Sifting Through The Cap
The first thing you should know about me now that I’m writing here at Hoops Addict is that I’m a business guy. I’m foremost a sports fan, but I realize that sports is an industry largely driven by money.
So when I was preparing an article the other day, I was, no surprise, examining the salary cap numbers for this coming offseason. In doing so, one truth became evident – nobody has any money to spend this summer. Using the great Hoops Hype Salary site, I prepared the table you see below. The table shows the salary space each team has this summer, the number of roster spots filled by that salary figure, and the amount they can spend before hitting the luxury tax threshold.
Take a close look. Thirteen teams are above the cap. Another seven are within the expected mid-level exception figure. Only three teams could offer a player a maximum contract, and each of those teams has at least one high-profile restricted free agent to re-sign. On top of this, teams have draft picks to sign with no negotiating room, since the NBA utilizes a rookie contract scale. Depending on where you pick, you can add between $1.5M and $3M to that figure.
Sure, there are a few ways around this. Sign-and-trades exist and give teams the opportunity to both acquire players they couldn’t otherwise and get something in return for departing free agents. The mid-level exception also exists, allowing teams to spend the league’s average salary on one player or spread it across several. Finally, you can sign as many minimum contract players as you like, with a bi-annual ‘double minimum’ exception. But all of this still counts towards the luxury tax.
So what does this all mean?
Well, it means that there won’t be a lot of money thrown around this offseason. Logic and smart business sense would suggest that teams and players alike will choose to excercise options (an assumption of my table), and most free agents will be looking for one-year deals for the mid-level exception. If I’m a restricted free agent this summer, I’m signing my one-year qualifying offer, biding my time, and hitting the free agent market in 2009 when most teams have a great deal more cap space. If I’m a team this summer, I’m not overpaying for fringe players just because the market is bare, and I’m not sacrificing future cap flexibility for a patchwork solution.
My table lists the restricted free agents each team has to sign, as well. This list includes some marquee names, but it seems probable that most will sign their qualifying offers since no other team can offer them much money. It also means that most teams will be razor close to the salary cap or luxury tax line when the real free agent period begins.
Looking quickly at some of the top potential free agents this year, I have to feel for them.
Players who can opt out, but probably won’t: Shawn Marion, Elton Brand, Baron Davis, Allen Iverson, Corey Maggette, Jermaine O’Neal, Ron Artest
The one who probably will: Gilbert Arenas
The only big unrestricted free agent: Antawn Jamison
It seems unlikely that anyone will pay Jamison a max deal, and the first group are probably better served waiting until a team not named Memphis or Charlotte has serious cap space. Arenas could command big money, especially if the Bulls let Ben Gordon walk or the Sixers decide to take a gamble, but even his earning power will be restricted by his knee injury.
That leaves Jamison, some key restricted free agents who will probably have their offers matched, and a mediocre group of unrestricted free agents (highlighted by Ricky Davis and Antoine Walker) all vying for mid-level exceptions from bad teams or teams willing to cross the luxury tax line.
2008 is going to be a bad summer for fans of the NBA free agency period. It’s unlikely that most of the key free agents will opt out, your favorite team probably doesn’t have any money to spend, and the league may be worn out when it comes to selling superstars for 50 cents on the dollar.
Don’t fret, though. This is all leading to three entertaining scnearios:
1. An offseason that could include a large number of small trades. Suddenly 2009 expiring contracts like Rasho Nesterovic, Eric Snow, Malik Rose and Bobby Simmons have serious trade market value.
2. A very active February in 2009, for the same reasons as above. Championship contenders could find themselves dealing valuable expiring deals for that last missing piece.
3. The most entertaining summer ever in 2009. Half of the league will have significant cap room and there will be a huge cohort of big name free agents. Interesting, too, is that a few select teams will be posturing for the following offseason when LeBron, Wade & Co. can opt for free agency.
Blake Murphy also runs and writes for The On Deck Circle.
This article was written by:
Blake Murphy - who has written 21 posts on Hoops Addict.
Blake Murphy is a Queen's University Business graduate and broadcast journalism hopeful. He uses his business background often to analyze basketball from a management perspective more so than a fan perspective.
Comments
By austinkent on March 6th, 2008 at 12:07 pm
http://www.nba.com/blog/gilbert_arenas.html
Gilbert Arenas spoke about his decision to opt out way back in June 14, 2007 in his blog. For a guy who has a history of being brutally honest, I think Wizards fans can rest a little bit easier. Like he says in the blog, opting out is all about milking more money out of the Wizards front office. ‘
Take a look (you gotta search half-way down the page) or just ctrl+f the phrase “opting out”.
By khandor on March 6th, 2008 at 6:04 pm
Is this article written by the same Blake Murphy I’ve been reading comments from on “Ball Don’t Lie’? (yes or no)
Either way … could the writer of this specific article please list the 15 (or so) teams that will fall into the category of “half the teams in the league will have significant cap room in summer 2009″?
I’d appreciate very much.
By Connor on March 6th, 2008 at 9:39 pm
Interesting point about Rasho Nesterovic being dealt next season, but I can’t help but feel the Raptors will hold onto him next season for his experience and the value of his expiring contract. In your article you talked about players electing to sign a one-year deal this summer and if this were to play out with Calderon the team could then use Nesterovic’s expiring contract to pay Calderon a much larger deal during the summer of 2009 without fear of going over the salary cap.
By Blake on March 6th, 2008 at 11:34 pm
Khandor, same me, yup.
As for teams with significant cap space in 2009, it’s difficult to say which exact teams because we haven’t gone through this free agency period yet. However, I made that assumption by looking at the incoming free agent class and then the free agent class for 2009. Reason would predict teams will be a little tighter with money in this poor free agent class in order to have more to spend on better free agents later.
The problem with this assumption is that NBA GMs don’t always follow sound logic. Regardless, Khandor, I think you’ll see 12-15 teams with significant cap space that summer. The Hoops Hype link I provided is great, so you can check there for more on your favorite teams.
Sorry that doesn’t clear things up too much more, but it was an estimate that’s heavily influenced by this summer’s spending.
By khandor on March 7th, 2008 at 10:51 am
Hey, Blake … no problem.
With that many teams projected to have significant ‘cap space’ available during summer 2009, seems as though a few teams looking ahead to that period in their development - to step up to the big stage with a few crucial ‘big ticket’ signings, to push their squad ‘over-the-top’ - might end up being disappointed, if/when they lose out in the free agent sweepstakes to a handful of the prime-time draws/markets in the NBA, while being left ‘holding the bag’ (full of money but with no superstar takers) so-to-speak. e.g. the Toronto Raptors
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