7 NBA Teams Trapped in the New CBA
When it comes to free agency in the NBA, much of the focus is placed on which teams have the most cap space available to spend or which teams can afford the top-tier players. These teams get the press because they get to make the glamorous signings, but at the other end of the spectrum are the teams pushing up against the luxury tax line.
These teams are faced with how to make their team better with limited resources (yes, typically because of previous trades or free agent signings that raised the payroll). Their situation may be a product of their own decisions, but it’s the situation they are in. Some teams are adamant they will not pay luxury tax. Some teams will pay the tax if the player they add is worth it.
The teams below face some difficult decisions this summer because of those decisions and because of restrictions placed on teams by the new collective bargaining agreement. For example, teams over the luxury tax don’t have the Bi-Annual Exception to offer a free agent. Those same teams are limited to a smaller Mid-Level Exception as well (three years starting at $3.09 million for 2012-13 as opposed to three years starting at $5 million). Also, that doesn’t affect just teams over the tax but also teams close to the tax; if signing a player to the $5 million MLE pushes the team over $74.3 million in salary commitments ($4 million over the tax level, or “apron”), they can only offer the smaller one.
The seven teams below face constraints this summer when it comes to trying to make their teams better, to get them over the hump.
The Hawks are currently sitting at $60.9 million for next season, owed to just six players. Add in five minimum salary cap holds ($2.4 million) and the 23rd pick in the draft ($1.0 million) and the Hawks are pushing the tax line, something they have been adamant they will not cross. They could use amnesty if they want to clear some room, but they aren’t a team apt to pay a player to go away. Say the Hawks sign a player to the full MLE and their first-round pick, giving them eight players under contract. They will have $66.9 million in salaries, plus four cap holds at the rookie minimum salary ($473,604), putting them at $68.8 million. If they want to sign veteran minimum salaries – like how they signed Tracy McGrady, Vladimir Radmanovic, Jason Collins, Jerry Stackhouse, Willie Green and Jannero Pargo last summer – they will be in the luxury tax because that $473,604 number becomes $854,389 (the taxable amount for a minimum salary to a player with two or more seasons of experience). That’s going to make it very difficult for the Hawks to get better than they were this past season.
Right now the Bulls are tax payers in 2012-13, sitting on $76.0 million to 10 players. The 29th pick in the draft will add about a million and tack on a minimum salary cap hold. They can use the mini-MLE, but it will cost them $6 million to do so with the tax. They can lower their obligations significantly if they waive Kyle Korver, Ronnie Brewer and C.J. Watson (the latter two by July 10th). They will pay just $500,000 to Korver instead of a combined $12.6 million. However, considering how good the Bulls were this past year, does it make sense to waive those players? They would still be over the cap so they would be limited to exception money (MLE and BAE) plus minimum salary deals to replace that trio. It’s unlikely that would make the team better. Amnesty is still an option for the Bulls.
The Lakers sit at $83.8 million for next season to nine players. Ramon Sessions can reduce that number by one player and $4.6 million if he declines his Player Option. Andrew Goudelock’s $0.8 million is not guaranteed, but that won’t affect whether or not the Lakers pay the tax. Andrew Bynum’s $16.1 Team Option would, but the chances the Lakers decline that are somewhere between slim and none. That means L.A.’s only way to get under the luxury tax would be use amnesty on Pau Gasol or Kobe Bryant, and that’s not happening either. This almost forces the Lakers to re-sign Sessions with Bird Rights and then use the mini-MLE on a veteran who can contribute. Then again, paying the tax has never been something that bothered this franchise.
The Grizzlies have $63.4 million committed next season to 10 players. Normally that wouldn’t put them on this list, but they also potentially have three restricted free agents if they make all three Qualifying Offers by June 30th: O.J. Mayo, Marreese Speights and Darrell Arthur. If they don’t make the Qualifying Offers, they will probably lose the players as unrestricted free agents. If they do issue QOs, they may not be able to match an offer sheet signed with another team without going into luxury tax territory. Speights and Mayo in particular were key members of the team this past season (Speights because of the Zach Randolph injury). Will the Grizzlies be willing to pay what it takes to keep this team together? Amnesty is still an option for Memphis as well.
Miami has $78.1 million on the books to 11 players, which probably isn’t a surprise to anyone. In fact, their obligations already sit in the luxury tax for the next three seasons and in 2015-16 they have $65.8 million going to Chris Bosh, Dwyane Wade and LeBron James. The HEAT know this – they knew it would be this way when they signed the trio – and know they now have to draft better than everyone else and get the best player they can for the mini-MLE in order to get better, just as they have the past two summers after the big signings. Nothing will change for them going forward. Miami still has the option to amnesty a player.
The Knicks are an interesting case study. They have $63.0 million in commitments for 2012-13 to eight players. They could clear $1.5 million if they waived Jerome Jordan and Josh Harrelson, but that would just mean minimum salaries to replace them. J.R. Smith has a $2.6 million Player Option he will likely not invoke. Even if all of that happened, the Knicks would still be over the cap and limited only to spending exception money (MLE and BAE). However, the Knicks also have two players who can be restricted free agents and fall under the so-called “Gilbert Arenas Provision” of the CBA: Jeremy Lin and Landry Fields. What that means is that other teams can only offer these restricted free agents up to the MLE in an offer sheet, but the Knicks have to use their MLE to match such an offer sheet. The assumption is they will pay Lin the MLE, one way or another, which means there likely isn’t money left for Fields unless he is willing to sign for the BAE. Or they can use the BAE on someone else. The end result of all of this is the Knicks can’t keep Lin, Fields and Smith unless all of them combine to sign under market value. If Lin is kept for the MLE, the Knicks must fill out their roster with a BAE player and minimum salaries. Will that make them better than they were in 2011-12? Truly, the Knicks are probably the team on this list that’s the most stuck. The Hawks are limited as well, but they don’t have to face the decision of deciding which young talent they want to keep while watching the other leave.
The Magic sit at $66.7 million to 11 players. Von Wafer’s $1.1 million is non-guaranteed, as is J.J. Redick’s $6.2 million if he is waived by July 8th. If Earl Clark and Jameer Nelson both decline their Player Options, that would clear another $9.0 million, so the Magic could have just $50.4 million for seven players, but it’s not likely. The Magic sit just far enough under the tax line that they can use the full MLE, but then will lose the BAE (even if they waive Wafer). Considering the pressure being placed – both internally and externally – on the Magic front office to make the “right” decisions leading to a re-signed Dwight Howard, that means they must make the right decisions.
What can these teams do with their limited resources? Leave your thoughts in the comments below!