FanPost

2015 Salary Cap Room Analysis

Soobum Im-USA TODAY Sports

Good stuff from BlazerFanSince1970, promoted to the front page. -- Tim

Unless Neil Olshey makes a trade, re-signs Mo Williams using the Non-Bird Exception, or waives a player(s) to sign a free agent at the veteran’s minimum salary, the Blazers roster is complete for the 2014-15 season. The Blazers have already used their Mid-Level Exception (MLE) to add Chris Kaman, and their Bi-Annual Exception (BAE) to add Steve Blake.

So it’s a good time to revisit the 2015 salary cap situation once more, and see what the Blazers will face if they want to go after a free agent for more than the Mid-Level Exception next summer. But first here’s the current 2014-15 team salary now that we have a 15-man roster.

2014-15 (Current) Team Salary

PORTLAND

2014-15

1

LaMarcus Aldridge

16,006,000

2

Nicolas Batum

11,765,500

3

Wesley Matthews

7,245,640

4

Robin Lopez

6,124,728

5

Thomas Robinson

3,678,360

6

Damian Lillard

3,340,920

7

Chris Kaman

4,800,000

8

Steve Blake

2,100,000

9

C.J. McCollum

2,421,000

10

Meyers Leonard

2,317,920

11

Will Barton

915,243

12

Joel Freeland

3,013,512

13

Dorell Wright

3,150,000

14

Allen Crabbe

862,000

15

Victor Claver

1,370,000

Total

69,110,823

Salary Cap

63,065,000

Over Cap

6,045,823

This shows we are currently about $6.0M over this year’s salary cap, but well under the $76.829M Luxury Tax level.

2015-16 Team Roster Options

Now let’s look ahead at the summer 2015 Team Roster based on our current players. The players can be placed in 3 categories – players with a 2015-16 contract, players with a team option that must be exercised by the end of October 2014 (green in the preceding table), and players with expiring contracts (yellow in the preceding table).

1. 2015-16 Contracts (2015-16 salary shown):

Batum ($12.2M), Blake ($2.1M), Kaman ($5M, only $1M guaranteed if waived)

2. 2015-16 Team Options that must be exercised by October 31, 2014 (2015-16 salary shown):

Robinson ($4.7M), Lillard ($4.2), McCollum ($2.5M), Leonard ($3.1M).

These are all 1st round draft picks still under their rookie contracts. If the Blazers do not pick up the options on these players by the end of October 2014 they become unrestricted free agents in the summer of 2015. But that is extraordinarily unlikely, even in Leonard’s case.

3. Expiring Contracts

Each of these players will have a salary cap hold based on their previous salary and the type of Bird Rights we have to re-sign them. Their cap holds are shown in the first column, and an estimate of their new salary if re-signed is in the second column.

Expiring Contracts 2015-16 Cap Holds Est 2015-16 Salary Notes
LaMarcus Aldridge 18,500,000 18,500,000 Estimated Max Salary - Bird Rights
Wesley Matthews 10,868,460 8,000,000 1.5x Cap Hold - Bird Rights
Robin Lopez 9,187,092 12,000,000 1.5x Cap Hold - Bird Rights
Will Barton 1,181,348 3,000,000 QO Cap Hold - Bird Rights
Joel Freeland 5,725,673 3,000,000 1.9x Cap Hold - Bird Rights
Dorell Wright 4,095,000 3,000,000 1.3x Cap Hold - Early Bird Rights
Allen Crabbe 947,276 team option Decline option 1.3x Cap Hold - Early Bird Rights
Victor Claver 2,603,000 Renounce 1.9x Cap Hold - Bird Rights
Total $53,107,849 $47,500,000

How to Compute Salary Cap Room

Each player that finishes the 2014-15 season on the Blazers roster will count against our Total Team Salary at their 2015-16 salary, or as a salary cap hold if they are a free agent. Salary cap holds are removed if the player is renounced or signs with another team. Their new salary counts against our Total Team Salary if they re-sign with us.

Unless traded, we will have a 2015 first round draft pick with about a $1M cap hold.

Each open roster spot, for less than 12 players, would have a $525K cap hold.

Finally, we have a Mid-Level Exception (MLE) worth $5.464M. That amount is added to our Total Team Salary until it is used, renounced, or lost. The MLE is lost if our total Team Salary (excluding the MLE) falls below the salary cap by $5.464M or more.

The NBA’s 2015 Salary Cap Estimate (not finalized until July 2015) is currently $66M, and the Luxury Tax level is estimated to be $80M.

Table A - 2015 Team Salary with All Cap Holds

This table shows Total Team Salary with salary cap holds for the entire roster except Crabbe and Claver, under the assumption they will be allowed to walk away (Crabbe team option declined and Claver renounced whenever his cap room is needed).

PORTLAND 2015-16 with All Cap Holds
1 LaMarcus Aldridge 18,500,000 Max Contract Hold
2 Nicolas Batum 12,235,750
3 Wesley Matthews 10,868,460 1.5x Bird Rights
4 Robin Lopez 9,187,092 1.5x Bird Rights
5 Thomas Robinson 4,660,482
6 Damian Lillard 4,236,287
7 Chris Kaman 5,000,000
8 Steve Blake 2,100,000
9 C.J. McCollum 2,525,160
10 Meyers Leonard 3,075,880
11 Will Barton 1,181,348 QO Bird Rights
12 Joel Freeland 5,725,673 1.9x Bird Rights
13 Dorell Wright 4,095,000 1.3x Early Bird Rights
14 1st Round Draft Pick 1,000,000
15 2015 MLE 5,464,000
Total Team Salary 89,855,132
Salary Cap 66,000,000
Over Cap 23,855,132

The Blazers would be about $23.9M above the NBA estimated 2015 salary cap with these players and their cap holds, and would only have the $5.5M MLE to use on free agents. (Although the Total Team Salary is above the Luxury Tax Apron, the Non-Taxpayer $5.5M MLE still applies because free agent cap holds are excluded for determining the type of MLE.)

Optimize Timing of Free Agent Signings to Create Cap Room

In the case of Matthews, Freeland, and Wright they will likely not get a salary as large as their cap holds. Therefore, if the Blazers desire to create cap room to sign an external free agent, they should re-sign any of those players they want to keep BEFORE signing other free agents. Conversely, the cap holds for Lopez and Barton are lower than their estimated new salaries, so they should be signed AFTER any external free agents. If Aldridge signs a maximum salary contract it makes no difference when he signs because his cap hold is equal to his maximum salary.

With optimized timing (standard procedure in free-agency) more cap room can be created. The next table shows the result of this strategy.

Table B - 2015 Team Salary with Optimized Free Agent Timing

PORTLAND 2015-16 Maximize Cap Room
1 LaMarcus Aldridge 18,500,000 Re-sign max contract
2 Nicolas Batum 12,235,750
3 Wesley Matthews 8,000,000 Est. Re-sign
4 Robin Lopez 9,187,092 1.5x Cap Hold
5 Thomas Robinson 4,660,482
6 Damian Lillard 4,236,287
7 Chris Kaman 5,000,000
8 Steve Blake 2,100,000
9 C.J. McCollum 2,525,160
10 Meyers Leonard 3,075,880
11 Will Barton 1,181,348 QO Cap Hold
12 Joel Freeland 3,000,000 Est. Re-sign
13 Dorell Wright 3,000,000 Est. Re-sign
14 1st Round Draft Pick 1,000,000
15 2015 MLE 5,464,000
Total Team Salary 83,165,999
Salary Cap 66,000,000
Over Cap 17,165,999

By optimizing the timing of re-signing our own free agents we start out $17.2M over the cap, rather than $23.9M. Hence, fewer players may need to be removed to create cap room.

Create 2015 Cap Room

From Table B we see what would need to be done to create cap room. We must remove salary by letting our free agents walk away for nothing, or trading players under contract for future draft picks or players with less salary. But add back a $525K cap hold for each open slot if less than 12 slots are filled in the table.

When the Total Team Salary in the table (which includes the MLE amount) reaches the Salary Cap ($66M) there is zero cap room but we still have the MLE ($5.5M) to use for external free agents. If additional salary is removed we lose the $5.5M MLE, which converts into cap room, but we then get to use the $2.814M Room Mid-level Exception (RME) in addition to our cap room.

Examples –

Remove Wes, Lopez, and Wright (total $20.2M) plus the MLE ($5.5M) and add back a roster slot cap hold ($0.5M) for a total of $25.2M. That creates $8M in cap room (25.2-17.2). We’ve gained only $2.5M more in cap room (plus the $2.8M RME) versus the lost $5.5M MLE. This example shows how costly it would be to create any significant amount of cap room without losing Aldridge or Batum for draft picks.

In 2015-16 a maximum free agent will get about $15.4M (0-6 years), $18.5M (7-9 years), or $21.6M (10+ years) depending on their years in the NBA. To acquire a 7-9 year max free-agent ($18.5M) we could choose to also lose Robinson, CJ, Freeland and Leonard in addition to Wes, Lopez, Wright, and our MLE to cover the free-agent’s salary and 5 empty roster spot cap holds ($2.5M). Which free agents would you give all that up for? If we went after a player with 10 years or more experience, the price goes up again, and we would have to add Kaman, or Barton and Blake to the list.

The Hard Cap Trap

Even if the Blazers don’t try to clear cap room to sign an external free agent, they still have to worry about the Hard Cap Trap.

Teams that spend more of the Non-Taxpayer MLE ($5.464M) than the Tax-Payer MLE amount ($3.376M) become Hard-Capped at the Luxury Tax Apron for the remainder of the season. The Luxury Tax Apron (always $4M above the Luxury Tax level) is projected to be about $84M for 2015. Table B shows that if the Blazers used their full MLE they couldn’t later sign Lopez and Barton for much more than their cap holds without exceeding the Apron, which would violate the Hard Cap rule. Conversely, if they signed Lopez for $12M, they could then only use the Tax-Payer MLE because they would be over the Apron.

Hence, in order to sign free-agents Lopez and/or Barton to contracts larger than their cap holds, which may be necessary to keep them from going elsewhere, AND still use the FULL MLE, another player(s) (perhaps Freeland or Wright) would have to be renounced or dumped for future draft picks to stay under the Hard Cap that results from using the full MLE.

Beyond 2015

Even if we stick with our current starting 5 in 2015, the salary situation starts to look grim in 2016. At that point Lillard will have to be maxed out for around $16M. Batum’s contract is also up and he will want a close to max deal ($19M). That would add more than $18M to our 2015 team salary, which may already be at or above the luxury tax level. If in the summer of 2015 we re-sign Wes for around $8M, Lopez for around $12M, and max out Aldridge for $18.5M, we would have a starting 5 earning about $74M in 2016. If we also added an MLE player in 2015, we would be at about $80M for six players. Hopefully, that MLE player and the development of our youngsters will push us into contention, and Paul Allen will continue to spend big in 2016 to keep us there.

Otherwise, maybe the expected new national TV deals will raise the NBA revenue and luxury tax limits so high it will be a whole new financial game in 2016. Nevertheless, I expect Lillard’s and Batum’s 2016 contracts to influence how Neil Olshey fills out the bench roster in the summer of 2015, if he doesn’t blow up the starting lineup in 2015.