Today's Mailbag question deals with the Portland Trail Blazers' control--or lack thereof--over their destiny in July.
Let's assume the Blazers' offseason strategy is to sign ~$20M worth of players in the offseason to eat up the cap space, either in one or multiple signings, and then re-sign all of our restricted free agents with Bird-rights so we hurdle over the salary cap. This is the most talked-about scenario and in my opinion, this is the best way to maximize the total combined talent of the roster.
The most critical element of that plan is that we can time the moves correctly - sign an outsider before signing our guys back through matches or offers. But other teams know that and would potentially want to throw a wrench is our plans by making us commit to something outside of our preferred order. This would be a move that makes us resign our own guys first, or ties up our own cap space only to have it not work out with the player we're hoping to sign.
Does this question make sense? Assuming they can make a deal with a free agent, and assuming they're willing to match all offers on restricted free agents, are the blazers in control of their own destiny?
Not only does your question make sense, it's brilliant...one of the few I've presented without any editing at all. Yay, you!
Your assumption seems to preempt the idea of trades factoring in to the Blazers' summer. For the sake of this discussion, let's go with that. We'll assume that any trades the Blazers make will be minor and that the main thrust of their off-season plans will involve free agents...with the caveat that this post won't cover the whole gamut of possibilities.
If we're only talking free agency, then yes, the formula you lay out would make the most sense. The Blazers would benefit most by getting as much value out of the open market as possible, then re-signing their own free agents. Even if they don't have long-term plans for the guys they re-sign, they'd be buying the opportunity to kick the tires for another year or two and dangle any players they don't want in future trades. Losing assets for nothing is sub-optimal. For a team in Portland's position, retaining as many players as possible makes sense.
You've also correctly identified the critical timing issue involved in executing this plan. For those who need a brush-up on the issue, here's why order will matter as much as value or intent for Portland in July.
Every incumbent player on a team takes up cap space. There are no exceptions. If nothing changes, all the players who finished the season with Portland in May will count against the cap in one way or another in July...including every free agent on their roster.
Accounting for players still under active contract with the team is easy. Their 2016-17 salary will count against the cap.
Accounting for free agents is harder. Each free agent creates a cap hold...a potential salary amount added onto the team's cap obligation representing what the team might spend to retain that free agent.
When you check into a hotel they reserve "x" dollars on your credit card, an amount in excess of the actual room rental rate. They do this because you might end up purchasing incidentals (movies, mini-fridge booze, cleaning fees) during your stay and they want to make sure your credit limit is high enough to cover them. The NBA does the same thing. A team carrying incumbent free agents has to reserve some of its cap space in case it ends up purchasing the services of those free agents later. The team must have a big enough credit limit (i.e. cap space) to do so. Cap holds protect that space.
Signing other teams' free agents can eat up cap space quickly. The league doesn't want teams buying up everybody else's players with open cap space then going back and signing its own free agents using cap exceptions like Bird Rights. Those exceptions were intended to help teams retain their own free agents, not to facilitate them gobbling up everybody else's in addition. That's why cap holds for a team's own free agents must be accounted for before available space for signing other free agents is calculated.
A team has $60 million in cap obligations and the salary cap stands at $90 million. This leaves them $30 million to sign free agents.
A current free agent on that team generates a $10 million cap hold. That amount is counted against the cap as if he was under contract. Now the team has only $20 million to spend on free agents.
How to Get Rid of Cap Holds
Cap holds resolve in one of three ways:
1. The team re-signs the free agent in question, in which case the hold is replaced by the actual dollar amount of the new contract. If the free agent with the $10 million hold from the example just above signed for $8 million, his team would now have $2 million extra cap space. If he signed for $14 million, they'd have $4 million less.
2. The free agent signs with another team, in which case he comes off the original team's cap entirely and the hold disappears.
3. The original team renounces the free agent, giving up all special rights and exceptions, which also makes the hold disappear and frees up the cap space bound by it.
For veteran players, cap holds equal a percentage of the previous year's salary. The exact amount depends on the terms of the previous contract but 150% is a common figure. Gerald Henderson, for instance, made $6 million last year. In July he'll count against Portland's books for $9 million (150% of $6 million). That amount will remain on the Blazers' books until Henderson signs a new contract with the Blazers, signs with another team, or the Blazers renounce him. If Portland needs that $9 million to sign a different free agent, they'll need to cut Gerald loose first.
The Special Case of Restricted Free Agents
We've just covered everything you need to know about garden-variety Unrestricted Free Agent transactions in the NBA. All of this applies to Restricted Free Agents as well, with one added wrinkle.
Restricted Free Agents are allowed to establish their worth by signing offer sheets with any team who has cap space to sign them. This is the "free agent" part of their title. But their original team has the right to match the offer and retain their services (thus: "restricted").
Before a Restricted Free Agent signs an offer sheet, their cap hold is determined in the standard way: a set amount based on their previous contract. BUT...as soon as they sign an offer sheet, the cap hold changes to the amount of the new offer. Since Restricted Free Agents are, by definition, coming off of cheaper rookie-scale contracts, their initial cap hold is usually low compared to their relative value. The offer sheets they sign are often much higher, causing the cap obligation of their original team to balloon once the offer sheet is signed.
The Blazers are facing a dramatic example of this with Allen Crabbe this summer. His cap hold at the beginning of the free agency period will be $2.75 million or so. Given the amount of cap space available around the league, offer sheets from other teams are going to come in way north of that figure. Let's say for fun that Crabbe signs an offer sheet with the Brooklyn Nets for $12.5 million per year. The instant his signature goes on the form, Portland loses almost $10 million in cap space they could have used to sign other free agents (the difference between the original cap hold and the new offer). If the Blazers match Brooklyn's offer, Crabbe's new $12.5 million salary would remain on the books. The only way to get the original cap space back would be to let him go to NYC, in which case he'd no longer count against their cap at all.
The Blazers also face this dilemma with Meyers Leonard and Maurice Harkless. Their cap holds will exceed $7 million so the change isn't as dramatic, but the Blazers will still lose potential cap space if either signs an offer sheet with another team.
The Importance of Timing
The optimal course for a team like Portland with Restricted Free Agents is the one laid out in the original question:
1. They do not want their RFA's to sign offer sheets. This keeps the original, low cap holds in place.
2. While the holds are low and the team has the maximum amount of available cap space possible, they want to use that space to sign as many free agents as they need.
3. After their other signings are complete, then they want to do business with their RFA's. They can use their special cap exceptions to retain their own free agents even if doing so would put them over the cap. In this way they get to have their cake and eat it too, retaining their current players while signing other free agents at the same time.
The Trail Blazers would love to have this kind of option with Crabbe, Leonard, and Harkless this summer. Unfortunately it doesn't usually work that way for a couple huge reasons.
A: Opposing teams don't want to wait around for Restricted Free Agents to sign offer sheets.
Part of it is competitive balance. Why should the Nets help the Blazers get extra free agents by waiting to sign Crabbe to an offer sheet?
More critically, free agents become a dwindling resource as the summer progresses. There's no guarantee that Crabbe would actually end up in Brooklyn even if he signs an offer sheet there. Portland could stop that by matching the offer. Brooklyn will want to know as soon as possible whether Crabbe will be joining them. If not, they'll want to spend that money on a different free agent. If they wait around for three weeks to make the offer and Portland matches it, all the other desirable free agents might be gone by that point. The Nets would be out of luck. Therefore they'll want Crabbe's ink on that dotted line and the matter resolved at the earliest point possible.
B: Players hire agents to look out for their best interests in contract negotiations. Waiting is not in their best interest.
A good agent will not let a player sacrifice his own future to help a General Manager preserve cap space. Tim Duncan and Dirk Nowitzki can make contract concessions for the good of their teams. They're at the end of their careers, they've remained with the same franchise their whole lives, and they've both made over $200 million already. Restricted Free Agents have never made big money. They're negotiating their first significant deals. If they get injured in the next 3-5 years they could be negotiating their only significant deals. Nor do they have any guarantee that their current teams will show loyalty to them in return for them delaying other contract offers. If Neil Olshey thinks trading Allen Crabbe will make his team better, he has to do it even if Crabbe did him a favor by passing up free agency opportunities. Crabbe has to take the same approach to his career that Olshey takes with his team. If Crabbe has a chance to make money, he has to take it. Any agent worth his salt will advise his player, "If you see an acceptable offer, you sign it right away. There's no guarantee it'll be there tomorrow."
The best, and maybe only, way around this conundrum for a team like Portland would be to meet with the player and their agent early, negotiate terms for a new deal, then hold off on executing that deal until other free agents are signed. This would require the offer to be competitive with those the player could theoretically get from other teams...potentially exceeding them. As long as the price isn't exorbitant, the Blazers are likely to employ this technique with any Restricted Free Agents they plan on keeping.
The basic lesson: if you see one of Portland's Restricted Free Agents sign an offer sheet, that's bad news for Portland's cap situation. The longer the free agency period goes without that happening, the better it'll be for the Blazers.
Understanding this, you can see why the answer to the question, "Are the Blazers in control of their own destiny this summer?" turns out to be, "It depends..."
Portland will be in control in the same way every other team chasing free agents is. They'll be able to pursue available players. They'll have enough cap flexibility to sign the players they want, provided they can get those players to agree.
The cost of those signings--not just in dollars but in how many current players the Blazers will have to release to make them possible--will not be in Portland's control. If they can pre-negotiate deals with their RFA's (somewhat likely) or convince them to hold off on signing offer sheets for the good of the team (shouldn't be likely), they'll retain a measure of control. Otherwise they'll be at the mercy of what other teams offer the Restricted Free Agents and how quickly those offers get signed. For just this reason the Blazers are likely to move fast if they plan to chase significant free agents in July.
The ultimate way for Portland to retain control, of course, is to not care about losing their Restricted Free Agents. If the Blazers are willing to say goodbye to any or all of them, cap holds and offer sheets won't matter. It's unlikely they'll take a laissez faire approach, but they could face some fascinating value judgments on the worth of their RFA's...not just in terms of dollars, but of opportunity cost to sign other players. It's possible Portland could run into a situation where $9 million to re-sign an RFA would be worth it but $12 million wouldn't because that extra $3 million in cap space would prevent them from signing someone they wanted more. This is the stuff that July Fanposts and think pieces are made of.
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