The Cavs and the salary cap

[Lee]

Another good piece from a few days ago (June 17th) on the Cavs' salary profile for the upcoming season. I think the salary assumptions here are reasonable.

http://bballbreakdown.com/2015/06/17/five-questions-cleveland-cavaliers/

As I read it, the author envisions a scenario -- all free agents return, Cavs' take back maximum salary in a Haywood trade, and use the full mini MLE -- where the Cavs' team salary is over $126M, with a luxury tax payment of over $160M. So total payroll approaching $290M.

I just don't see us paying 160 mill, I think we might let haywood expire if everyone resigns. He is a safety net in case TT, Love, shump or JR walk.

 

[ajz20]

I just don't see us paying 160 mill, I think we might let haywood expire if everyone resigns. He is a safety net in case TT, Love, shump or JR walk.

They did not hold on to this contract not to use it. Now expectations with what we can get are def too high right now with visions of Wade. Worst case I am sure they will take on a salary and get a future protected pick to use later

 

[Lee]

They did not hold on to this contract not to use it. Now expectations with what we can get are def too high right now with visions of Wade. Worst case I am sure they will take on a salary and get a future protected pick to use later

Held on to it for insurance. Not having a 300 mill salary debt. Just keeping everyone will be stupid expensive.

 

[ajz20]

Held on to it for insurance. Not having a 300 mill salary debt. Just keeping everyone will be stupid expensive.

If they have a chance to use it in the next month to make the team better there is no doubt in my mind they will. Gilbert has given orders to do what ever the rules allow to make this a title team. There will be a new CBA soon so I dont think Gilbert is concerned with money yet. This is not the Cleveland Indians here

 

[Funkmastabuck]

Situations like the one with Haywood's contract are exactly why LeBron is choosing to have contract outs each year.

Sure, Gilbert could choose to have Haywood cut rather than trading for a contract that will cost big $ in luxury tax. But I'm sure he promised LeBron he'd do everything possible to build a champion. And not using this asset gives LeBron a chance to hold it against him in the near future.

Spend the $ now to keep the guy from Akron around who makes your franchise worth exponentially more $$$ than when he's gone.

 

[bigfoot5415]

The 76ers have 5 2nd Rounders I would bet they would be the target team, especially because they will want to get in & missed out (due to protections) on 2 other 1sts. If we can pull 2 2nd rounders in, then we are able to swing a little harder on the Haywood deal and try for better player.

Chris Haynes tweeted out that Wayne Blackshear (Sg/SF) , Anthony Brown (Sf), & Brandon Ashley all worked out for us. Also a separate report said Christian Wood also worked out for us. Blackshear would be the most ideal fit on this team. He is a 6-5 that can play the SF & shoot the 3. One thing to keep in mind is that all 3 guys are projected in the 2nd round. So we may get two bodies for the price of one by trading out, thus reducing our tax payment by a little. (Still on that Dakari Safari)

Edited because it was a load of poppycock

 

[col63onel]

A case study in capology: Dwyane Wade, the Miami Heat and Le Batard being an idiot
This thread has been exclusively Cavs, which is great, but I wanted to touch upon what I think is the most intriguing Salary Cap storyline of this offseason: Dwyane Wade.

Enough smoke has surrounded "Wade to the Cavs" to make a safari out of it, so this is at least tangentially a Cavs story. It is my belief that Miami wants Dwyane Wade gone, as he currently is acting as a fly in ointment in creating another super team in Miami in 2016. The whole situation contains some of my favorite parts of the Salary Cap: exceptions, cap holds and national writers looking like idiots for not understanding the Cap.

Le Batard's article outlining how Miami is maneuvering the Cap is here. I'll quote this section of the article.

The Heat can have room for Wade, Bosh, Goran Dragic, Hassan Whiteside and Durant … but only if Wade opts in for this year and gives them that flexibility by being a free agent in 2016.

I accept the first part as a legit premise. Well, a legit goal. Having that as a core of an NBA team is a worthwhile goal, but as I will show, they don't really have room for 4 of them, let alone all 5. I completely reject the second part as another NBA writer who has no knowledge and did no research of the Salary Cap.

The goal is to acquire Kevin Durant next offseason with the other aforementioned players still on the roster. Kevin Durant will be a free agent from OKC, so Miami will have to have enough cap space to sign him. The salary cap is projected to be about $89 million in 2016. If we assume Kevin Durant will want a max contract, his first year salary will be roughly 30% of 89 million, or $25.3 million (see Dragic note below for actual calculation). So Miami will need to have no more than 89-25.3 = $63.7 million on the books for that summer.

Chris Bosh is already on the books for $23.7 that summer. Dragic is a free agent this summer. It has been rumored he wants a max deal. By 2016, a max contract for Dragic would be about $20.2 million. (This number comes from 30% of the cap, but slightly lowered, then a 7.5% raise after 1 year. Read the footnotes of this part of Coon FAQ for full details.)

Here's where it gets tricky. Hassan Whiteside is a also a free agent that season. His salary next year will be $981k. As Le Batard points out,

It also requires some creativity and relationship-building with Whiteside, who will be tucked away in something called a “cap hold.”

On one hand he's right about the cap hold, but as I'll point out later, he exhibits temporary amnesia when it comes to cap holds. It requires no creativity or relationship building, though.

As was mentioned in a previous post, you can generally go over the cap to sign your own free agents with something called "Larry Bird rights". To retain those rights, however, there is something called a "cap hold". It is an amount of money, based on the previous year's salary, that counts against your cap until either the player signs with someone, or you "renounce their rights." As long as you let the cap hold stay, you can go over the cap to sign said player. (Full explanation here.) Whiteside's cap hold is about $1.3 million for 2016.

So it seems like a major coup. Whiteside only counts as $1.3 million against the cap. Adding his number to Bosh and Dragic 1.3 + 23.7 + 20 = 45 million. That gives them 18 million to sign Wade and tweak the rest of the roster and still have enough room for Durant, then use Whiteside's Bird Rights once you are over the cap and sign him to whatever you want. (Back in 2005, Milwaukee used this strategy to sign Bobby Simmons to a big Free Agent deal, then used Michael Redd's Bird Rights to sign him to a long deal once Simmon's deal ate up Milwaukee's cap space. Since Redd was a second round pick, his salary and subsequent cap hold was really small.)

The problem is that full Bird Rights require a player be under contract for 3 seasons. Whiteside would only have 2 seasons with Miami, so Miami would have something called "Early Bird Rights". Full details here, but the big problem is that Miami would only be able to pay him about $5.8 million using these rights. Whiteside will likely cost more than that, and to pay him any more, they'd need the requisite cap space to do so, as if he was a free agent from another team like Durant. A max for Whiteside that year would be about $21.3 million (using the same formula to find Dragic's max). If Whiteside commanded a max, they'd need a full $21.3 mil in cap space ON TOP of the $25.3 mil for Durant to have all 5. Even if Whiteside isn't worth a max, Bosh + Dragic + Durant puts them at $70 mil*. You could come close to signing Whiteside to max and still have have those 4, but that leaves nothing for Wade.

*(I am completely disregarding Josh McRoberts, unused roster charges and draft picks. These are relatively minor and can be worked around.)

So this is why I think Miami wants Wade out. It will take all of their cap space to get Bosh, Dragic, Whiteside and Durant. You can't even give max deals to all, but perhaps by convincing some of them to pay a pay cut (there is precedent for that...maybe LeBatard was right about relationships and Whiteside), you can make those 4 work. Wade, with his health declining, might be more of a burden by then.

So, let's revisit Le Batard.

The Heat can have room for Wade, Bosh, Goran Dragic, Hassan Whiteside and Durant … but only if Wade opts in for this year and gives them that flexibility by being a free agent in 2016.

As I have shown, just fitting 4 of the 5 will require some paycuts. Getting all 5, while a desirable starting lineup, is not remotely possible as he proposes. But the second statement is just downright bizarre.

If Wade opts in, his salary would be $16.1 million next year. That would make his cap hold a whopping $24.2 million. So of that $63.5 they need to stay below, Wade, by opting in, would account for almost 40% of what they need to stay below. And LeBatard obviously knows about cap holds, at least as they pertain to Hassan Whiteside.

If Miami wanted to somehow acquire/keep all 5, they really need Wade's salary to be as low as possible for 2016. They could do this by either having him opt out now and sign a club friendly deal now....or he could opt in, and sign a club friendly deal next offseason, but before they sign Whiteside and Durant (thus getting his cap hold off the books and his new, team friendly contract on the books).

So even if we ignore the 1st half of this post where I show getting 4 of them is difficult, the key to getting all 5 is NOT Wade opting in. In fact, Wade opting in would actually decrease flexibility, even if only temporarily.

So not only is LeBatard's idea pretty implausible, but what he considers the "key" to the whole plan does nothing to help said plan.

Now, I don't know how much we should expect out of NBA writers when it comes to the CBA. It is pretty complicated....I had to recheck about 12 different things to write this post. But how come I can figure this out, but a "nationally respected" writer not only posts such BS, but no other writer knows enough to call him out on it?

(I will note that if they could pull off some sort of S&T with OKC that could allow them to obtain all 5. That requires A LOT of things to happen, so I am sure that this isn't what LeBatard is referring to. Plus, Wade opting in would not help that plan either).

 

[spydy13]

If Wade opts in, his salary would be $16.1 million next year. That would make his cap hold a whopping $24.2 million. So of that $63.5 they need to stay below, Wade, by opting in, would account for almost 40% of what they need to stay below. And LeBatard obviously knows about cap holds, at least as they pertain to Hassan Whiteside.

I wonder if they're looking to do a bit of a magic trick though. Have him opt-in for next year to keep the fan favorite around, then next year kick him to the curb while they simultaneously bring in (or attempt to bring in) Durant. People will be distracted by their shitiness with a new super team assembled.

Either way, I'm pretty sure Wade (maybe with the help of LeBron) has woken up to the fact that he is lined up to get screwed in all this, and is looking to either get paid or move on.

 

[Mdog1]

Situations like the one with Haywood's contract are exactly why LeBron is choosing to have contract outs each year.

Sure, Gilbert could choose to have Haywood cut rather than trading for a contract that will cost big $ in luxury tax. But I'm sure he promised LeBron he'd do everything possible to build a champion. And not using this asset gives LeBron a chance to hold it against him in the near future.

Spend the $ now to keep the guy from Akron around who makes your franchise worth exponentially more $$$ than when he's gone.

This is the post of the thread. I mean LeBron left Miami in part because Miami amnestied Miller, an under used bench guy. Imagine how pissed he would be if we wasted the opportunity to add an actual difference maker with the Haywood contract.

In other words, we are using the contract, no doubt about it.

 

[natedagg]

A case study in capology: Dwyane Wade, the Miami Heat and Le Batard being an idiot
This thread has been exclusively Cavs, which is great, but I wanted to touch upon what I think is the most intriguing Salary Cap storyline of this offseason: Dwyane Wade.

Enough smoke has surrounded "Wade to the Cavs" to make a safari out of it, so this is at least tangentially a Cavs story. It is my belief that Miami wants Dwyane Wade gone, as he currently is acting as a fly in ointment in creating another super team in Miami in 2016. The whole situation contains some of my favorite parts of the Salary Cap: exceptions, cap holds and national writers looking like idiots for not understanding the Cap.

Le Batard's article outlining how Miami is maneuvering the Cap is here. I'll quote this section of the article.



I accept the first part as a legit premise. Well, a legit goal. Having that as a core of an NBA team is a worthwhile goal, but as I will show, they don't really have room for 4 of them, let alone all 5. I completely reject the second part as another NBA writer who has no knowledge and did no research of the Salary Cap.

The goal is to acquire Kevin Durant next offseason with the other aforementioned players still on the roster. Kevin Durant will be a free agent from OKC, so Miami will have to have enough cap space to sign him. The salary cap is projected to be about $89 million in 2016. If we assume Kevin Durant will want a max contract, his first year salary will be roughly 30% of 89 million, or $25.3 million (see Dragic note below for actual calculation). So Miami will need to have no more than 89-25.3 = $63.7 million on the books for that summer.

Chris Bosh is already on the books for $23.7 that summer. Dragic is a free agent this summer. It has been rumored he wants a max deal. By 2016, a max contract for Dragic would be about $20.2 million. (This number comes from 30% of the cap, but slightly lowered, then a 7.5% raise after 1 year. Read the footnotes of this part of Coon FAQ for full details.)

Here's where it gets tricky. Hassan Whiteside is a also a free agent that season. His salary next year will be $981k. As Le Batard points out,



On one hand he's right about the cap hold, but as I'll point out later, he exhibits temporary amnesia when it comes to cap holds. It requires no creativity or relationship building, though.

As was mentioned in a previous post, you can generally go over the cap to sign your own free agents with something called "Larry Bird rights". To retain those rights, however, there is something called a "cap hold". It is an amount of money, based on the previous year's salary, that counts against your cap until either the player signs with someone, or you "renounce their rights." As long as you let the cap hold stay, you can go over the cap to sign said player. (Full explanation here.) Whiteside's cap hold is about $1.3 million for 2016.

So it seems like a major coup. Whiteside only counts as $1.3 million against the cap. Adding his number to Bosh and Dragic 1.3 + 23.7 + 20 = 45 million. That gives them 18 million to sign Wade and tweak the rest of the roster and still have enough room for Durant, then use Whiteside's Bird Rights once you are over the cap and sign him to whatever you want. (Back in 2005, Milwaukee used this strategy to sign Bobby Simmons to a big Free Agent deal, then used Michael Redd's Bird Rights to sign him to a long deal once Simmon's deal ate up Milwaukee's cap space. Since Redd was a second round pick, his salary and subsequent cap hold was really small.)

The problem is that full Bird Rights require a player be under contract for 3 seasons. Whiteside would only have 2 seasons with Miami, so Miami would have something called "Early Bird Rights". Full details here, but the big problem is that Miami would only be able to pay him about $5.8 million using these rights. Whiteside will likely cost more than that, and to pay him any more, they'd need the requisite cap space to do so, as if he was a free agent from another team like Durant. A max for Whiteside that year would be about $21.3 million (using the same formula to find Dragic's max). If Whiteside commanded a max, they'd need a full $21.3 mil in cap space ON TOP of the $25.3 mil for Durant to have all 5. Even if Whiteside isn't worth a max, Bosh + Dragic + Durant puts them at $70 mil*. You could come close to signing Whiteside to max and still have have those 4, but that leaves nothing for Wade.

*(I am completely disregarding Josh McRoberts, unused roster charges and draft picks. These are relatively minor and can be worked around.)

So this is why I think Miami wants Wade out. It will take all of their cap space to get Bosh, Dragic, Whiteside and Durant. You can't even give max deals to all, but perhaps by convincing some of them to pay a pay cut (there is precedent for that...maybe LeBatard was right about relationships and Whiteside), you can make those 4 work. Wade, with his health declining, might be more of a burden by then.

So, let's revisit Le Batard.



As I have shown, just fitting 4 of the 5 will require some paycuts. Getting all 5, while a desirable starting lineup, is not remotely possible as he proposes. But the second statement is just downright bizarre.

If Wade opts in, his salary would be $16.1 million next year. That would make his cap hold a whopping $24.2 million. So of that $63.5 they need to stay below, Wade, by opting in, would account for almost 40% of what they need to stay below. And LeBatard obviously knows about cap holds, at least as they pertain to Hassan Whiteside.

If Miami wanted to somehow acquire/keep all 5, they really need Wade's salary to be as low as possible for 2016. They could do this by either having him opt out now and sign a club friendly deal now....or he could opt in, and sign a club friendly deal next offseason, but before they sign Whiteside and Durant (thus getting his cap hold off the books and his new, team friendly contract on the books).

So even if we ignore the 1st half of this post where I show getting 4 of them is difficult, the key to getting all 5 is NOT Wade opting in. In fact, Wade opting in would actually decrease flexibility, even if only temporarily.

So not only is LeBatard's idea pretty implausible, but what he considers the "key" to the whole plan does nothing to help said plan.

Now, I don't know how much we should expect out of NBA writers when it comes to the CBA. It is pretty complicated....I had to recheck about 12 different things to write this post. But how come I can figure this out, but a "nationally respected" writer not only posts such BS, but no other writer knows enough to call him out on it?

(I will note that if they could pull off some sort of S&T with OKC that could allow them to obtain all 5. That requires A LOT of things to happen, so I am sure that this isn't what LeBatard is referring to. Plus, Wade opting in would not help that plan either).

I just quoted your post so that you got an alert. A couple of things:
1. This is an excellent thread. I didn't say thanks before, so here's me saying it. I am surprised this thread isn't getting more burn, but whatever, easier for you to see my dumb questions now...
2. So I have consulted my consultants, namely, myself, and have figured out how we get Wade, but I need some help. It's going to be one of those simultaneous trade things where we can bend cap rules by making separate trades. Ok, that's all I got. Now how do we make it work? This seems like one of those techniques that will get shored up here shortly, so let's take advantage of it while we can.

 

[Kris032]

I just hope they could grab someone in his mid 20's and literally can be part of our core for the next 4-5 years with Haywood's contract. I know it's a little bit too much, but since Gilbert's has given the signal, might as well push it as far we can go.

 

[natedagg]

@col63onel - another "cap hold" question: let's say LeBron signs another 2 year contract this year with a max salary allowed this year and a minimum salary allowed next year (player option). Let's just say that Love does the same thing (for argument's sake)... So would the cap hold be the minimum salary after this year? That's what they are slated to make, after all. Of course the plan would be to player-opt out and re-sign, but trying to get around the cap here.

 

[col63onel]

2. So I have consulted my consultants, namely, myself, and have figured out how we get Wade, but I need some help. It's going to be one of those simultaneous trade things where we can bend cap rules by making separate trades. Ok, that's all I got. Now how do we make it work? This seems like one of those techniques that will get shored up here shortly, so let's take advantage of it while we can.

Breaking one trade into multiple smaller trades is always an option. It might be advantageous here if we get McBob's contract off Miami's books. McBob is the only long term contract Miami has besides Bosh on the books right now. If they really are looking at making a run at Durant in 2016, getting McBob's contract off the books would be huge.

Would take some magic on the Cavs part. They already need a little filler already to do Haywood for Wade. Would need even more filler for McBob. Probably looking at Miller, Harris, whoever is taken at 24 plus a little more.

another "cap hold" question: let's say LeBron signs another 2 year contract this year with a max salary allowed this year and a minimum salary allowed next year (player option). Let's just say that Love does the same thing (for argument's sake)... So would the cap hold be the minimum salary after this year? That's what they are slated to make, after all. Of course the plan would be to player-opt out and re-sign, but trying to get around the cap here

No, for 2 reasons.

There are limits to how much of a raise or decrease in yearly salary you can have. Usually it is either 4.5% or 7.5% of the initial year's salary, although it varies depending on what mechanism you used to sign the contract. But going from a max salary to a min salary on the same contract is not legal.

Second, the cap hold only activates once either of them had opted out, and is always based on the previous year's salary. If they opt in, then that minimum salary would be on the books. However, if they opt out, that min salary never existed, and the cap hold is based of the previous max salary.

 

[col63onel]

Just a visual of what to expect. I includes the tax raises on anything over $20 million. If we can somehow find a way to shave $5 million off our team, we will save ourselves $28 million in tax. I have to imagine that pick will be traded out. The 76ers have 5 2nd Rounders I would bet they would be the target team, especially because they will want to get in & missed out (due to protections) on 2 other 1sts. If we can pull 2 2nd rounders in, then we are able to swing a little harder on the Haywood deal and try for better player.

Chris Haynes tweeted out that Wayne Blackshear (Sg/SF) , Anthony Brown (Sf), & Brandon Ashley all worked out for us. Also a separate report said Christian Wood also worked out for us. Blackshear would be the most ideal fit on this team. He is a 6-5 that can play the SF & shoot the 3. One thing to keep in mind is that all 3 guys are projected in the 2nd round. So we may get two bodies for the price of one by trading out, thus reducing our tax payment by a little. (Still on that Dakari Safari)

Just a few assumptions for the tax payment.

1) Kyries contract was pulled from Sportstrac
2) J.R. Smith is retained for $8 mil (probably gets less with more years)
3) Thompson gets $15 mil, thats the magic number. Even that is an overpay, let alone a max for next season which is $17 mil for a player with less than 6 years of service.
4) Shump gets $10 mil. I could see someone trying to pay more to pull him away from us.
5) Mike Miller picks up his option
6) Haywood yields us 2 bodies
7) We keep #24
8) We use the full tax payer MLE.
9) I left our Dellys raise because who the hell knows what he is going to get.

The tax rates in that spreadsheet are for the repeater tax. You have to be a tax payer for 3 out of 4 seasons to qualify for the repeater tax. Next year would only be our 2nd year in the tax, so we're still at least a year away from the repeater.

 

[bigfoot5415]

The tax rates in that spreadsheet are for the repeater tax. You have to be a tax payer for 3 out of 4 seasons to qualify for the repeater tax. Next year would only be our 2nd year in the tax, so we're still at least a year away from the repeater.

I could have sworn it was 2 out of 3.

Here is what the CBA FAQ says:

• For 2014-15 teams pay an incremental rate based on their team salary. They pay the repeater rate if they also were taxpayers in all of the previous three seasons.