The New Orleans Pelicans 2017-18 salary cap sheet has recently been a hot topic of discussion, nearly as much as the team’s offseason signings or lack thereof.
With Rajon Rondo reportedly signing a $3.29 million contract for next season — incidentally, the same amount as the full bi-annual exception (BAE), it ensured the Pelicans would operate with a hard cap above their heads for the rest of the season. Think of the hard cap as a salary line drawn in the sand that a team may not exceed under any circumstances.
For over-the-cap teams, there exist several triggers (the BAE is one of them) which can invoke a hard cap at the apron, and for next season, it sits at $6 million dollars above the luxury/tax line ($125,266,000).
Whether Rondo was signed with the BAE or part of the mid level exception (MLE) is irrelevant because Bobby Marks published Darius Miller will make a guaranteed $2.1 million next season, an amount eliminating the chance to use the veteran minimum exception and thus needing to utilize either BAE or MLE money. The only way for New Orleans to have avoided the hard cap was to have stayed below the tax-payer MLE sum of $5,192,000. The combination of the Rondo and Miller salaries for next season surpass this amount — we didn’t even need to factor in Frank Jackson’s contract into the equation.
The Pelicans now can’t have more than $125,266,000 at any time on the books until June, 30, 2017 and they sit just $486,000 under the luxury tax line... but I’m here to tell you the sky isn’t falling.
First off, realize the current regime has experience operating with hard caps and should be regarded as savvy in handling the intricacies of collective bargaining agreements due to previous deals. For example, the trade for Omer Asik had a lot of necessary parts that wouldn’t have been possible without foresight and timely moves.
Back in 2015, the Pelicans used the non-taxpayer MLE to sign Dante Cunningham and Alonzo Gee and were thus hard-capped at the luxury tax apron of $88,740,000. The Pelicans came within $7,314,240 of the hard cap, but realize it was a lot closer when factoring the performance incentives of Asik, Alexis Ajinca, likely Jrue Holiday (he reportedly had $1.2 million in incentives for the 2016 season) and any other unknown qualifiers.
During the 2013-14 season, New Orleans was forced to operate under another hard cap after acquiring Tyreke Evans in a sign-and-trade (another automatic hard cap trigger).
A more comforting reason to not fret over the hard cap is that Demps has methods available at his disposal to create additional space on the salary cap sheet.
- The Pelicans can utilize the stretch provision by waiving a player and spreading their remaining salary over a period twice as long as the years left on their existing contract plus one. Asik has famously been mentioned as a candidate which could create a savings of just over $7 million for the upcoming season, and don’t forget his $1 million of performance incentives or so that counts towards hard cap calculations would disappear, too.
- The Pelicans have three unguaranteed contracts (Jordan Crawford, Quinn Cook and Axel Toupane) totaling almost $4.5 million.
- The Pelicans have all future New Orleans Pelicans draft picks available to tempt opposing teams to take any dead weight off the roster.
The Pelicans sit less than $1 million away from paying a tax, and we haven’t even factored the known bonus incentives of Asik, Holiday, Ajinca and Solomon Hill (minutes). It’s an uncomfortable situation for an unproven team, for sure, but realize tight salary caps are areas in which a lot of playoff teams must exist.
For instance, in quickly scanning through 2017-18 team salaries, the Los Angeles Clippers, Toronto Raptors, Houston Rockets, Memphis Grizzlies and San Antonio Spurs all appear to be hard-capped for the upcoming season. Two of them — the Clips and Rockets — sit really close to the tax line as the Pelicans but have less assets (future picks). Plus, if you’re a rebuilding team who has volunteered to tack on dead weight as long as it’s accompanied with first round compensation, wouldn’t you rather take on Asik’s contract than say Ryan Anderson’s? (The difference in guaranteed contract money is about $35 million.)
Asking whether the Pelicans were unwise to invoke the hard cap isn’t where your focus should be. Once Jrue Holiday was re-signed, the answer was easy. It was vital for the team to add cost controlled talent this summer, but take heart, they’re far from done.
It’s not difficult to foresee Axel Toupane’s contract being waived prior to July 25th (the day his guarantee jumps from $25K to $200K) unless Demps is able to include it in a trade package in the next few days. There’s a good chance Omer Asik may be stretched prior to August 31st (the last day to include stretching his 2017-18 salary) if he cannot be included in a trade. Demps most likely tried to include Asik in a Carmelo Anthony trade and don’t be surprised if he hasn’t called Cleveland already to help facilitate a Kyrie Irving departure. Lastly, the Pelicans could move Quincy Pondexter (if they feel his return still has questions) and Ajinca if further roster spots/cap space is required.
The fact that Cunningham has not realistically threatened to sign with another team serves as a positive indicator New Orleans is directly contemplating their next step. The Pelicans have probably hinted at throwing a solid contract his way, utilizing his bird right’s once they create the necessary space. The fact that he carries value (a 3-and-D player at both forward spots) and has still decided to wait while other team’s salary cap sheets shrink by the day bodes well for further changes to the roster.
Outside of last season’s salary cap explosion, multiple teams have operated yearly without issue while hard-capped in the past, including the Pelicans. Admittedly, things would be much easier if several mistake signings were not made in the past, but Dell Demps still has the wiggle room to make further improvements. Just sit back, put your feet up, and watch.