Making The Leap
Six teams with big-time cap space and big-time futures.
by Leo Sepkowitz | @LeoSepkowitz
Cap space is usually reserved for the bad teams. Teams whose best players make $6, $7 or $8 million annually. Teams whose players don’t bring owners hefty luxury tax bills, but also don’t bring them many wins. This summer, though, cap room won’t just be for the bottom-feeders.
A handful of teams—six, to be exact—with major cap space are within striking distance of relevancy. That doesn’t include teams like Detroit and New Orleans, which have money to spend and some solid pieces in place, but are likely at least a year away from trying to make a splash in free agency.
Cap room is fun. A team with enough space can do just about anything—big signings, small signings, sign-and-trades, mega-trades for overpriced stars, mega-trades for appropriately priced stars…whatever. There are endless options. That’s where I come in. But, before we get to the fun part, here’s some stuff you should know.
—”’13-14 Salary Cap” is the reported number for next season ($58.5 million).
—”Currently Sorta Guaranteed ’13-14 Payroll” is what’s guaranteed for next year as of now, plus some assumptions about upcoming player and team options.
—”Projected Amount Under Salary Cap” subtracts the Currently Sorta Guaranteed Payroll from the ’13-14 Salary Cap to project how much cap room—aka available money—each team will have to sign free agents.
—”Cap Holds” is how much money a team has in cap holds this summer. Cap holds have a few implications here. If a team has an unrenounced free agent, meaning they’re holding onto his Bird Rights so they can go over the cap to re-sign him, there is a cap hold on its payroll. If a team owns a first-round pick in the upcoming Draft, there is a cap hold for that, too. Also, if during the offseason a team has fewer than 12 players, there is a charge for each unused roster spot until the roster is full. All of these cap holds cut into teams’ cap space, and are factored into the Projected Amount Under Salary Cap number.
You can read lots more about all of that, as well as lots of other CBA things, right here.
Now the fun stuff…
|’13-14 Salary Cap||Currently Sorta
Under Salary Cap
|Cap Holds||Key Free Agents|
The Rockets’ focus will be on Dwight Howard this summer. The team will have over $22.5 million available to spend—enough to squeeze in a max contract for the Lakers center. If he goes to Houston, he’ll command about $20.5 million in the first year of his four-year ~$87M contract. From there, the team would have some options.
Option 1: Keep Omer Asik and Jeremy Lin. This seems unlikely to me. Asik will be expendable with Howard, and I don’t love the idea of them trying to fit together. Lin was simply bad in the Playoffs, and Houston should improve at the 1 this summer. In this scenario, though, they hang onto both and try to fix up the roster around the edges, rather than with a blockbuster move or two.
Option 2: Trade Omer Asik, Keep Jeremy Lin. If Howard signs in Houston, they’ll likely move Asik. A trade package of Asik, Thomas Robinson and Terrance Jones totals more than $10.3 million in combined salary. For those three, the Rockets would be allowed to receive about $17.3 million in salary (since they’re not a tax-paying team, they get to receive up to $5 million more than what they’re sending away in a trade, and they’ll still have ~$2 million of cap space left after the Howard signing which can be used in a trade). That’s about enough for a second max player (Josh Smith, Al Jefferson and Paul Millsap are set to hit unrestricted free agency). If they can land one of those guys in a sign-and-trade (for the rest of this section we’ll say it’s Smith), they’ll have a starting lineup featuring Lin, James Harden, Chandler Parsons, Smith and Howard, with a few promising pieces off the bench. Not bad.
Option 3: Trade Omer Asik and Jeremy Lin. This is where stuff gets really interesting. If they make the aforementioned Asik/T-Rob/Jones trade for a power forward, they’ll still be left with a few non-key assets along with Lin. Donatas Motiejunas looks like a solid stretch 4, and there should still be at least a shred of trade value in Royce White. Lin, Motiejunas and White combine for more than $8.3 million in salary. If they move the trio, Houston can receive about $13.3 million in salary ($8.3 million + $5 million). So even with Harden, Howard and Smith on the roster, Houston could land another high-impact player, though point guards available for trade this summer probably won’t be very enticing, save for Chris Paul.
Landing CP3 is highly unlikely with Doc Rivers on board in L.A. But if Paul still wants to leave, Howard’s Rockets will be very enticing. Backtracking to before Houston made a hypothetical move for a power forward, they could make a pretty good sign-and-trade offer to the Clippers. Something centered around Asik, Lin, picks and young guys could be enough if the Clippers think Paul is bolting this summer. If Red L.A. doesn’t want Lin or Asik (Eric Bledsoe and DeAndre Jordan make both incomers poor fits), Houston could flip them elsewhere, stockpiling more assets to send Los Angeles’ way in the deal
Here’s the really fun part. Even if Houston signs Howard and then makes the earlier discussed move for Smith, a sign-and-trade for Paul would still be on the table.
If Howard takes a less-than-maximum contract (about $17 million in Year 1), Houston could pick up the team options on Aaron Brooks ($2.5 million) and Carlos Delfino ($3 million) before signing D12. Then Houston could flip Asik/Robinson/Jones for Smith. After that, they could include the expiring contracts of Delfino and Brooks along with Lin, Motiejunas and White in the trade with the Clippers for CP3 and offer Paul close to $19 million in the first year of his deal. Not max money, but close.
Of course, all of this is assuming that: A) Chris Paul wants out of L.A. despite the Doc hiring, B) He would take less money to play for a hypothetically star-studded Rockets team, C) The Clippers would trade him to a Western Conference team and D) They’d settle for that less-than-spectacular package, which would surely include multiple first-round picks and still fall short of being particularly intriguing because E) For some reason there isn’t a better offer available to L.A. The Clippers would have to be in full-blown We’re-Going-To-Lose-Him-For-Nothing-If-We-Don’t-Pull-The-Trigger mode, also known as Rob Hennigan Summer 2012 Syndrome. That’s a lot of things to break Houston’s way, but just a year ago the Lakers landed the top center in the League for some insignificant pieces and a guy whose knees were so bad that a bad bowling experience sidelined him for the season. Stuff happens. (PS: I can’t believe that trade is sorta working out for Orlando.)
If there’s no luck on the CP3 front, they could look to Milwaukee or Atlanta, who have Brandon Jennings and Jeff Teague hitting restricted free agency, respectively, as potential sign-and-trade partners. It could work if one of the point guards has a max contract offer sheet from a third team, and his original team doesn’t want to match the offer but also doesn’t want to lose the guard for nothing. A sign-and-trade could then be explored as long as the guard didn’t already sign the offer sheet with the third team. Slim chance. Realistically, Lin is a pretty safe bet to be Houston’s starting point guard next season, though Patrick Beverly looks like he might be an overall better player.
Other Options If Howard Signs. They could use the Asik package, which I would imagine is far more valuable than the Lin-centric one, to upgrade at point guard, and then use Lin and other pieces to land a better power forward. Or not. Maybe they’re high on Motiejunas, Robinson and/or Jones, and don’t think they need a power forward. Maybe they’re still high on Lin, or see Beverley as their future point guard, and don’t think they need a new one. Maybe they think Asik and Howard could co-exist. There’s no obvious route for the Rockets to take this summer, but, if they sign Dwight Howard, they can quickly build one of the elite teams in the NBA behind a top-two center and a top-two shooting guard.
Options If Howard Doesn’t Come To Houston. If the Rockets whiff on Howard, the offseason should still be a success. They can then move to signing a different big man outright—probably Smith, Jefferson or Millsap. They could keep Asik in that scenario, since he’d do just fine alongside any of those three. They’d also still have Lin and all of their young guys, and could try to package them for another star player, or just sit tight with quality depth. Nobody knows what Houston will do, but you can bet that the Rockets will make a splash this summer, one way or another.
PS—The Paul, Harden, Howard, Smith/Jefferson/Millsap team would obviously end up with a huge payroll, but Houston wouldn’t get hit that hard with tax penalties. Since they didn’t pay the luxury tax last season, it’ll take three full seasons until they have to deal with repeater taxes, which are much steeper than regular luxury taxes. By then, three of the Big Four would have just one year left on their contracts, so Houston would get stuck with a huge tax bill for two seasons. Plus, they already have the perfect wing to fit on that team in Chandler Parsons, who will earn less than $1 million in each of the next two years. Two hefty tax bills for that team seems worth it to me.
|’13-14 Salary Cap||Currently Sorta
Under Salary Cap
|Cap Holds||Key Free Agents|
Jeff Teague (RFA)
Ivan Johnson (RFA)
The Hawks are hardly committed to anyone next season, so their summer is wide open. Right now, mega-tradable Al Horford ($12 million), definitely-tradable Lou Williams ($5.225 million) and probably-tradable John Jenkins (~$1.25 million) are the only guys with guaranteed ’13-14 money. Jeff Teague and Ivan Johnson will hit restricted free agency, so Atlanta can match any offer they receive. In my projections for payroll and salary cap space above, I presumed that the team would renounce every free agent except for Teague to create as much cap space as possible.
Until Teague signs a contract sheet or re-signs with the team, his cap hold remains on the payroll. The charge is 250 percent of his previous salary—roughly $6 million. They would need to renounce Smith to give them the ~$28.2 million in initial cap room. Once he’s renounced, they lose his Bird Rights, so they wouldn’t be able to go over the cap to keep him. If they don’t renounce Smith, his temporary cap charge will be $16.5 million, bringing their initial cap space to under $12 million. They will quickly need to decide whether he’s worth max money or not.
Let’s start with the Howard/Paul thing. Howard is from Atlanta, and the two reportedly want to play together. If they decide they want to go to the Hawks, it would be easy to pull off. Let’s assume they have the full $28+ million, meaning they renounced Smith but are hanging on to Teague.
Step One: Either guy signs in Atlanta as an unrestricted free agent. Assuming the Hawks renounce everyone except for Teague, the team will have more than enough to offer one max contract—either going to D12 or CP3.
Step Two: Sign-and-trade for the other guy. Regardless of who signs outright, the package to get the second player would likely be the same. A sign-and-traded Teague, assuming an $8 million salary, along with Lou Williams, Jenkins and the team’s 17th overall pick would be enough to sign either Paul or Howard to a max deal in a sign-and-trade.
If the Lakers or Clippers, depending on which team didn’t lose their superstar outright, demand Horford, which would be surprising since they’d have zero leverage in the situation, the Hawks could send the Florida alum away and keep Teague and Lou-Will. Teague would then be expendable with Paul on the roster, so they could sign-and-trade him elsewhere for a piece that fits.
If it works, Atlanta will either have Paul, Howard and Horford or Paul, Howard, Williams and whoever they acquire for Teague as the team’s core. The Hawks would still own the Nos. 18, 47 and 48 picks to begin filling the roster out on Thursday. When free agency begins, they’ll get the Mid-Level Exception ($5.15 million in the first year) and Bi-annual Exception (~$2 million in the first year) to sign more pieces. If you can land two of the NBA’s premier players in one summer, you do it and figure the rest out later.
It’s all fairly practical, but will only happen if Howard and Paul decide that Atlanta is the only place they’ll play next season.
If that plan falls through, the Hawks would still be in a position to have a big summer. If they’re not afraid of the luxury tax, Atlanta could quickly sign two high-priced free agents (Monta Ellis, Andre Iguodala, Al Jefferson-types), then re-sign Teague, who they’ll be allowed to go over the salary cap to retain because they own his Bird Rights.
So if the Hawks sign two guys and then re-sign Teague, it would give them a Teague-High-Priced FA 1-High-Priced FA 2-Mid-level Exception Guy-Horford starting lineup with Lou Williams off the bench. That seems like a pretty reasonable scenario.
They could also bring in one High Priced FA—let’s say it’s Jefferson—and then split the remaining money on other guys. A trio like Jefferson, OJ Mayo and Carl Landry could probably fit into their $28+ million of available dough. Again, they’d then re-sign Teague to go over the salary cap and then use their mid-level exception to sign another piece. This formula would give them a nice, deep team that steers clear of the luxury tax—something like Horford, Jefferson, Teague, Mayo, Landry, Williams, No. 18 pick and two guys signed with the free agent exceptions. Not a title threat, but a quality team nonetheless.
Atlanta should, at the very least, build on a pretty good team, but they have a chance to create a great one.