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Mailbag: Salary Cap Questions

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Since we have our first double-off-day between games in ages it seems like a good time to catch up on some of the e-mail questions people have asked.  I meant to do three or four but as it turns out just one takes up all of my space and time, so here you go.

There's been a lot of talk about the salary cap situation in the next couple years.  What's your take on it and can you clear up exactly what happens, to whom, and when?

Salary cap matters are ALWAYS a nightmare...a landmine field that traps media people far more accomplished than I.  But I will try my best.

Your first and best resource for contract information is Storyteller's excellent site here.  It's pretty much the most accurate I've found.  Just pay attention to the color coding on the top of the page.  You'll need it!

If you're a closet lawyer you can also check out Larry Coon's salary cap info page here.  It's not an easy read but with a little time and attention you can usually find an answer.  Just don't expect to read it all the way through!  Find the section pertaining to your question and digest in small doses.

A quick look at Storyteller's site shows us that we have a fair amount of potential cap flexibility coming up.

2008-09

Next season isn't so great.  The big roadblocks are at the top of the list.  Steve Francis' contract will cost us $15.7 million next year.  Raef LaFrentz has a player option for $12.7 million.  That means he has a choice whether to take that year of his contract as it's written or forego it and seek a new contract on the open market.  That's obviously a no-brainer for him.  Those two contracts gum up our cap so much that we're bound to be over the limit no matter what else we do.  

Lamarcus, Martell, Brandon, Channing, Jarrett, Sergio, Josh McRoberts, and Taurean Green all have team options this summer.  That means we have a choice whether to continue their contracts or release them.  Some of those are no-brainers for us and anyone who isn't doesn't really matter at that point since we'd be over the cap anyway even if we released them thanks to the LaFrentz/Francis contracts.  For the most part, then, there's no use letting anybody go at the end of this season for cap purposes.

2009-10

The summer after this will bring some interesting decisions.  Steve Francis and Raef LaFrentz come off the books.  In fact the only people on the books for sure at that point are Darius Miles and Joel Przybilla.  Their contracts total roughly $16 million.

Oden, Aldridge, and Roy have team options.  There's no way we're releasing any of them.  Their contracts total $15 million.

We have a couple of first round draft picks coming up too.  Depending on where they are drafted those could total $3-4 million.  (Assuming we don't win the lottery again.)

That's $34-35 million for sure on the books.  The salary cap this year is $55.6 million and is likely to go up as the league is experiencing a modest surge in popularity.  That means if the Blazers really wanted they could have at least $20-21 million in free agent money to play with two summers from now.

Getting that large amount, however, would mean retaining none of our current players besides the ones we just mentioned.  This is where the decision-making comes in.

These players have contracts with team options that summer:

Steve Blake        $4.9 million
Travis Outlaw        $4.0 million
Sergio Rodriguez    $1.6 million

We have to choose outright whether to retain them at that price or let them go.  If we retained them all that's $10.6 million off of our available cap space, or roughly half of it.

These players become restricted free agents that summer:

Martell Webster    $5.0 million
Channing Frye        $4.2 million
Jarrett Jack        $2.9 million

These cases are trickier.  There are four options in this situation:

  1.  The Blazers simply renounce the player and take the cap savings.
  2.  The Blazers and the player agree to the amount of the qualifying offer and the player plays one more year for the team at that amount, after which he becomes an unrestricted free agent.
  3.  The player tests the market and gets a better offer, which the Blazers have the opportunity to match.  If they match the offer the player stays with the team at that price.  If they decline he goes to a new team and comes off the Blazers' cap.
  4.  The Blazers and the player agree to a new contract extension of longer duration and better pay than the qualifying offer.
As you can see the player and their agent have far more say in this case than they do in the team offer scenario.  It's very possible that these players will want to test the free agent market and/or demand a longer-term contract from the team.  That would make keeping them more expensive and thus eat more cap space.  But even with the cheapest option--all of them agreeing to the one-year deal--their salaries total around $12 million.  That's the other half of our potential cap space.  (And it could well be more if they demand better contracts or receive better offers on the free agent market.)

So for the players we've mentioned so far it's pretty simple:  we can either retain them and lose that portion of our cap space or let them go.  But there's one player we haven't mentioned yet...the fly in the ointment:  James Jones.

James' contract has an option coming up this summer.  And unlike those other players it's strictly a player's option.  That means he has a choice:

--Play out the last year of his contract and become an unrestricted free agent in the summer of 2009

OR

 --Cancel the last year of his contract and try to make more money from us or in free agency this summer.

I think it's clear that it would be better for the Blazers if Jones picked up the last year of his contract.  It's cheap at $3.1 million.  It would also allow us to make a decision about him at the same time as we make decisions about everyone else.

It's becoming increasingly clear that it would probably be better for Jones to opt out of that year.  With his shooting percentage and contributions this year he might be able to get more than $3.1 million on the open market this summer.  At the very least he could get more guaranteed years on a contract and thus more security.  

James has said he'd like to do what's best for the team, but the reality of the situation is he'll need to do what is best for himself and his agent probably won't let him do otherwise.  If he waits until next summer he risks injury.  He also risks his value not being as high.  He also sets himself up to be one of the players Portland cuts if they want more cap space--which would be the main reason for them asking him to not sign a new contract this year.  The team to whom he's being loyal might find its best move is to release him, especially if they want to retain Martell Webster.  It doesn't make sense for him to risk that.

The upshot is Jones will probably demand a new contract this year.  Whatever the value of that contract, assuming we re-sign him, that's less that we'll have to play with next summer.

The end result of this over-complete depiction is this:  Yes, we will have cap space if we want it.  It will come at the cost of releasing some of our current players.  The question will be whether the player or players we could get on the open market would be of more value to us than the players we already have.

A side note:  If you're asking whether we couldn't just sign free agents and THEN re-sign our own guys the answer is basically no.  Unless their contracts are actually expiring our own players create what's called a "hold" on our cap.  It's like what happens when you check into a hotel.  You give them your credit card.  They don't actually bill you until your stay is over.  But in the meantime they place a hold on your card.  You haven't paid the money, but it's reserved for them and you can't spend it on anything else until you've either paid the bill or cancelled your stay.  All of the above players except Jones will create "hold" space on our cap until we sign or renounce them.  Between all of their salaries the sum total of that hold will be more than the cap, so we can't sign anybody new unless we get rid of them.

What's the Most Likely Scenario?

Based on the information we have right now (keeping in mind I'm not Kevin Pritchard and have no idea what's going on in his mind or anybody else's at Blazer HQ) here's my best guess at what's likely to happen.

--Jones is going to want a new contract this year and unless Martell plays out of his mind in the second half of the season we're likely to give it to him.  That'll be $4 million or so off of the cap space right there, leaving $15-16 million.

--At this point picking up Travis' and Sergio's contract options seem like no-brainers.  That's another $5.6 million, cutting the available space down to around $10-11 million.

--Blake, Frye, and Jack are going to have to play at an extremely high level in order to be retained, with the burden being heaviest on Steve, then Channing, then Jarrett.  At this point I'm guessing we won't keep any of the above.  I know it's a hard choice, but some of those have to be made.

--Martell is the most interesting question.  Basically it's going to be a matter of whether we think he helps us more than whoever we could get on the open market with between $6-11 million to offer (depending on who else we keep).  That cap space is a huge chunk of change when you figure yearly raises.  But what we'd have left after retaining Martell would be far more modest.  He's going to want a nice offer and he's going to want playing time.  Will we give him either?

Of course all of this assumes we're not trading some of these players away, which is also possible.  Keep in mind having cap space in the summer of 2009 would also allow us to trade some of our players for other players who make more money.  We wouldn't have to take equal salaries in return.  We could, for instance, renounce Blake, Frye, and Jack then re-sign Martell to a modest contract and trade him and Sergio for somebody who makes $6 million more than their combined salaries.  That is another facet to the flexibility.

One last, important facet:  All of this cap space will disappear entirely if we don't use it within the next couple of years.  We're going to have to extend the contracts of our stars after that. If we want to re-sign Outlaw he comes due the very next season.  At that point the space and flexibility go bye-bye.  If we do want to sign a significant-salary free agent our window is fairly tight.

Hope this helps!

--Dave (blazersub@yahoo.com)