This thread is to provide CBA/Cap info related specifically this upcoming summer. It’s meant as a resource, and not necessarily as a place to talk about potential FA/trade/moves, etc. It might be useful if stickied, or it just might be useful for people to read/refer to when they are considering potential signings, acquisitions, etc.
Exhibit A: The Pacers' Payroll
What is the Pacers cap situation? - The Pacers have $57.8mm in guaranteed contracts, which is slightly below the projected $58.7mm salary cap. The luxury tax threshold is projected at $69.4mm. The $57.8mm is for 9 players (including Tinsley), leaving the Pacers needing to fill 6 roster spots.
Can the Pacers go over the cap to sign players? Yes. There are a number of "exceptions" to the cap that will allow the Pacers to exceed it.
What exceptions are available to the Pacers? For most of their own Free Agents, the Pacers hold the "Bird Rights." This means they can pretty much pay them anything up to the max. For other teams' free agents, or for their own where they do not own the "Bird Rights", they can use one of three exceptions: Mid-Level (MLE), Bi-Annual, and Minimum Level.
Exhibit B-1: Exception Amounts
Exhibit B-2: Minimum Salaries by Years of Experience
Minimum See Chart
The MLE and the Bi-Annual exceptions may be split and given to more than one player. The Minimum is for one player only.
Special note on the Min: If we were to sign a 10-yr vet at $1.3mm, only the amount equal to a 3-yr vet's min would count against our salary/luxury cap figure. This is to prevent older veterans from being forced out of the league by the escalating salary.
So, how much money do we have to spend on Free Agents? This depends on what we do with our own FA's. It is almost certain that the Pacers will treat the luxury tax threshold as a "hard" cap. If this is the case, then we have about $11.6mm to fill out the final 6 roster spots.
Hey, what happened to the $22.4mm in "expiring contracts?" Why can't we spend all of that money? Expiring contracts are useful as trade filler, but they are misleading when it comes to free agency. Essentially, it is your total payroll that matters, not how much is coming off of your books. The Knicks, for example, have over $30mm coming off their books, but will still be over the luxury tax threshold.
What's the difference between the salary cap and the luxury tax threshold? The salary cap is the limit that teams can spend on players' contracts. There are hard caps and soft caps. Hard caps, like the NFL has, cannot be exceeded. The NBA has a soft cap, which allows for exceptions for teams to use to exceed the salary cap. The reason for the soft cap is to make it easier for teams to keep their own players. It is probably impractical to have a hard cap when you have the guaranteed salary structure the NBA has.
The luxury tax threshold is a number above the salary cap meant to help control teams' spending. If a team exceeds this amount, they have to pay $1 for every $1 over the threshold they are. For example, if the Pacers were to sign a player that puts them $2mm over the threshold, they would have to pay $2mm in taxes. Additionally, teams below the threshold get a 1/30th share of the total tax collected. In 2008, this number was about $3mm, so in the example above, it would have actually cost the Pacers $5mm ($2mm in tax, and $3mm in lost escrow).
Most teams, including the Pacers, will treat the tax threshold as a quasi-hard cap...going to extremes to avoid or minimize payment of the tax. Examples of this behavior would have been Denver's trade of Camby to the Clippers for a 2nd round pick and the Chandler debacle with New Orleans this year.
What about options on our own players? Marquis Daniels has a team option for about $7.5mm. There is virtually no chance that the Pacers pick that option up, making Daniels an expiring contract. Travis Diener has a player option for about $1.7mm, and I am assuming that he will exercise that option and stay with the team. The deadline for exercising the option is June 30.
Can these players with options be traded? They can only be traded if the option is picked up before the trade. As noted above, there is almost no chance at all of Daniels option being picked, even for trade, as it would almost certainly put us over the tax. Diener is of negligible trade value.
So, can we spend the $11.6mm on one player? Technically, yes, but it would have to be one of our own, like Jack. This will not happen. For outside FA's, we are limited to the exceptions above, with the MLE being the biggest.
What about our draft picks? The Pacers have one 1st round next (likely #13) and one second round pick (from Dallas). The #13 pick will command about $1.8mm, while the 2nd rounder, if signed, will get about $0.5mm.
What happens if we win the lottery? I'll drop dead from shock. However, a top three pick will command somewhere between $3.5mm and $5.0mm for the first year. This will reduce the amount of money we have to re-sign our own players or pick up FA's. It seems a small price to pay.
What will we do with our Free Agents? Well, the debate of what should happen is for another thread, but I would expect us to let Daniels, Rasho, and Baston walk. We'll tender a qualifying offer to Jack, and plan on matching it (up to a point), and we'll probably try to re-sign McBob for the minimum or slightly above. Graham is up in the air. For the purposes of Exhibit A, I assumed that we would re-sign Jack to a 4/$16 contract, and that McBob and Graham would likely be among the 3 "Players needed" signing on the cheap.
So, what kind of money do we realistically have to sign a FA? The most we could sign a FA for is about $6mm (or a little less) to start, or the MLE. However, using both the full MLE and re-signing Jack would almost certainly put us over the luxury tax.
Exhibit A above assumes that if we sign our picks, re-sign Jack to a contract starting at $3.5mm (4/$16mm), and sign two players at the min (3 yr vet level), that would leave us just over $4.1mm to sign someone.
This figure may be optimistic. It is possible that Jack could command more money, but my assumption is that the Pacers won't match anything over $5mm to start, maybe as little as $4.5. Therefore, an aggressive suitor for Jack could knock our available money down to as little as $2.6mm.
Is there anything we should worry about longer term? Yes. As we all know, we're in cap hell. Bird did a lot with last summer's moves to alleviate that, but there's still a long way to go. It is not helped by the declining NBA revenues and cap structure...this probably cost the Pacers $5-6mm in space this summer, and another $6mm next.
It is important to realize one thing. If we re-sign Jack, or pick up a similarly-price (MLE) FA this summer, we will go over the tax threshold, not for this coming year, but the year following. The good news is that our payroll situation clears up considerably in 2011, but if the Simons decided they did not want to pay the tax at any point, then we could be looking at a summer of losing Jack and only signing Min-type players.
What about Tinsley? Well, what about him? He's owed $7.2mm next year and $7.6mm the year after. We should assume that all of that will remain on our books. His arbitration hearing will come this summer, and that could shed some light. However, it's unlikely to bring significant relief.
The only way to get all of Jamaal's salary off the books is to find a team far enough under the cap to take on his salary and only send back a draft pick. This is exceedingly unlikely.
What about a buyout? As discussed ad nauseum, the buyout could save some money if it is for less than the remaining amount. However, it's very unlikely that he'd take much less than $14.0mm on the $14.8 owed. A few hundred k or a mil could give a little breathing room, but only very little.
What teams are under the cap? There are several teams like the Pacers, sitting a few hundred thousand or a couple million below the cap, but they are effectively over the cap, once you factor cap holds, draft picks, and re-signings.
There are only seven (7) teams significantly under the cap: Atlanta, Detroit, Memphis, Minnesota, Oklahoma City, Sacramento, and Toronto. Of those teams, strong rumors indicate that only Detroit and Oklahoma City will be willing to take on significant salaries. Everybody else will be re-signing their own players, saving for 2010, or simply cutting costs.
I'm sure there are more things, and I'll add as it makes sense.
As I said, this is not a place for discussing what to do (what players to get) with the Pacers' available space/exceptions. However, if you have other questions, you can post them here, and someone will respond.
or...you can follow the link below
As always, Larry Coon's FAQ is the best source for detailed CBA questions, and I relied on it heavily for the information included.