Atlanta Hawks Salary Cap: Post-Dwight Howard trade edition

[Admin]

https://www.peachtreehoops.com/2017/6/21/15847320/atlanta-hawks-salary-cap-dwight-howard-trade-miles-plumlee-marco-belinelli

Currently, Atlanta has no cap space due to the $10,024,776 in trade exceptions. Trade exceptions have a cap hold and can be used to acquire a contract via trade or a waiver claim. Trade exceptions cannot be combined, so the largest contract Atlanta could acquire is for the Dwight Howard trade exception and that would be a contract valued at $4,446,942 (there’s a $100,000 buffer with trade exceptions). Trade exceptions are formed from trades in which a team that is over the cap trades away more salary than they receive -- the difference is the value of the trade exception -- although this exception expires after one calendar year.

The Salary Cap is $94,143,000 until July 1st when the moratorium starts and the 2017-18 NBA Salary Cap begins (although we don’t know what the Salary Cap will be at that time). If Atlanta decides they want to use cap space, then they can renounce all their trade exceptions which would result in the team having $2,926,141 in cap space.

Trade Ramifications

There are two ways that the Atlanta-Charlotte trade could have happened from a cap perspective. The primary way (and generally assumed) is for Atlanta to stay over the cap and acquire a traded player exception from trading away Dwight Howard for Miles Plumlee and Marco Belinelli.

Since Atlanta would be technically over the cap after this trade, they would need an exception to make this move and this particular exception comes with a restriction: Miles and Marco cannot be aggregated/combined in a trade for two months. Miles or Marco could be traded individually right now without a problem, but Atlanta cannot combine their salaries in order to receive more salary in return.

By example, this means that Atlanta could trade away Miles and his $12.5M salary for a player earning $17.5M or less. But if Atlanta wanted to receive a player worth more than $17.5M, then Miles would not be eligible to be combined with another contract in a trade. This restriction wears off on August 20th.

The other way that the Atlanta-Charlotte trade could be structured is for Atlanta to have renounced all of their trade exceptions and acquire the Plumlee and Belinelli contracts with their cap space. If this is how Atlanta structured the deal, then Plumlee and Belinelli would not be under any two month restriction and would be available to be packaged in another trade immediately.

Draft Trade Activity

As of right now, only $1,662,500 of Mike Dunleavy’s contract is guaranteed for the 2017-18 season. His contract becomes fully guaranteed on July 1st. If Atlanta wants to clear more cap space for the 2017 off-season, they could waive Dunleavy to partially avoid his $5,175,000 salary. Atlanta would also have the option to absorb his $1,662,500 fully in the 2017-18 season or stretch this amount over the next 3 seasons at $554,167 each.

Alternatively, Atlanta could look to deal Dunleavy to a team that wants to unload salary. If Atlanta stays over the cap, then another team could trade up to $7,356,250 in salaries for Dunleavy. Atlanta could also add on Ryan Kelly’s non-guaranteed contract to acquire up to $7,786,428 in salaries.

Adding on other contracts are possible, but then it becomes questionable as to why a team attempting to clear cap space would accept a guaranteed contract. And if Atlanta is OK with renouncing their trade exceptions, they could actually use cap space in receiving contracts from a Dunleavy trade. This would allow Atlanta to bring back $7,863,641 in salaries with Dunleavy outgoing and $8,150,426 if Kelly is attached.

And lastly, Atlanta can be either buyers or sellers of draft picks. They have $2.35 million in cash to use in a trade. On the other side, they can receive up to $2.75 million in a trade. These values reset on July 1st to be $5.1 million for the 2017-18 season.

Stretch Provision

The Dwight Howard trade has brought up much discussion on the stretch provision. The stretch provision is a mechanism for spreading waived salary across multiple salary cap years. This was introduced in the 2011 CBA. Previously, when a player was waived their remaining guaranteed salary continued to count towards the salary cap for each year the contract lasted for.

With the stretch provision, a team has the option to extend the remaining guaranteed salary over more years than the contract lasted for. The number of years is equal to two times the number of years remaining plus one if utilized prior to September 1st. If it is utilized after September 1st, then the current season counts fully and any future remaining years are what can be stretched.

Stretching happens in conjunction with waiving a player and it must occur within one day of waiving said player. This is also a permanent action. A team cannot decide to stretch a previously waived player’s salary nor can it amend a previously stretched salary to go onto current cap space. Any time that the stretch provision occurs, it also coincides with a player being waived.

Stretch Dwight

The stretch provision has been discussed with respect to Dwight Howard and Miles Plumlee. Dwight Howard has 2 years remaining at $47,319,725 on his contract. If he were to be stretched, then Dwight would count as $9,463,945 over the next 5 seasons on Atlanta’s cap sheet. For Miles Plumlee, he has 3 years remaining at $37,500,000 and stretching him would result in 7 years of $5,357,143 cap hits for Atlanta.

Stretch Miles

Now the stretch provision as it relates to Dwight and Miles does not have to be used this off-season. It’s also possible that a team would not want to stretch either player until further down the line. The amount of how the stretch would apply to a team’s cap is detailed in the tables above.

The Flexibility of the Deal

Travis Schlenk is clearly one to value flexibility with respect to the salary cap. He broke down an approximately $23.5 million contract into a $6.6 million and $12.5 million. That’s an immediate savings of $4.4 million on the 2017-18 cap and more manageable contracts in a potential trade. The next year sees an $11.4 million savings on a salary cap currently projected by the NBA to be at $102 million. This does come at the cost of reducing the amount of potential cap space in 2019-20 by $12.5 million, although by that time the salary cap is projected to be up to $111 million.

This is an important time to note that cap space can be utilized for more than simply signing free agents. Cap space greatly relaxes the constraints on trades and opens up the possibility to renegotiate current contracts in a way to appease players (a-la Russell Westbrook this past off-season).

Schlenk has positioned himself to at least have the option of utilizing cap space. Prior to this trade, Schlenk’s options were more limited in the near future but now Schlenk at least has a viable option to make further trades and or signings. And that option value is certainly valuable even though it may be difficult to quantify.

[Admin]

So if we used the stretch provision we could take Plumlee's cap hit all the way down to 5.3 million per season. 

[sturt]

4 minutes ago, Dolfan23 said:

Travis Schlenk is clearly one to value flexibility with respect to the salary cap. He broke down an approximately $23.5 million contract into a $6.6 million and $12.5 million. That’s an immediate savings of $4.4 million on the 2017-18 cap and more manageable contracts in a potential trade. The next year sees an $11.4 million savings on a salary cap currently projected by the NBA to be at $102 million. This does come at the cost of reducing the amount of potential cap space in 2019-20 by $12.5 million, although by that time the salary cap is projected to be up to $111 million.

This is an important time to note that cap space can be utilized for more than simply signing free agents. Cap space greatly relaxes the constraints on trades and opens up the possibility to renegotiate current contracts in a way to appease players (a-la Russell Westbrook this past off-season).

Schlenk has positioned himself to at least have the option of utilizing cap space. Prior to this trade, Schlenk’s options were more limited in the near future but now Schlenk at least has a viable option to make further trades and or signings. And that option value is certainly valuable even though it may be difficult to quantify.

This.

[Admin]

Funny that all the armchair GMs are avoiding reading this topic since it pretty much destroys their theory of how bad this trade is for our cap situation and how Plumlee is the worst contract in basketball. 

Damn I miss Hawksfanatic around here telling it like it is feelings be damned. 

[Admin]

1 hour ago, sturt said:

This.

And this subtle jab... And that option value is certainly valuable even though it may be difficult to quantify.

Jab, jab, body blow, left hook, uppercut, boom. Down go the haters. Send in the medical staff with preparation H immediately. 

[Watchman]

4 minutes ago, Dolfan23 said:

And this subtle jab... And that option value is certainly valuable even though it may be difficult to quantify.

Jab, jab, body blow, left hook, uppercut, boom. Down go the haters. Send in the medical staff with preparation H immediately. 

Why not just stretch Howard's contract instead?  Solve the problem without taking on worse problems.  What's $4 million more a year among friends.

Edited June 21, 2017 by Watchman

[Admin]

2 minutes ago, Watchman said:

Why not just stretch Howard's contract instead?  Solve the problem without taking on worse problems.

Stretching Plumlee is 4 million less per year (for 2 years longer) which could be the difference between being able to sign or trade for someone we really want or not. We can also use Plumlee to take back 17.5 million in salary while only sending out his 12.5. That makes him a a far more tradeable piece than Dwight was simply due to how much Dwight made. Then we have Belli as a tradeable asset to get another player. 

[Guest]

31 minutes ago, Dolfan23 said:

Funny that all the armchair GMs are avoiding reading this topic since it pretty much destroys their theory of how bad this trade is for our cap situation and how Plumlee is the worst contract in basketball. 

Damn I miss Hawksfanatic around here telling it like it is feelings be damned. 

Didn't you hate him?  Or was that AHF?  Probably AHF.  He secretly hates everybody.

[Admin]

23 minutes ago, kg01 said:

Didn't you hate him?  Or was that AHF?  Probably AHF.  He secretly hates everybody.

Nope he was a good dude... angry and a drunk and short tempered... sort of like you but without the weird @Spud2Nique fetish that you have. 

And yes I do hate @AHF. Always giving us lawyer speak and making you wonder what point you were arguing in the 1st place. 

[Plainview1981]

13 minutes ago, kg01 said:

Didn't you hate him?  Or was that AHF?  Probably AHF.  He secretly hates everybody.

It was me.

I respect his knowledge of the cap and that kind of stuff, but I just didn't like him outside of that. 

Edited June 21, 2017 by Hotlanta1981

[sturt]

2 minutes ago, Dolfan23 said:

Nope he was a good dude... angry and a drunk and short tempered... sort of like you but without the weird @Spud2Nique fetish that you have. 

And yes I do hate AHF. Always giving us lawyer speak and making you wonder what point you were arguing in the 1st place. 

I thought I was the only one who thought all of that.

[Bankingitbig]

This article alludes to something I have been thinking about regarding Dunleavy and Portland. It is obvious Portland wants to shed some salary to lessen their tax burden. They also happen to have three first round picks this year. Wonder if they would take Dunleavy, Kelly and the #41 pick for Ezeli and #26 pick. Portland could then waive Dunleavy and Kelly since they are non-guaranteed contracts.

[sturt]

30 minutes ago, Watchman said:

Why not just stretch Howard's contract instead?  Solve the problem without taking on worse problems.  What's $4 million more a year among friends.

Can you answer that, or do you really need someone else to? Honestly... not trying to be a smart ass (this time)...I really think you could.

[Guest]

1 hour ago, Bankingitbig said:

This article alludes to something I have been thinking about regarding Dunleavy and Portland. It is obvious Portland wants to shed some salary to lessen their tax burden. They also happen to have three first round picks this year. Wonder if they would take Dunleavy, Kelly and the #41 pick for Ezeli and #26 pick. Portland could then waive Dunleavy and Kelly since they are non-guaranteed contracts.

@Bankingitbig  Festus and #26 for Dunleavy works straight up.

[GrimeyKidd]

Still a bad trade because the Hawks got no significant value. But thats just me. 

[AHF]

1 hour ago, Dolfan23 said:

And yes I do hate @AHF. Always giving us lawyer speak and making you wonder what point you were arguing in the 1st place. 

I knew you made me a mod to ruin my life.  Then you go leave us alone spending some 'quality time' in the penitentiary.  Last time I send you smokes there to keep 'Big Manny' off your back (in every sense of the word).  Some people.

[thecampster]

4 hours ago, Dolfan23 said:

So if we used the stretch provision we could take Plumlee's cap hit all the way down to 5.3 million per season. 

To be clear, Hawksfanatic's status is going to change after July 1st. The numbers he is using that state we have no cap room are pre-july1. Once Millsap signs elsewhere (assuming we don't sign and trade), his cap hold comes off the books. Same with Moose and assuming we don't trade Dunleavy tomorrow night and we release him, we gain another 3.5 million.  He's using these numbers because they apply for trades tomorrow night.  But 2 weeks from now, the landscape is very different.

[Admin]

25 minutes ago, thecampster said:

To be clear, Hawksfanatic's status is going to change after July 1st. The numbers he is using that state we have no cap room are pre-july1. Once Millsap signs elsewhere (assuming we don't sign and trade), his cap hold comes off the books. Same with Moose and assuming we don't trade Dunleavy tomorrow night and we release him, we gain another 3.5 million.  He's using these numbers because they apply for trades tomorrow night.  But 2 weeks from now, the landscape is very different.

Yes but it doesn't change the fact that we're in much better position to make moves without Dwight than we were with Dwight. 

[DrReality]

This topic has brought out the best in HS finest.  Ta da. 

[Admin]

6 minutes ago, DrReality said:

This topic has brought out the best in HS finest.  Ta da. 

That's a very zen way of looking at things!