Peachtree Hoops: Atlanta Hawks 2020 Salary Cap Primer

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Photo by Scott Cunningham/NBAE via Getty Images

It’s been awhile since I’ve provided an overview of where the Atlanta Hawks currently stand with the salary cap. But here we are, at the tail end of the 2019-20 season and we can just about make out the plans of the Atlanta Hawks’ 2020 off-season and beyond. It is a bit pointless to discuss the current season — and there really was not much need at the beginning of the season to discuss the salary cap anyway — so let’s give an overview of where Atlanta currently stands, the decisions they need to make for the 2020 off-season, and provide some insight into the future off-seasons.

Current Salary Cap Sheet

The great Jeff Siegel keeps all of the relevant salary cap material for all teams on his site, Early Bird Rights, and we’re going to leverage that information. For all intents and purposes, we can simply ignore 2019-20 and focus on the 2020-21 columns and beyond.

Early Bird Rights

Right now, Jeff is using the NBA’s current projection of $115 million salary cap for 2020-21. While this is the best available information for the 2020-21 salary cap, it needs to be stressed that this is currently only a projection and is subject to change.

The NBA’s projection has already been adjusted from the $116 million projection released in September, which was also a decrease from the initial $117 million projection reported by Zach Lowe at the end of June. There should rightfully be some concern over what the salary cap ends up being, and it will be finalized near the end of the league year, currently scheduled for June 30.

For some context, and ignoring lockout seasons, the last time the salary cap decreased from one season to the next was in 2009-10, when it dropped to $57.7 million from $58.68 million. From there, the last time there was a decrease in Basketball Related Income (BRI) was the 2002-03 season, which had $2.662 billion — a decline from $2.667 billion the season before. All relevant financial data available here, courtesy of yours truly.

But whatever the salary cap ends up settling on will require only some minor adjustments to this analysis if it is around $110-115 million. Anything outside of this range would likely be catastrophic and require its own separate article.

Guaranteed Contracts

Going into the 2020 off-season, the Atlanta Hawks will have nine players under contract, with eight of the contracts fully guaranteed totaling $56,202,336 (Capela, Dedmon, Hunter, Young, Reddish, Collins, Huerter, and Fernando). Brandon Goodwin’s contract is only $100,000 guaranteed for the 2020-21 season, although it becomes fully guaranteed if he is still on the roster beyond Aug. 1, which would bring the total up to $57,903,929.

Finally, the Hawks project to be 6th in pre-lottery draft position, and the No. 6 pick would carry a first-year Salary of $6,125,880 based on a $115 million salary cap (obviously subject to change). This projection is based on 538’s RAPTOR model, which assumes that the rest of the regular season will be played, though at this point there is no way to know if that will happen. That is ten contracts totaling $64,029,809, although with the uncertainty of what the draft-pick Salary would be one should be wary of significant figures and ballpark the ten contracts to about $64.03 million.

Cap Space

Atlanta will most likely have $49.08 million in cap space without accounting for any of their free agents this off-season, although this could be up to $49.73 million in cap space if they decide to waive Goodwin. One might wonder why the guaranteed contracts ($64.03 million) plus cap space ($49.08 million) does not equal the assumed $115 million, and that is because Atlanta would be charged for two empty roster spots, which takes away from their cap space. Each team must have at least 12 roster spots accounted for in their Team Salary and Atlanta would only have 10 accounted for with contracts and draft picks.

The Maximum Salary amounts have been greatly simplified in the new CBA as players with 0-6 years of experience can have up to 25% of the salary cap ($28.75 million); players with 7-9 years of experience can have up to 30% of the salary cap ($34.5 million); and players with 10+ years of experience can have up to 35% of the salary cap ($40.25 million). The previous CBA’s actually used a different salary cap for computing Maximum Salaries which was based on a different share of BRI.

I am not in the business of predicting which particular players would be targets of the Hawks, but the list of free agents in 2020 are available at Early Bird Rights. Feel free to use this as fodder for discussion in the comments.

Atlanta’s Free Agents

Atlanta will hold rights over Jeff Teague, DeAndre’ Bembry, Skal Labissiere, Damian Jones, Treveon Graham, and Vince Carter. Bembry ($3,752,339), Labissiere ($3,484,883), and Jones ($3,457,586) can all be made Restricted Free Agents if the Atlanta Hawks decide to tender them Qualifying Offers.

A Qualifying Offer is a standing one-year fully guaranteed contract offer that the free agent can accept at any time and comes with a no-trade clause. Signing the Qualifying Offer allows the free agent to enter Unrestricted Free Agency in the following season, although it is unclear if Atlanta would be willing to offer these contracts to players that they did not play frequently over the last month of the season.

Even without tendering Bembry, Labissiere, and Jones Qualifying Offers, Atlanta will hold Bird Rights over those free agents as well as Teague and Graham. Bird Rights allow a team to exceed the salary cap in order to sign the player for a contract of up to five seasons with up to 8% raises/declines and for any amount up to the player’s Maximum Salary. Typically, contracts can only be for four seasons with up to five percent raises/declines and a team needs to have cap space to fit the starting Salary. Holding these rights come with the cost of each player’s cap hold remaining on the Team Salary and eat up cap space. Early Bird Rights displays the cap hold for each player, and all aside from Graham are likely higher than the free agents will command in the open market.

Atlanta will have Early Bird Rights on Vince Carter, however it seems highly unlikely he will play another season in the NBA.

So expect Atlanta to renounce their rights to Teague, Bembry, Labissiere, Jones, and Carter fairly quickly in the off-season in order to free up cap space to sign free agents. The team can always use their cap space to re-sign these guys, but they will not have their cap holds on their Team Salary.

John Collins

I rarely make predictions, but I am pretty confident that John Collins will not agree to an extension before the start of the 2020-21 NBA season — the deadline for a Rookie Extension. This is not a statement that should be interpreted as the Hawks not valuing Collins. I believe Atlanta does, and I believe that Atlanta will offer Collins an extension. I do not believe Collins will (or should) accept the extension offer and this is perfectly reasonable. Let me explain.

First-round draft picks entering the final year of their Rookie Scale Contract are eligible to sign a contract extension from July 6 to the start of the NBA regular season. This contract can be for up to four additional seasons, although if Atlanta wants to make Collins a Designated Player, they can give him an extension which covers five additional seasons. The problems with making Collins a Designated Player is that the contract must start at his Maximum Salary (25% of the salary cap) and a team can only have two Designated Players at a time.

Again, I don’t like to make predictions but, if Atlanta is already earmarking a Designated Rookie Extension for Trae Young, then signing Collins to one would limit Atlanta on the trade market and negatively affect De’Andre Hunter, Cam Reddish, and their 2020 Draft Pick. I would not expect a Designated Rookie Extension to be on the table at any point for Collins although it is still possible Atlanta offers him an extension for four or fewer seasons.

In the hypothetical situation that Atlanta does sign Collins to an extension, two main things occur afterwards. For one, Collins’ Salary for the 2021-22 season and beyond are known and immediately placed on Atlanta’s Team Salary for their agreed-upon amounts. In addition, Collins would also be Poison-Pilled and his outgoing Salary in any trade would differ from his incoming Salary in any trade — further complicating issues and making it practically impossible to trade him in the 2020-21 Season if an extension is signed.

If no extension is made with Collins, then his Bird Rights would count at $12,411,906, or 300% of his previous Salary, towards the salary cap before Atlanta decides to re-sign him or let him walk in the 2021 off-season. Since Atlanta would hold Bird Rights over Collins in that off-season, they can keep his cap hold on the books to use up all their cap space and then exceed the salary cap in re-signing Collins for up to his maximum Salary.

Projecting into the future, the 2021 off-season will most likely be the last time the Atlanta Hawks will have cap space for a few seasons. In the 2022 off-season, Atlanta will have used up their 2021 cap space and have the potential extensions of Young and Kevin Huerter on the books. They will also be having discussions of Rookie Extensions with Hunter and Reddish during that off-season and should be more focused on making trades and signings with their Mid-Level Exception than concerned with cap space.

What a time that will be, the Atlanta Hawks making moves geared towards building a roster that makes sense to win games rather than acquiring assets and focusing on player development.

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