I’m trying my best here to summarize the Darius conundrum as it currently presents itself. I tried to check the facts as good as possible. There probably are errors or I’m too subjective, so please all CBA/salary experts correct me in the comments. Or just speculate on what happens next ;-)

What the Blazers did:

Darius Miles, once a promising young forward signed to a long-term contract until 2010, has not played a game for Portland since April 15, 2006 after undergoing microfracture surgery on his right knee. A lengthy rehab didn’t seem to help, and thus the team started a process known as “medical retirement” or “career-ending injury” to have an independenct doctor certify that he is unfit to play basketball in the NBA - forever. Purpose: Free a roster spot, get an insurance company to pay most of his outstanding salary, and free up valuable cap space ($18 million over two seasons left on his contract). That process was completed this spring. But Darius wasn’t satisfied to end his career this way, kept working on a comeback with independent trainers (e.g. a famous training academy in Chicago once making MJ fit for a comeback), and now it looks like he is succeeding.

Couldn’t KP have kept him? Or traded him? Was that a major mistake?

A trade at the time of retirement or now: With his well publicized injury history and off-court issues, teams have been reluctant to take Darius on for the league minimum for a veteran of his experience. Do you think a team would have traded for a Darius with an $18 million price tag?

A trade in 2010: After all, Darius would have become an expiring contract in 2010, the year when everybody and their brother tries to come under the cap to acquire one of the many major free agent (LeBron, Wade, Amare, Bosh, …). Didn’t Pritchard see that he potentially would be highly valuable then, the DMEC? We can assume the Blazers did see that, and made a conscious “addition by subtraction” decision that it was better to clear a roster spot and ideally get him off the books. Even as it stands now, I think the Blazers handled the situation correctly (at least from a business perspective).

The current situation

After going to training camp with the Boston Celtics, he looked pretty good in a few pre-season games, but the Celtics ultimately shied the risk and went with a younger version of him: Bill Walker. Now he has found a new home with the Memphis Grizzlies. He served his suspension for violating the NBA’s anti-drug policy there (apparently handed out for the use of a weight loss drug), spending five games on their active and five games on their inactive list which was enough to fulfill this requirement. A report in the Memphis Commercial Appeal over the weekend stated that the Grizzlies staff and players are pretty happy with how he performed in training for them albeit admitting that he is not yet back in game shape. They even praised his leadership skills, which is not completely void of irony. Is Darius really the kind of veteran you want around your young players like Mayo and Gay you hope to develop into the cornerstones of your franchise? Yesterday on January 4th, he appeared in his first regular season game since April 2006, playing in the final two minutes in a win against the Dallas Mavericks and recording a big fat zero in all stats.

Now what?

An interesting deadline is fast approaching: All contracts become guaranteed on January 10th. Until then, the Grizzlies have to decide (after seeing him in training and in max. three more games against Minnesota, New Jersey and Toronto) if it is worth it to keep him on their books. If they release him, all bets are off. Well, not really. He could still get the required number of games this year or (with less consequences for the Blazers) next year with another team. After having served his suspension that seems quite likely. After playing in ten games, his outstanding salary comes back on the Blazers cap.

Does it matter? We have cap space en masse

Actually, we don’t. At least not as much as you might think. According to various salary info sites (e.g. BE’s own Storyteller’s excellent website http://www.storytellercontracts.com, or Shamsports), the Blazers would have committed about $35 million in salary in the summer of 2009, including small cap holds for our unsigned draft picks (Petteri, Freeland) and a mid to late first round pick. Depending on how high the salary cap will be (it’s usually increasing, but in the current economy it could actually go down a bit) that leaves the Blazers with about $25 million in cap room. That however is before we take on the last year of the contracts of Steve Blake ($4 million) and Travis Outlaw ($3.6 million). We wouldn’t want to let those two just walk away leaving us empty handed, right? So even if we would trade them, salary would come back. Subtract that, and we are left with about $17.4 million. Remember, that is with Raef already off the books, and not having traded him for additional salary! Then come the restricted free agents Channing and Ike, who having been high first round picks would command pretty big qualifying offers and thus (temporary) cap holds of ca. $9.5 and $8.75 million respectively. Only if we would trade those for expiring contracts or just renounce their rights we would still have that cap space. We could quickly re-sign one of them for significantly less money of course, but he won’t play here for free. Subtract $9 million for Darius, and you are left with not all that much, severely limiting our chances to acquire a major free agent next season. There are still options, but I suppose it makes a trade (including Raef) much more likely.

Are they doing this on purpose?

Nobody knows for sure. Coach Ivaroni and GM Wallace have claimed repeatedly that they don’t do this with the intend of reducing the Blazers cap space but to get help from Miles as a player. Yet, they would have a vested interest in it: They are among less than a handful of teams who would have enough cap space in 2009 to go after a major free agent, along with e.g. OKC - and the Blazers.

In fact, most other teams have a small interest to “stick it to the Blazers” in this situation. They keep a potential major competitor with less cap flexibility, and we can be sure they have taken notice of the rising Blazers. And then there is this little tidbit from TrueHoop (http://myespn.go.com/blogs/truehoop/0-36-21/Math-With-Darius.html)

•    In addition to the aforementioned $18 million over two season, the Blazers would go from $1.08 million under the luxury tax line, to $7.9 million over the cap for 2008-09, money they'd owe to the league in luxury taxes.   

•    By virtue of being a luxury taxpayer, the Blazers would lose a first payout of about $3.5 million.

•    Blazers would miss out on $14.4 million in insurance compensation they would have claimed had Miles been inactive. By playing ten games, Miles essentially proves the doctors wrong and, therefore, can't legitimately be regarded as having a career-ending injury.   

•    Each non-taxpaying team would receive 1/30 of $7.9 million, or $263,300.  That might not buy your team an impact player, but it's more than chump change.

What can the Blazers do then?

Paul Allen can apply for co-ownership of the Memphis Grizzlies, claiming he already pays Steve Francis and Darius Miles and thus about 1/4th of the real salary of that team ☺ Well, not really.

The Blazers might (and likely will at least try to) appeal that Darius’ salary comes back on their books, claiming that the Collective Bargaining Agreement (CBA) and associated documents between the NBA and NBA players association (NBPA) did not intend that. That might be the most interesting part of this story for our future flexibility (Darius as an opposing player is pretty much a non-issue for the Blazers), completely eliminating the “threat” of the cap space hit. How likely is it that the Blazers will have success with that? I don’t know, and so far I haven’t heard from an expert/lawyer who really would know for sure. Different opinions are out there. Obviously Blazers officials (e.g. Assistant GM and cap expert Tom Penn) are keeping mum about the situation now until this problem really arises, after already creating stories in the press about potential HIPAA violations in the summer when KP talked about certain details of Miles medical status (http://www.portlandtribune.com/sports/story.php?story_id=121693653261551200, worst microfracture injury, knee replacement surgery, etc.). Darius (especially in interviews with the media in Boston, e.g. inthis article) and his agent have stated repeatedly that they were disappointed in how the Blazers handled the situation. Yet now they claim that they are just interested in the comeback with the Grizzlies, and would wish this could work without the Blazers taking the cap hit (of course not without getting his full salary).

So from this point on there are mainly speculations out there, and few hard facts (http://www.realgm.com/boards/viewtopic.php?f=4&t=827526). Some people claim the intention of this provision in the latest CBA was to keep teams from dumping older injury-prone players with expensive contracts (let’s say Allen Houston with the NY Knicks), renegotiating their deals, and re-signing them for less money. This of course is not in the interest of the NBPA who tries to maximize player salaries, and not in the interest of competitors. It was not really intended for a situation when a player gets medically retired, then comes back with another team. The provision is written in a complex and somewhat vague legal lingo that still doesn’t account for all cases. Why is there no team-independent doctor required to make a new diagnosis deeming the player fit for service again? Why should his former team be punished twice for this, paying his salary (which he earned/was guaranteed) and taking the cap hit for a player who no longer renders his services to them? It is unclear when the right time to appeal this cap hit would be if the player re-injures himself and has to retire again for the same reason. At the end of his comeback season, so e.g. July 1st? After another year? 

Here is the original text from the CBA (respectively an accompanying document between the insurance company and the NBA) referring to the situation in question. Especially section 4 could become important.

“(h) Long-Term Injuries. Any player who suffers a career-ending injury or illness, and whose contract is terminated by the Team in accordance with the NBA waiver procedure, will be excluded from his Team’s Team Salary as follows:

(1) Beginning on the first anniversary of the injury or illness, the Team may apply to the NBA to have the player’s Salary for each remaining Salary Cap Year covered by the Contract excluded from Team Salary.

(2) The determination of whether a player has suffered a career-ending injury or illness shall be made by a physician selected jointly by the NBA and the Players Association.

(3) Notwithstanding Section 4(h)(1) and (2) above, the career-ending injury or illness of a player who plays in more than ten (10) games in any Season shall not be deemed to have occurred prior to the last game in which the player played in such Season.

(4) Notwithstanding Section 4(h)(1) and (2) above, if after a player’s Salary is excluded from Team Salary in accordance with this Section 4(h), the player plays in ten (10) NBA games in any Season, the excluded Salary for the Salary Cap Year covering such Season and each subsequent Salary Cap Year shall thereupon be included in Team Salary (and if the tenth game played is a playoff game, then the excluded Salary shall be included in Salary retroactively as of the start of the Team’s last Regular Season game). After a player’s Salary for one (1) or more Salary Cap Years has been included in Team Salary in accordance with this Section 4(h)(4), the player’s Team shall be permitted at the appropriate time to re-apply to have the player’s Salary (for each Salary Cap Year remaining at the time of the re-application) excluded from Team Salary in accordance with the rules set forth in this Section 4(h).”

Are other teams interested in getting this situation clearly defined, and would support the Blazers in such a motion?

Maybe. The Cleveland Cavaliers have Eric Snow medically retired, but it’s very unlikely he makes any comeback from his current job as studio analyst for NBA TV. Also, the New York Knicks might be highly interested in getting newly acquired Cuttino Mobley (dangerous heart condition) off their books to further save cap space. But it’s a rare situation, and Darius’ specific case has never been tested before to my knowledge. He is the first player trying to come back from being declared “medically retired”. Not even guys like Alonzo Mourning (kidney transplant) or Ethan Thomas and Rony Turiaf (open heart surgery) ever had that status. Maybe other teams are also interested in getting the rules clearly interpreted once and for all, maybe not (see “Are they doing this on purpose?”). What does the NBA and NBPA want? I really don’t know. Maybe they had hoped that the situation would just go away by itself.

What happens next?

As stated above, January 10 is an important date (next Saturday). All contracts become guaranteed for the remainder of the season, and if the Grizzlies don’t release Miles by then, they commit about $580k to him for this year. If that happens, you can basically rest assured that he will log his ten games this year, triggering all other actions. The saga continues.

Update:

Miles played 7 minutes in another game for the Grizzlies, recording 2 blocks and 2 rebounds (1 offensive, 1 defensive). The same evening, the Grizzlies informed him they would waive him again on Wednesday, most likely to look for a short-term replacement for injured C/PF Darko Milicic (Update: They also did a deal with Miami involving Shaun Livingston and cash for a second round pick, who was subsequently waived as well). Are we safe? For now we are, albeit having served his suspension was an important step in any comeback, and you can still sign players for quite some time this season regardless of the deadline mentioned above. Having less of a chance to just bring him in and "kick the tires" might make cash-strapped GMs weary to give him another shot. The reasons why it still might make (business) sense to "stick it to the Blazers" remain, only opposing GMs seem not as intent on it as Blazer fans might have feared (see Danny Ainge). If Darius would only play in the 2009/10 season, also only the then remaining part of his salary would come back on our books and cap (and we wouldn't have a lot in the summer of 2010 anyway as it stands now).

Update 2:

In a surprising development, Yahoo's Adrian Wojnarowski reported that according to the league office the 6 pre-season games he played for Boston actually count towards the number of games he played this season. That would bring the number of games left before he comes back on our cap down to 2, achievable with a ten day contract (at least preliminary until a decision regarding an appeal the Blazers would very likely file based on the intention of the CBA as described above would have been made - a process that has not been used before so the outcome is hard to predict).

The Blazers reacted by sending an email to all other teams warning them to not sign Miles to a short-term contract for pure business reasons in bad faith, threatening litigation.