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Old 05-21-2008, 03:34 PM   #1
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Default Salary Cap Fundamentals

http://members.cox.net/lmcoon/salarycap.htm

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Salary Cap Fundamentals
Here are a couple of basic concepts for those that don't fully understand the nuances of the cap.

1. The salary cap this year is $55.63M. That's up from $53.13M last year. The cap is based on a percentage of the projected basketball related income for the league. For the purposes of this analysis, I'm going to assume that the salary cap next year is $58M, an increase of roughly the same amount as last year.

2. To compute a team's cap number, you add up the salaries of each signed player, plus the cap holds for any free agents that a team wishes to resign, plus cap holds for draft picks, plus enough minimum salary contracts so that the total team roster size is 11.

3. A "cap hold" is the calculated salary slot that a team must reserve for a free agent if they want to retain that free agent's "Bird rights". That is, if they want to be able to exceed the cap to resign the free agent. In order for a team to not be charged a cap hold, they must renounce that free agent, which means they cannot resign them. Oftentimes, the cap hold is bigger than the actual salary that the player is likely to get. If a free agent is quickly resigned, then the player's new salary becomes the cap figure and the cap hold is no longer calculated.

4. All teams can utilize the Mid-Level Exemption (MLE). The MLE is the value of the average of all player salaries. This year, the MLE is $5.36M, up from $5.21M last year. I'm going to assume that the MLE will be $5.5M next year. So effectively, a team isn't really under the cap until they have more than 5.5M in cap space. Anything less would mean that it's more advantageous to use the MLE rather than cap space. Any team with a payroll of $52.5M or greater will not be a significant player in free agency and I consider them to be over the cap for the purposes of this analysis.

Teams Over the Cap:

The following teams are well over the cap. There aren't any foreseeable trades or transactions that could conceivably get then under the cap. They will only have the MLE available to them in free agency. (And many will choose not to use it because of luxury tax ramifications.)

Boston
Cleveland
Dallas
Denver
Detroit
Houston
Indiana
L.A.Lakers
Miami
Milwaukee
Minnesota
New Jersey
New Orleans
New York
Orlando
Phoenix
Portland
Sacramento
San Antonio
Toronto
Utah


Teams that Could Get Under the Cap, but Probably Won't

Charlotte
Charlotte has a base payroll of about $43.0M next year. (I don't know Matt Carroll's exact salary but it's somewhere in the $3.5M range.) If you add in about $2.4M for a number 8 draft pick, the cap figure jumps to $45.4M. This payroll figure does not include the salary of Okafor. Okafor is a free agent with a cap hold of $13M (the max salary). Okafor will almost surely get resigned, probably for something in the $9-12M range. If he doesn't get resigned, or if somebody else offers more money and Charlotte declines to match, then Charlotte could end up with about $13M in cap space.

Chicago
Chicago has a projected payroll next year of about $41.5M. (I can't find the exact breakdown of Nocioni's new contract, but I know it's 5 years, $35M, so I'm assuming $6.5M next year.) That salary figure does not count Deng and Gordon who are free agents. However, their cap holds are huge: $9.9M for Deng and $13M for Gordon. So the Bulls are well over the cap until they make a decision on both players. Conceivably, the Bulls could sign Deng for something in the $8M range (like C.Butler and J.Howard) and then renounce Gordon and have about $8M in cap space. Chances are, they'll resign both players and they'll have no cap space.

Golden State
Golden State has a projected payroll of $47.2M. Baron Davis has a player option, but since his salary is $17M and nobody else figures to offer him anything near as much, I don't see Davis exercising that option. Andris Biedrins is a free agent and Golden State will surely resign him. His cap hold is $7.9M and his likely salary will probably be in that range as well. That pushes Golden State up to a salary of $55M or so. They also have to fill out their roster with minimum salary vets and draft picks, which should add another $3M at least. Basically, if Golden State unwisely renounces Biedrins, they'll have about $8M in cap space and a 6-man roster with no MLE or LLE available. I don't see that happening. Monta Ellis is also a free agent but his cap hold is just $750K.

L.A.Clippers
The Clippers will have a payroll of $53.2M if they renounce Livingston. They'll have to add a draft pick and 3 minimum salary vets to get to an 11-man roster so that means a payroll of about $56M, which means no effective cap room. However, Brand and Maggette have player options. They are due $16.4M and $8.4M respectively. I seriously doubt Brand will exercise his option given that he makes a ton and is coming off an injury. Maggette might be more inclined to do so, but I doubt it. If Maggette does exercise his option, the Clippers could have about $10M in cap space.

Washington
Jamison is a free agent and Arenas is opting out. That leaves Washington with a payroll of $42.1M. Add in a cap hold for their draft pick and a minimum salary vet and it's about $44M, giving the Wizards about $14M in cap room. However, it is highly likely that both Jamison and Arenas will resign, rendering the Wizards over the cap. (Note, the cap holds for Arenas and Jamison are easily enough to keep them over the cap. The Wizards would have to renounce both Jamison and Arenas to have cap room. That's not happening.)
One interesting wrinkle is that there is the potential that Etan Thomas retires because of his heart condition. If he does, his $6.8M salary comes off the books. If Etan departs, Jamison is renounced, and Arenas resigns for a somewhat low figure of about $12M, the Wizards could have about $8M in cap space.


Teams that Could Get Under the Cap, and Probably Will

Seattle
Seattle has a cap figure of $53.7M which jumps to about $57.2M if you add in the cost of a #4 overall draft pick. They have no significant free agents that they would be looking to resign. They do have a boatload of draft picks and a handful of players on relatively short contracts whom they might be able to unload at the trade deadline. Wilcox is certainly movable, and dumping his $6.75M salary would put them under the cap. Guys like Ridnour and Watson ($6.5M and $6.2M respectively) are reasonably effective players whom they might not be able to dump outright, but they could probably bribe someone to take off their hands if they sacrifice one or two of Phoenix' first round picks.


Teams that Will Be Under the Cap

Atlanta
Atlanta has a projected payroll of $39.9M. They traded their pick to Phoenix so they won't have a high pick to tack onto their cap figure. Their cap figure does not include Josh Smith, Josh Chidress or Anthony Johnson, all of whom are free agents. Josh Smith will almost certainly be resigned. Interestingly, his cap hold is only $6.7M, which is likely to be less than his future salary. If Atlanta operates quickly, they may be able to grab a free agent before resigning Josh Smith and having to utilize his new salary for his cap number. Chidlress's cap hold is much higher: $10.9. His cap hold puts them over the cap. If the Hawks renounce Childress, their cap figure will be $46.6M, giving them $11.5M in cap space. If they sign him to a modest deal of about $4M, they'll have $7.5M in cap space. If they renounce both Smith and Childress, they'll have $18M in cap space.

Memphis
After the Gasol trade, Memphis' payroll is $44.2M next year. Add in a lotto pick and the Lakers pick, and the payroll goes up another $4-5M. That leaves them with $9-10M in cap room. The big question is if they want to be a player in the free agent market or if they're just cutting payroll to make it easier to sell the team.

Philadelphia
Philadelphia's projected payroll is just $34.6M, but that doesn't include Iguodala and their draft pick. Iggy's cap hold is roughly $8.4M, which is probably what he'll cost as a free agent. Their draft pick will cost about $2M. Their payroll next year should therefore be about $47M, giving them $11M in cap room. However, they will probably make a move to dump Andre Miller by the trade deadline. If they can unload him for expiring contracts, they'll add another $10M in cap room. Louis Williams is also a free agent, but his cap hold is just $750K. They should have plenty of breathing room to make a free agent acquisition, and then turn around and sign Williams using Early Bird rights.


Good Free Agents:

The following players are notable free agents who could conceivably cost more than the full MLE. Most are restricted, meaning that their initial teams have the right to match any offer. There are a bunch of other free agents, but most of them will go for the MLE or less so I didn't include them.

Josh Childress (RFA, may be renounced)
Josh Smith (RFA)
Emeka Okafor (RFA)
Luol Deng (RFA)
Ben Gordon (RFA)
DeSagana Diop
Andris Biedrins (RFA)
Monta Ellis (RFA)
Kwame Brown
Jason Williams
Nenad Krstic (RFA)
Ryan Gomes (RFA)
Craig Smith (RFA)
Louis Williams (RFA)
Andre Iguodala (RFA)
Grant Hill
Ron Artest (Player Option)
Jose Calderon (RFA)
Gilbert Arenas
Antawn Jamison

Last edited by GOBB : 06-23-2008 at 07:54 AM.
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Old 05-21-2008, 03:36 PM   #2
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Default Re: Can this be stickied?

I'll bold stuff in a bit. But this is a nice guide for this offseason free agency. Posters here constantly try to make trades (that dont meet the CBA), assume players arent FA or RFA so forth and so on. Right here? You pretty much cant make a thread lookin like a jackass or clueless (to be nice but fair).
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Old 05-21-2008, 03:42 PM   #3
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Default Re: Can this be stickied?

Thanks, it's a real nice find. I second on the sticky.
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Old 05-21-2008, 03:42 PM   #4
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Default Re: Can this be stickied?

I still can't get a whole grasp on it. I'm gonna have to reread, again.
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Old 05-21-2008, 03:43 PM   #5
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Default Re: Can this be stickied?

Personally, I can't stand the trades that people make. It's not like GM's are reading their threads and going to take ideas from random people online, why make them? They don't seem very entertaining, at least to me, but maybe people fancy making them. At least now they'll be more realistic and actually do-able.
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Old 05-21-2008, 04:10 PM   #6
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Quote:
Originally Posted by Day La Ghetto
I still can't get a whole grasp on it. I'm gonna have to reread, again.

yeah..
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Old 05-21-2008, 04:18 PM   #7
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Default Re: Can this be stickied?

Finally, someone makes a thread like this. Great Post Gobb
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Old 05-21-2008, 04:20 PM   #8
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Default Re: Can this be stickied?

I'm interested to see what happens with Arenas and Jamison.


Thanks for the thread.
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Old 05-21-2008, 04:37 PM   #9
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Default Re: Can this be stickied?

GOBB why don't you also paste this addy into your first post, it's another site that deals with the cap in an easy to use format

http://members.cox.net/lmcoon/salarycap.htm
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Old 05-21-2008, 04:46 PM   #10
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Default Re: Can this be stickied?

The Mods might want to change the title if he stickys it.
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Old 05-21-2008, 05:05 PM   #11
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Default Re: Can this be stickied?

Quote:
Originally Posted by gts
GOBB why don't you also paste this addy into your first post, it's another site that deals with the cap in an easy to use format

http://members.cox.net/lmcoon/salarycap.htm

Good one. Thanks
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Old 05-21-2008, 05:06 PM   #12
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Default Re: Can this be stickied?

Quote:
Originally Posted by imlmf
yeah..

What do you have trouble grasping?
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Old 06-08-2008, 04:14 PM   #13
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bump
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Old 06-08-2008, 04:37 PM   #14
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Default Re: Can this be stickied?

Gobb, I'm 95% sure that this guy is wrong when it comes to cap holds. Do you know anything about cap holds? It looks to me like Iggys cap hold will be 3.8 mil which is his qualifying offer
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Old 06-08-2008, 05:22 PM   #15
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Default Re: Can this be stickied?

Quote:
Originally Posted by statman32
Gobb, I'm 95% sure that this guy is wrong when it comes to cap holds. Do you know anything about cap holds? It looks to me like Iggys cap hold will be 3.8 mil which is his qualifying offer

I know nothing about cap holds...but somehow dude comes up with the exact figure the Sixers do ($11mil in cap space).
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