but the Paul George injury, which happened right in front of Anthony Davis last August, shows that injury can strike at any time.

Moving Forward

Eric Gordon is the only other real variable this summer. The chances he was going to opt out were minuscule to begin with; now they have evaporated altogether. I covered this in February looking at the salary cap flexibility this summer.

He is almost certainly going to pick it up. Everyone in the league is attempting to set themselves up for the free agency bonanza in 2016. All Gordon has to do to ensure that is to also get paid $15.5 million next season. Gordon's recent resurgence could tempt him to secure a greater long term value this summer. It is not a stretch to think Gordon could receive a four year contract worth more than the $15.5 Million owed. However, Gordon is probably going to bet on himself. Another season of relatively good health while shooting 40%+ behind the arc will be valuable in the 2016 market.

The Pelicans could allow Omer Asik to walk this summer. That would not create much functional cap space, but it would limit future liabilities. Who the General Manager is come July 1st will have a big effect on if Asik is retained.

The big picture is that the chances Anthony Davis is extended this summer increased with this decision by the player's association. Not only that, before reaching free agency he will have the most lucrative contract in the entire league in front of him to sign.