as for signing a player to a long term deal in 2013 (you mentioned 5mio/yr) it's possible but there are a lot of factors that come into play (their draft picks over the next 2 years + will they pick up Gee's and Andy's options in 2 years?). that's why i was all for trading Speights, if you break down the numbers it's a lot closer than i originally thought (in terms of going into 2014/15 with the ability to sign a player to a max. deal) and i really don't want to be in a position in 2 years where you have to decline Andy's option because you gave Speights a long term deal...
This is actually a very interesting point. Even if he is healthy and hasn't been traded, it's conceivable the Cavs will have to decline Varejao's option in 2014-15 (they will still have to pay him $4M though).
Here are my assumptions. The Cavs want to compete next year to make the playoffs. Everything I have seen points in this direction. However, they also want to maintain cap flexibility, and specifically want to preserve max cap space for the summer of 2014 in the event a franchise changing opportunity presents itself. These two considerations are in conflict, which is where the problem comes in. (It's not unlike the situation Dallas and other teams have confronted in recent years, trying to maintain cap flexibility and compete at the same time; notably in the case of Dallas it has led to a sub-.500 season.)
Here are the Cavs' FAs or potential FAs this summer:
Casspi -- won't be re-signed
Gibson -- won't be re-signed
Ellington ($3M QO) -- QO will likely be offered; may re-sign on a Gee-type contract? (see further below)
Speights ($4.5M PO) -- likely declines PO; how much will Cavs be willing to pay?? (To my mind, this is one of the more interesting questions faced by Cavs in off-season.)
Selby (Team Option) -- will not return
Livingston -- Cavs likely will try to re-sign on cheap one year contract (if possible)
Walton -- Cavs may well try to bring back on one year deal for vet minimum or perhaps a bit more (purely speculation on my part)
Miles (TO) -- TO likely declined; however, this is tricky, because the Miles contract does expire in 2014, so maybe the TO is exercised (?); may depend on likelihood of Ellington re-signing (or not signing an offer sheet with another team), but that likely won't be known till later in the summer, which complicates matters a bit
Jones (TO) -- likely brought back to fight with a new batch of undrafted FAs and maybe a second round pick for a roster spot or two
That's 9 guys who make >$20M in 2012-13, quite a bit of money coming off the books for a low salary team (low team salary if you don't consider KD's amnestied contract, that is). You have to fill these spots on the roster by some combination of re-signings and new signings/acquisitions/draft picks. Unlike in the previous couple of years, you actually need to replace them with guys who can contribute to winning games, since the object this coming year is to make the playoffs and be as good as possible.
The problem is that to get good players, you typically need to pay a bit more. I think it is very likely Speights commands at least a guaranteed 3 year contract for $5M/yr, perhaps somewhat more. It will depend on his performance the rest of the year, and then on how the market shakes out this summer. So do the Cavs consider Speights a guy who helps you look like a viable NBA team, or a guy who you can be a part of a playoff team's front court rotation? Maybe you are able to bring back Ellington for the 1 year QO ($3.1M) and not worry about a multi-year extension for him at this point. Then maybe in 2014 you decline the option on the final year of Gee's contract, and assuming you haven't taken on additional salary (via trades using your cap space or through other FA signings), maybe you are able to exercise the option on Varejao's final year AND still have max cap space. It will be cutting it close though, depending on exactly where the Cavs' draft picks fall, and where the salary cap figure comes in, and how much Speights gets paid. My back of the envelope calculations put the team salary at just about $40M, but this figure excludes Gee and includes only 9 players (Varejao, Irving, Thompson, Waiters, Zeller, 2013 first rounder #1, 2013 first round #2, 2014 first rounder, and Speights), which cuts it very close considering a 10 year max salary in 2014 will be at least $20M.
So my guess is they re-sign Speights for (non-tax payer) MLE type money ($5-6M/yr), re-sign or otherwise bring back Ellington, Livingston, and Walton, try to sign Greg Oden guaranteed for 2013-14 with a team option for 2014-15 (this complicates things further, but if he stays healthy and plays well and you want to exercise the option in 2014, you find some way to carve out the cap space), and bring in a few other guys (plus maybe actually draft someone in the second round using their own pick or Orlando's) to compete with Kevin Jones for a couple roster spots.
EDIT: Should have mentioned another consideration mentioned by others...the 90% minimum team salary rule, which is another reason for re-signing Speights. If you decide not to re-sign him because he is too expensive, you are going to have to sign someone else. Maybe you can find a vet willing to sign a one year deal, but if that's your goal, the market is going to be very limited (I'm sure Jamison will be available), and it's going to be difficult filling out the roster with enough salary to get to the 90% threshold.