I've gotten a few questions, and seen a fair number of comments around the site, either asking for clarification or evidencing misinformation/confusion about the free agent possibilities for Portland Trail Blazers forward Nicolas Batum this summer and what the signing process means for Portland. Here's a quick explanation to clear it up.
The confusion stems from the age-old question people ask when any incumbent player enters free agency: "Can't we just sign a roster full of free agents with our cap space and then re-sign our own player using Larry Bird rights?"
In the vast majority of cases the answer to that question is, "No". The CBA includes a cap hold provision for players entering free agency. From 120% to 300% of their previous salary counts against their team's cap during the summer they're free agents until their team re-signs them, they sign with someone else, or the team renounces their rights. That means that the $5 million the guy made last year still sits on your cap (and then some) until his status is resolved, reducing the amount of cap space you have to sign other free agents.
Smart observers have this answer at their fingertips, as it's the standard response to the "can we cheat the system" question. The problem is, in this case it doesn't apply, or at least not as seriously.
Because Batum is coming off a rookie scale contract, his cap hold will end up being roughly $5.4 million. That's the amount deducted from Portland's available cap space this summer until Batum's future contract is determined.
(Find this info and more from our friend Storyteller's salary site.)
The key thing to realize here is that $5 million is a smaller than the likely size of his future offer, which could nearly double. If they intend to push their cap limit with free agent signings this summer it's to the Blazers' advantage to do all their free agent business before taking care of Batum. They keep that $5 million tucked in a corner, spend the rest of their money up to the cap, then match any offer to him using their ability to exceed the cap via Bird Rights. If they signed him to a $10 million contract before doing their other business they'd lose that full $10 million in available cap space for signing other potential free agents instead of just his $5 million cap hold.
The problem is, the rest of the league may not let Portland get away with that.
(note: See addendum at the end of the piece on next paragraph. It still contains useful information but with an adjustment.)
[[A little-known rule in the CBA: while a restricted free agent's cap hold generally starts at the same amount as his qualifying offer, it doesn't stay there. As Larry Coon's Salary Cap FAQ's will explain, as soon as a restricted free agent signs an offer sheet his cap hold becomes equivalent to the first-year salary of that new offer. So let's say a team with salary cap room offers Batum a four-year deal at $9 million each year and Batum signs it. The Blazers' cap hold of unusable space is now $9 million. Let's say a team with even more cap room wanted to get nasty and said, "We'll give you that same $36 million but we want to pay you $12 million the first year and $8 million each of the next three". If Batum signed that offer sheet the Blazers' cap hold on him would now be $12 million. And this happens the instant Batum agrees to accept that contract.]]
Naturally Portland still has the right to match the contract. The other team can't just steal him away. But if another team wanted to mess with Portland's cap space, especially if they were confident the Blazers would match Batum's offer no matter what, all they'd have to do is make an offer with a big first-year payout and they've eaten up that much of the Blazers' cap room, providing Nicolas likes the deal. No team can force him to accept an offer sheet, but a team could sure entice him with some attractive numbers.
The Blazers have to hope that the rest of the league holds off on offers to Batum until they've done their own business. Failing that, the Blazers have to hope that Batum dallies and doesn't accept any of the offers until the Blazers have signed other free agents. Failing that, get used to this equation:
Portland Trail Blazers Cap Space This Summer = Theoretical Cap Space - First Year Salary in the First Great Offer to Batum.
For these reasons I believe you'll see the Blazers trying to do business at lightning speed coming out of the gate this year. They'll also encourage Batum to take his time and make sure he's getting the best offer out there. If he's committed to staying in Portland that could work for a short time as he should be amenable to helping his team. But if another team tells him they need him to sign the offer or they're going to spend it on another free agent, he has to make sure he gets paid. If even one other team with cap space is enchanted by Batum, this could get hairy.
The Golden Ticket for the Blazers is if they can convince Batum that they will make their own offer once they have pursued other free agents. They're allowed to put up an offer sheet like any other team and they can use Bird Rights while doing so. If Batum knew that offer was coming he could comfortably refuse to sign offers by other teams, giving the Blazers the time and cap space they need. The caveat here is that such an offer would have to be on the high end of his earning potential to be attractive. However it's certainly possible that both the organization and Batum's camp knew this was the plan all along and this was the reason he wasn't extended earlier, in effect letting the Blazers make full use of their potential cap space and then paying him off afterwards instead of extending him last year and losing that space.
Whichever way this goes, timing will be the critical aspect here. It's an interesting situation. We'll see how it plays out.
Update 10:50 a.m.: Interesting things always happen when you do an article like this, information coming out of the woodwork. I just had a conversation with a source who knows this stuff back and forth. Two corrections:
1. The cap hold is $5.4 million, higher than the $3.2 figure, which may not have been accurate even as Batum's Q.O. That's been changed in the article above.
2. Apparently either Larry Coon's piece is incorrect or the wording is imprecise. Any offer sheet signed by Batum would not go on Portland's cap until officially matched. It goes on the offering team's sheet immediately. But Portland has three days to match the offer during which they only suffer the cap hold, not the new contract. Therefore as soon as Batum signs an offer a 72-hour clock starts for the Blazers during which they can transact other business before absorbing Batum's new offer onto the cap.
Neither of these changes materially lessen the overall point of the article, which is that Batum's contract burden is something the Blazers want to absorb last, not first, and that the plans of other teams could mess with that.