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This week's Mailbag is all about the raft of amnesty clause questions. You can find a nice explanation of the basic issue
People keep talking about the Amnesty Clause. What will it entail and would the Blazers really just dump Brandon Roy if they got the chance?
I answered the second part last week but you're right, people keep talking. So let's go into detail.
If the new Collective Bargaining Agreement changes the salary cap and luxury tax numbers significantly it's likely that it will include an amnesty provision allowing teams to reduce salary to better comply. The precedent came after the last CBA was agreed upon. Each team was allowed to cut one player, losing their services and removing their contract from the books for purposes of the total counted towards the luxury tax.
Things to remember:
- The team was still on the hook for the actual salary payments. The player affected still got the full amount due him under the removed contract, paid out of the pocket of the team's owner. The cost savings to the team came through avoiding the luxury tax. For a team not affected by the tax, cutting a player wouldn't make any sense.
- The player's salary was still counted for salary cap purposes. The amnesty clause did not create space under the cap.
- The team couldn't keep said player, nor could they re-sign them immediately.
- This was a one-time offer. It wasn't savable, repeatable, and there's no guarantee it would ever be offered again. Use it or lose it.
If the amnesty provision (provided there is one) remains exactly the same this time the Blazers would face a tough choice with Roy. The salary cap is certain to be reduced. The luxury tax threshold would be reduced correspondingly. If the Blazers retain Greg Oden, Nicolas Batum, Gerald Wallace, and any kind of starting point guard they'll be pushing the tax threshold. Teams under that line receive money from the tax fund. Teams over it pay out the nose, a dollar for every dollar they're over the limit. This isn't desirable. For a team attempting to balance a budget it can be the kiss of death.
Brandon Roy makes between $15 and $19 million per year over the next four years. Figure you're paying that cost plus another $10 million per year in tax charges plus losing out on another $6 million that would have been coming in were you under the limit and all of a sudden you're carrying a $31-34 million dollar annual investment on bad knees. You can't cut all of that. You'll owe him the $15-19 million no matter what. But if cutting Roy would save you an extra $64 million over the next quadrennium you have to examine the bottom line versus what he can give you on the court.
The cautionary question is whether you can afford to lose a player of Roy's stature for no return but cash. He's been the heart of your team, a shining hope. If there's any chance of him returning to form they can't lose him. But if he's not going to recover his contract is a disaster and they might have to bite the bullet and let him go just because it's financially insane to keep him when he can't produce. It's a choice between certain money from the cut versus a gamble on a recovered Roy with a much-improved team as a prize and a huge payment penalty for falling short. Paul Allen and the Blazers brass will have to decide which is more valuable to them and how risky of a proposition retaining Roy is.
The outlook changes if you speculate that the owners would allow an amnesty provision that also wiped out a player's tally against the salary cap. The league has always been reluctant to mess with the cap for a couple of reasons. First, teams at or under the salary cap aren't eager to bail out teams that have exceed it. It's kind of like credit card companies taking $10,000 off of everybody's bill. It sounds fantastic in theory, but what about all of the people who were responsible with their credit and didn't run up $10,000 in the first place? Why should the careless people get helped? They've already enjoyed the fruits of their overspending while the frugal people went without. Now the people who did well get nothing while the cavalier spenders get bailed out? Second, the whole point of collective bargaining from the owners' side is to reduce costs. Granting a salary cap amnesty wouldn't save money. The owners would be on the hook for the original contract but also be under pressure to keep competitive by filling up the departed player's cap space with a new player, for whom presumably there would now be room. Many owners would end up paying double again, just in a different way.
Despite that, the cap may go down so far under the new agreement that owners are all but forced to offer a one-time exception because almost every team would suffer without it. Sacramento is the only team currently under the latest cap figure proposed by the owners, $45 million. If by some miracle they got a hard cap at that number nobody could be signed outside of the single, $1 million per year offer the Kings could make to Jamal Crawford. Even reducing salaries by 25% wouldn't bring most teams in line. Therefore there's a chance the league will bend its long-standing policy and allow each team to make a cut that affected the cap as well as the luxury tax.
If the issue is just Paul Allen's tax money the burden of proof would probably be on the Blazers to justify cutting Roy to save some dollars. But if the amnesty clause affected the salary cap as well--allowing Portland to use some of Roy's vacated space to sign or re-sign other players--then the burden falls upon Roy to prove he's worth keeping. Now you're talking about player versus player, Roy's utility at $16.5 million per year versus Nicolas Batum at $8 million per year. If you could only keep one, which would it be? Or if you could have Batum plus another player instead of Roy, would that be better?
Freeing up cap space changes the question entirely. Unless the Blazers are sure Roy can recover to a max-contract level of play they're likely to get out of the onerous contract and start again at the position with Wesley Matthews and whoever else they can find on the market, figuring they'll balance out his injury-riddled contributions with different players at the same cost.
My wild guess: If the amnesty clause covers luxury tax alone the Blazers will keep Roy but if it also absolves them of the cap obligation they'll cut him.
What do you think of the Blazers picking up [Player X] if he were cut due to an amnesty clause situation?
Right now this seems like another version of "dream trade/free agent" wishful thinking with a slightly different label. Consider:
- We don't know if there's even going to be an amnesty clause for sure.
- We don't know that some of the speculated names would be cut. Keep in mind that owners still have to pay those salaries. By taking advantage of the clause they're paying a lot of money for no service. There's got to be a compelling reason to make that move. If a guy has talent and can produce (people's rationale for wanting him to come to the Blazers) the reason to cut him becomes less compelling.
- Will there be any kind of competitive bidding wars for these cut casualties? If so, remember the Blazers probably won't be that far under the new cap level even if they receive a cap break for cutting Roy and choose to do so (no guarantee of that). That is unless they also cut the last year of Andre Miller's contract and don't re-sign Greg Oden. Show me an amnesty casualty that makes up for the potential production of Miller, Roy, and Oden combined. I'd like to see that guy! In any case, if there are bidding wars the Blazers will probably be out of the running for the upper echelon players either because of cap space or because the point of cutting Roy in the first place was to save money, not blow it on a new guy.
- If there's not competitive bidding--if we see a repeat of the last amnesty situation where guys collect their old contracts and sign for the minimum with a new team--what incentive do big-name guys have to come to Portland instead of Miami, L.A., Dallas, or Chicago? It's the same money either way, right?
It's Amnesty, not Santa. The last names are spelled totally differently.
How likely is an an Amnesty Clause?
The deeper the cuts to the salary cap and the sooner they're implemented the more likely the provision becomes. The players aren't going to agree to anything that results in the next couple crops of free agents being stuck with lowball offers due to a hard cap and no room. A total lack of movement would be undesirable to most of the owners too. Big cuts next year all but mandate an out to grease the wheels. But if you have a four-year phase-in the clause doesn't become as necessary. The owners are shooting for big cuts so it seems likely.
This also holds true of the "luxury tax alone" versus "tax and salary cap" nature of the clause. Drastic measures require a more drastic escape from the current system.
Would an Amnesty Clause be good for the Blazers?
Only if it allows them out of Roy's cap obligation. For the most part they've gotten good players at the right prices otherwise.
Even the decision whether to cut Brandon is going to cause more soul-searching than most teams will have to do. Pre-injury Roy was The Man on this team. Few teams are going to be losing their former #1 guy--a young guy and maybe a potential star again--through this provision. We're talking Baron Davis or Antawn Jamison, Gilbert Arenas, and Rashard Lewis here...no-brainers. It's not as clear cut for Portland. It could be good for Portland but it's not guaranteed they'd even use it.