Salary Cap Q&A: 2021 Offseason Primer
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vasashi17+
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PostPosted: Sun Sep 19, 2021 9:39 pm    Post subject:

AD is eligible to sign an extension next season that would kick in for the 2023/24 season...will he?

I don’t think so. Here’s why.

Quote:
League source: Should the NBA sign a new TV deal worth $75 billion, early projections indicate that a 2025 salary cap number of $171 million is possible, assuming no cap smoothing.

Should the NBPA instead agree to cap smoothing, it's likely the league will still see annual increases to the extent of $15 million, according to source.

https://www.forbes.com/sites/mortenjensen/2021/09/19/with-new-tv-deal-looming-nba-teams-could-spend-big-on-extensions/


AD has a 43.2m early termination option for the 2024/25 season....meaning he’s an UFA for that potential 2025 FA class cap spike if he elects to bypass his ETO.

It’s also worth noting that the current CBA expires after the 2023/24 season where a decision in Dec 2022 could enable an early opt out of the current CBA after the 2022/23 season. Decisions on cap smoothing could play a part in negotiations as to whether the current CBA sticks or not.

As of right now, the rule is the salary cap has to increase yearly by at least 3%, but can go up by a max of 10%. It should be noted that due to the extenuating circumstances of COVID, the salary cap did not experience the normal minimum 3% annual increase from the 2019/20 season to the 2020/21 season...as a result of the financial struggles of a COVID environment and its impact on regular season sales, both seasons experienced an identically set salary cap of 109.1m. As a result, we can expect at least some form of cap correction moving forward.

Let’s assume cap smoothing is agreed upon in order to prevent another KD to 73-win dubs event from happening again. That would insinuate the annual salary cap would increase by the max 10% allowed up until the current CBA expires in ‘24 or when the new TV deal kicks in by ‘25 in an effort to smooth the cap over.

FYI: current projections have the salary cap/tax line for the 2022/23 season set to 119m/145m which would be about a 6% increase from this season. All projections below reflect a max 10% annual increase that the current CBA allots. Again this is an assumption made in an effort to cap smooth before the potential 2025 TV deal kicks in impacting the salary cap projections at that time.

2021/22
Salary cap: 112.4m
Tax line: 136.6m
35% max (10+ seasoned player/designated vet): 39.3m
30% max (7-9 seasoned player/designated rookie): 33.7m
25% max (0-6 seasoned player): 28.1m
non taxpayer MLE: 9.5m
taxpayer MLE: 5.9m
room MLE: 4.9m
Biannual exception: 3.7m
Veteran minimum exception: 1.7m cap hit /2.6m (for 10+ vet min, where 900k difference covered by league)

2022/23
Cap: 123.6m
Tax: 150.3m
35%: 43.3m
30%: 37.1m
25%: 30.9m
ntMLE: 10.5m
tMLE: 6.5m
rMLE: 5.4m
BAE: 4.1m
VM: 1.9m/2.9m

2023/24
Cap: 136m
Tax: 165.3m
35%: 47.6m
30%: 40.8m
25%: 34m
ntMLE: 11.6m
tMLE: 7.2m
rMLE: 5.9m
BAE: 4.5m
VM: 2.1m/3.2m

2024/25
Cap: 149.6m
Tax: 181.8m
35%: 52.4m
30%: 44.9m
25%: 37.4m
ntMLE: 12.8m
tMLE: 7.9m
rMLE: 6.5m
BAE: 5m
VM: 2.3m/3.5m

So by the time we get to the summer of 2025, when the new 75B TV deal kicks in, the 10% annual max escalators acting as baseline mechanics into cap smoothing before ‘25 hits, will still get you a projection of 164.6m, which is short of the early 171m projection. It’s possible at that time a spike still occurs but only of the 10-15% increase as opposed to the nearly 35% increase experienced in 2016.

Also notice that each year experiences nearly the 15m increase projected in the Forbes report. So at least you have a loose projection of how the money will break down from year to year.

Who knows, maybe AD does extend next year seeing how he did lock in a full 5yr deal based off his injury concerns. Still, coming into potential cap spike money in ‘25 as a 35% max eligible player at the young age of 32 might be too hard to pass up for him.
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vasashi17+
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PostPosted: Sun Sep 26, 2021 4:20 pm    Post subject:

See Dudz, we did go younger. So how far above the tax line does this Reaves kid leave us?

1. Russ 44.2m
2. Bron 41.2m
3. AD 35.4m
4. THT 9.5m
5. Nunn 5m
6. Melo 1.7m
7. Dwight 1.7m
8. Baze 1.7m
9. Ariza 1.7m
10. Monk 1.7m
11. Ellington 1.7m
12. Rondo 1.7m
13. DJ 1.7m
14. Reaves 925k (counts as 1.7m cap hit towards taxes)
Deng corpse 5m
= 154.8m in team salary
= 41.8m in taxes (ie 19m over tax line)
= 196.6m in combined team salary + associated luxury taxes
note: salary/taxes are all rounded up to the nearest tenth aka decimal point

Since Reaves is an undrafted rookie, he is eligible to sign a rookie minimum of 925k. This is the reason his minimum won’t count as a cap hit of 1.7m like all our other veteran minimum players did. However, he will count as a 1.7m cap hit towards luxury taxes. So counts as 925k towards trades and counts as 1.7m towards tax calculations.

It’s been reported that he signed a 2 year deal where his 2nd year is guaranteed via a team option. Had we saved at least 925k from our 5.89m mMLE instead of the the 890k we left unrealized after Nunn took 5m off of it, then we could gave given Reaves a deal that was longer than 2 years in length. A rookie minimum contract can only be topped off at 2 years in length, however the mMLE (or a portion of it) can be up to 3 years in length. As a result we will only have early bird rights to Reaves (assuming he sticks for his entire 2yr deal) as opposed to full bird rights we could have had at the end of a 3yr deal. So assuming we have no cap space in the summer of ‘23, the max we can offer him as an early bird RFA is 105% of the average NBA salary in the 2022/23 season (~12-15m; variance based on cap smoothing/favorable salary cap COVID corrective projections). This is exactly the situation that we experienced with THT this summer.

Since Reaves leaves his 2-way spot, we now have a roster of 14 guaranteed contracts + 1 2-way (Ayayi). This allows us to still add 2 more to the roster: 1 via a mid-season add (ie “rest-of-season” contract) & 1 via a now vacated 2-way slot.

And with this, I believe the roster is all but set till we hit that #BuyoutSZNPrimer. Till then, we soon should find out when the official trade deadline date will be set to and when we do I’ll try working on a TradeSZNPrimer update for this thread. Early forecast: we are lined up for minimal activity at the trade deadline...but it is a long season.
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vasashi17+
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PostPosted: Sun Oct 10, 2021 2:55 pm    Post subject:

With Ariza out for at least 8 weeks, THT battling a hand injury and Monk having to rehab his groin, which is an injury that typically lingers, what can we do to replace their production in the interim?

First thing is first, it depends on if ownership is open to paying an additional tax. They have shown to this point, not to be receptive in doing so.

Remember, even if they use our open 15th roster spot to sign a nonguaranteed vet min deal, the days that player provides us before he gets waived ahead of his guaranteed trigger date (Jan 10, 2022), will still yield a prorated tax hit where our current tax rate of 3.25 is applied to every dollar that comes from each day provided of service by a potential nonguaranteed player: 1/174 (ie 174 total regular season games between opening night on Oct 19, 2021 to end of regular season on April 10, 2022) of 2yr+ vet min deal @ 1.67m.

So for example, if we sign Ennis to the final 15th roster slot on a fully nonguaranteed deal and we keep him up until Jan 7th at which point we waive him (ie has to be waived and clear waivers before “cut-down” date of Jan 10th when all nonguaranteed deals go fully guaranteed), then his vet min salary of 1.67m will not be on our books, however he will have given us 80 days of service and that means he will account for 2.5m in taxes (ie a 3.25 tax rate applied towards a total of 768k for 80 days of service).

So let’s assume ownership goes this route and is willing to pay an additional 2.5m in taxes for a nonguaranteed player at the 15th roster spot. Which potential players currently on other teams rosters could we bring in to occupy that last roster spot, knowing that other teams will have to be waiving players to cut their rosters down to a mandated max of 15 before the regular season starts.

Here is a list of teams that have to make player cuts to non exhibit 9/10 (ie training camp/ G-league rights) players before Oct. 19:

-Toronto has to waive 2 players
Partially guaranteed players: Yuta Watanabe, Sam Dekker, Isaac Bonga, Freddie Gillespie

-San Antonio has to waive 2 players
Note: They do not have any non/partially-guaranteed deals on their roster so they would have to either waive minimum deals and eat the cost or trade those minimum deals into another team’s vet min exception to dodge the cost
Minimum contracts: Keita Bates-Diop, Jock Landale

-Golden State has to waive 1 player
Nonguaranteed players: Gary Payton II, Mychal Mulder
Partially guaranteed: Damion Lee
Note: Avery Bradley & Jordan Bell are on Exhibit 10 deals and are interesting names to keep an eye out for in case they get cut. Also the dubs just waived Langston Galloway who was also on a training camp invite deal

-New Orleans has to waive 1 player
Nonguaranteed player: Wenyen Gabriel

-OKC has to waive 1 player
Partially guaranteed: Kenrich Williams, Mamadi Diakite

-Memphis has to waive 1 player
Note: they do not have any non/partially-guaranteed deals so will either have to cut a low salary player and eat the cost or dump them via trade to another team

-Charlotte has to waive 1 player
Note: they do not have any non/partially-guaranteed deals so will either have to cut a low salary player and eat the cost or dump them via trade to another team

Finally we do also have an open 2-way slot where we can offer up to 462.5k to a young player that will not inflict a tax hit. Also if we are willing to take a tax hit on a younger development type player, we can wait till Oct 26th (ie 1 week into the regular season) to sign a rookie to a prorated minimum of 890k using the remainder of our mMLE. The advantage in doing so is that we could offer that player up to 3 years in length on a new deal (since vet/rookie min exception deals can only be up to 2 years in length, while mMLE exception deals can be up to 3 years in length).
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