Hawks and Free Agency - Cap Space and Options

[AHF]

The salary cap for the 2012-13 season is 58.044M (but could go higher - we will know after the July moratorium). That would leave the tax line at 70M.

EXECUTIVE SUMMARY:

The Hawks are unlikely to pay the tax, but will have the option to use our full MLE on one player if we sign all minimum free agents (including a rookie). If we amnesty Joe, we could sign a free agent for up to $13M. Amnestying Marvin doesn't do much of anything.

DETAILS:

The Hawks have the following committed salaries (source: ShamSports http://www.shamsport...aries/hawks.jsp):

Joe Johnson $19.73M

Josh Smith $13.2M

Al Horford $12M

Marvin Williams $8.29M

Zaza Pachulia $5.25M

Jeff Teague $2.4M

#23 Draft Pick $1.049M

Ivan Johnson $.96M (option)

When you add up the exact numbers, we are sitting at $61,884,157 with 5 roster spots to fill.

If you assume we renouce all our free agents and take minimum salary cap charges for those players (but not including a cap charge for our 13th player who presumably will be signed for more than the minimum), you are talking about adding:

$473, 604 x 4 = $1,894,416

Larry Coon FAQ:

36. Can a team with cap room sign all the free agents it wants (up to the salary cap) and THEN re-sign its own free agents using the Bird exception?

A team's ability to do this is very limited. The team's free agents continue to be included in team salary. This charge is called the "free agent amount" (and is also frequently referred to as a "cap hold"). There may not be enough money available under the cap to sign another team's free agent, because the team's own free agents are taking up all their cap room.

38. Why do free agents continue to count against team salary?

It closes a loophole. Teams otherwise would be able to sign other teams' free agents using their cap room, and then turn their attention to their own free agents using the Bird exception. This rule restricts their ability to do that. It uses the player's current status (type of free agent, whether coming off a rookie contract, and previous salary) as a rough guideline to predict the amount the player is likely to receive in his next contract, and sets that amount aside in the form of a cap hold. But while it functions as a rough guideline, it's obviously not perfect -- for example, in 2005 Michael Redd's free agent amount was just $6 million, even though the Bucks intended to re-sign him for the maximum salary. By waiting to sign Redd last, the Bucks were able to take advantage of the difference by signing Bobby Simmons. Had they signed Redd first, they would not have had enough cap room to sign Simmons.

14. Exactly what is included when computing total team salaries?

A roster charge if the team has fewer than 12 players (players under contract, free agents included in team salary, players given offer sheets, and first round draft picks). The roster charge is equal to the rookie minimum salary for each player fewer than 12. For example, if there are 11 players included in team salary, then an amount equal to the rookie minimum salary is added to the team salary; if the roster is completely empty, then 12 times the rookie minimum salary is added to the team salary. This roster charge only applies during the offseason.

Since teams are required to have at least 13 players on their rosters (see question number

76

The roster charge reserves a minimum amount of cap space to sign 13 players. For example, if a team has 11 players on its roster, the roster charge reserves cap space to sign the team's 13th player, and the remainder can be used to sign the 12th player.

[Note: The rookie minimum salary for 2012/13 is $473,604.]

http://www.cbafaq.com/salarycap.htm

That puts us at $63,778,573 which means we are over the cap but under the luxury tax line. Last season we were above the luxury tax line, but below the $4M apron so we would have the full mid-level exception available. That is $5M this year which is about the maximum we could pay anyway without putting ourselves in dire risk of being tax payers for a second consecutive year - which I assume the ASG wants to avoid. Paying 3 years in a row subjects you to additional penalties under the CBA which would be unattractive for the ASG or a buyer of the franchise.

So we have about $6M to play with to spend above rookie minimum salaries.

IF THE HAWKS DON'T PAY THE TAX AND DO SIGN VETERAN MINIMUM PLAYERS HOW MUCH CAN WE SPEND?

Veterans are more expensive than non-first-round rookies. So if we brought back players like Green, T-Mac, Collins or signed their FA equivalents, you would incur higher cap charges than the rookie minimum.

For example, a 1 year veteran costs $762,195. A 10 year veteran costs $1,352,181. The max for cap purposes, however, is $854,389.

When a player has been in the NBA for three or more seasons, and is playing under a one-year, ten-day or rest-of-season contract, the league reimburses the team for part of his salary -- any amount above the minimum salary level for a two-year veteran. For example, in 2011-12 the minimum salary for a two-year veteran is $854,389, so for a ten-year veteran, with a minimum salary of $1,352,181, the league would reimburse the team $497,792. Only the two-year minimum salary is included in the team salary, not the player's full salary. They do this so teams won't shy away from signing older veterans simply because they are more expensive than younger veterans.

If you assume the Hawks will sign veterans instead of rookies as it did last year at the same rate this increases our cap burden for those minimum contracts from:

$473,604 x 4 = $1,894,416

to

$854,389 x 4 = $3,417,556

This would increase our cap total to $65,301,713. Since we have gone with vets in the past, for purposes of our room under the tax threshold I am going to use this number.

This leaves us a grand total of $4,698,286 to spend on a 13th free agent and for amounts over the vet minimum for free agents 8-12.

CAN THE HAWKS USE THE FULL MID-LEVEL AND AVOID THE TAX?

Yes. But only if they sign at least one minimum salary rookie free agent to fill the minimum salary slots. As noted above, signing all veteran free agents like Green and Pargo would push us over the tax line if we used the full $5M mid-level.

HOW MUCH COULD WE SPEND IF WE WERE WILLING TO PAY THE TAX?

Even if we were willing to pay the tax, we couldn't sign anyone significant except:

(a) We could pay Kirk as much as we want since we have his bird rights and

(b) We could use up to two exceptions, the $5M mid-level and the $1.957M bi-annual exception which maxes out our total FA spending at $7M for the 2012-13 season and our max offer to any single player at $5M.

(c.) We can sign minimum contract free agents under the Minimum Player Salary exception.

WILL THE HAWKS PAY THE TAX?

I think the correct thing to assume is that the Hawks are not willing to pay the tax.

HOW MUCH COULD WE SPEND IF WE WERE WILLING TO USE AMNESTY ON MARVIN?

Using the amnesty provision on Marvin would reduce our cap figure by $8,287,500 but the owners would still be stuck paying him most of that money. Using amnesty would put Marvin in the auction system for people who are below the cap to bid on players and someone would get him cheap through that system. If you assume someone lands him with a $3M bid, the owners start off by paying $5.3M to Marvin.

Cutting $8,287,500 off the cap while signing a veteran minimum free agent in his place means that we could pick up an additional $7,433,111 in cap space. That reduces our cap burden from $65,301,713 to $57,868,602. We could effectively renounce our cap space and then use our full MLE and bi-annual exceptions and remain under the tax line, however this is not particularly appealing since we can use our full MLE anyway if we take on another rookie and because we then lose the ability to amnesty Joe.

HOW MUCH COULD WE SPEND IF WE WERE WILLING TO USE AMNESTY ON JOE?

Using the amnesty provision on JJ would reduce our cap figure by $19,752,645 and the owners would still be stuck paying him a lot of that money. Using amnesty would put JJ in the auction system for people who are below the cap to bid on players and someone would get him cheap through that system. If you assume someone lands him with an $8M bid, the owners start off by paying $11.8M to JJ.

Amnestying Joe and signing a veteran minimum contract in his place would reduce our cap number by $18,898,256 which would bring our total from $63,778,573 (using this figure here to maximize cap space) to $44,880,317.

This would open up a maximum free agent bid of $13,163,683.

So the ASG would be paying roughly $12M to Joe and then another $13M to our mystery free agent for a total of $25M for the right to go from Joe Johnson to whoever the mystery $13M FA is.

DOES THIS MEAN I SHOULD STOP THINKING ABOUT DERON WILLIAMS?

Yes. Yes, it does.

Edited June 1, 2012 by AHF

[Admin]

If you'd like to comment on this topic then please see this thread... thread is locked and stickied to keep it on topic as we venture into the offseason.Thanks AHF for the great summary!!