Earlier this evening, news struck that Eric Gordon would be opting in with the New Orleans Pelicans, exercising his $15.5 Million player option for the 2015-16 season. As I outlined in February, this really clears up the realistic avenues of roster construction for Dell Demps this summer.
There are two fundamental choices as an NBA franchise each July: to function as an under the cap team or an over the cap team. For many, this decision is made for them as their salary commitments put them firmly in one camp (under, the Philadelphia 76ers) or the other (over, the Golden State Warriors). The Pelicans, on the other hand, have had a choice rather frequently and Demps has decided to go under the past two summers.
Going under the salary cap opens the possibility of a large single contract to be offered to a significant difference maker. As I will outline below, that option is not incredibly appealing for the Pelicans this summer. Remaining above the salary cap maintains rights to current players not under contract as well as access to sizable exceptions for external improvement.
Pelicans on July 1st
This is the picture the Pelicans will be looking at before they go about renouncing their rights to anyone. If you want background on how much Demps can offer each free agent, check this article out. The only players under contract next season are Eric Gordon, Jrue Holiday, Tyreke Evans, Ryan Anderson, Anthony Davis, Quincy Pondexter, and Toney Douglas (unguaranteed). Everyone else is listed as a cap hold except Norris Cole and Jeff Withey. The amounts listed there are the qualifying offer necessary to retain their restricted free agent rights.
I would be surprised if the Pelicans paid the luxury tax next season. Of course, sixteen potential players are listed above, and the maximum roster size is 15. The unguaranteed contract of Toney Douglas, as we learned last season with Melvin Ely, has the potential to facilitate a trade this summer. Remaining above the cap would give the Pelicans the ability to retain any of their own players and bring in free agents with the Mid-Level Exception (MLE) with a maximum value of four years, $23.3 Million and the Bi-Annual Exception (BAE) for two years, $4.3 Million.
Operating with cap space
Instead, the Pelicans could clear the decks (the official tab name on my excel document) for a bigger fish in free agency. Renouncing the rights to Asik, Cole, Ajinca, Babbitt, Cunningham, Fredette, and Withey as well as waiving Toney Douglas create a decent amount of cap space at the cost of continuity and depth. In the process the team must also renounce the Mid-Level Exception and Bi-Annual Exception, with the Room Level Exception (max value two years, $5.7 Million) as their return.
|Cap Holds (x5)||$2,625,465|
The NBA CBA requires incomplete roster charges for a full roster of 12. I am not completely sure whether the 12th cap hold is rolled into a potential maximum cap space contract offer. Above I have done so. The $8,677,658 contract in year one, with 4.5% raises over four years, maxes out just over $37 Million. The Room Exception is capped at just two years and $5.7 Million total.
Time to plan
Going the cap space method really only makes sense if Demps goes whole hog. Even keeping Norris Cole's qualifying offer on the books reduces available cap space near the Mid-Level Exception amount. Further, cap space simply is not going to be enough to secure the commitment of a substantial upgrade to Omer Asik at center. Even if the Pelicans decide to let Asik walk for nothing, it would not create a single cent of cap space this summer. To create cap space of any functional level means saying goodbye to everyone not under contract. Everyone.
There is, however, another option to get into the game of free agency. The sign-and-trade. The key to this is understanding that three different parties must execute this transaction. First, the Pelicans would need to convince a free agent to contract terms. Then New Orleans would need to convince that player's old team (who continues to hold that player's rights) to execute a sign-and-trade.
Sometimes the assets or players traded are relatively trivial. Ryan Anderson was obtained via sign-and-trade and the Pelicans sent out Gustavo Ayon. Other times, in order to make salaries match as a team operating over the cap, the pieces are of much greater value. The sign-and-trade for Tyreke Evans in 2013 which involved Robin Lopez, Greivis Vasquez, and Terrel Harris (I bet you forgot about Harris!) is one such example.
If I had to guess, the Pelicans are going to operate as a team above the cap this summer. The one reasonable way they would not is if they found a way to ship off a core player with little to no guaranteed salary in return. The Cleveland Cavaliers and the Brendan Haywood contract is the best example.
Still, I am not convinced it is the best method unless somehow Marc Gasol (or LeBron James as long as we're dreaming) has made it known he would like to come to the Crescent City through back channels and agents. Remaining big targets in free agency such as Draymond Green, Kawhi Leonard, Jimmy Butler, and Khris Middleton are all restricted. Their own teams allowing them to walk is a minuscule proposition at best.
Thus, expect salary cap wizardry from Demps again or a number of small moves as much of the core returns for another go around with Anthony Davis. That might not be such a bad thing after all.