Reason: We will be under the cap.
*Props to kosmovitelli*
See thread:
viewtopic.php?f=24&t=988815
Let's talk about the implications for next summer and free agency.
If the salary cap for the season 2010-2011 is set at $55.4 million or below then the maximum starting salary for Lebron's contract will be $16,568,909 (105% of his previous salary instead of 30% of the salary cap). Same for Bosh and Wade. Two max contracts = $33,137,818. Now let's see if we're in position to sign two max contracts after the trades.
BEST CASE SCENARIO :
Let's look at the best case scenario : two max players agree to sign with the Knicks. Also T-Mac and Sergio Rodriguez would agree to sign for the minimum. Why ? For Sergio, he would have the chance to be our starting PG or a backup PG with nice minutes and under d'Antoni for a full season, he can hope to cash in after the 2010-2011 season. For T-Mac it would be almost the same reason :
- when a player signs for the minimum, his cap hold is only the part of the minimum salary not reimbursed by the league (meaning the min salary of a two year veteran) so Sergio and T-Mac would both have a ridiculously low cap hold in 2011
- we have Bird rights of both Sergio and T-Mac and if we renounce them next july then we can't resign them using any exception other than the minimum BUT
- if Sergio and T-Mac sign for the minimum then we will have again their Bird rights in july 2011 (you lose Bird RIghts only if you leave via free agency or you're playing under a one year contract and you accepted to be traded), it means we could sign Sergio and T-Mac to contracts up to the maximum salary in 2011 (obviously we won't max them out, I'm just saying we have the flexibility to give them the contract we want in 2011 if they resign for the minimum in 2010).
Under that dream scenario, if we sign Lebron and Bosh (or Lebron and Wade) then Donnie Walsh will need to make a decision on Curry. Either he will use his contract as trade bait to get a better player (with a long contract, maybe Okafor) but then Knicks would have no flexibility to sign free agents (except MLE) in 2011. If Walsh decides to let Curry's contract expire then we wouldn't have enough room under the cap to sign a free agent (it would be the same as the MLE) but if we trade Chandler, Gallo and Douglas (for draft picks for example) we could have almost $16 million in cap room. Obviously I doubt we will do that. It's just an exemple to indicate how much room we could have in that case.
If we sign Lebron and Bosh then either Chandler or Gallinari will be traded. If either one is traded (for a future pick) and we let Curry's contract expires then we would have around $10 million in cap space in 2011 (+ the possibility to resign T-Mac and Sergio after we sign a free agent).
If we let Curry's contract expire, we could also package our cap room + Gallinari and Douglas for Chris Paul. Just an exemple.
If we sign Lebron and Bosh I doubt we will let Curry's contract expire (he will be used as trade bait for immediate help) but Donnie Walsh will have several options for the future.
If the salary cap is set at $54.6 million or more then the Knicks will have room for two max free agents. $54.6 million is the magic number for the Knicks. If we're unlucky and the salary cap is set at a lower number then we will need to either dump one of Douglas/Chandler/Gallinari (depending on the number) or trade Eddy Curry for a smaller contract. Eddy Curry will be paid $11,276,863 next season, we could trade him for a similar expiring contract but for a player paid less money. Under the 125% + $100,00 rule, the minimum salaries we'd have to take back in the trade is $8,357,647, we could save approx $2.9 million so the goal would be to trade Curry + $3 million cash for a player who's paid $8.4 million next season. Obviously, after we gave up Hill and a protected first round pick (+ option to swap) to clear Jeffries salary, other teams will ask for more than $3 million cash, they will ask for additional compensations (either a young player or pick(s) - probably a first round pick or a couple of second round picks). We have our own second round pick and Denver's second round pick next june. In theory, after the draft, if these players are good (if like the Spurs last year with Blair, we can get a player projected higher but who fell in the second round) we could trade the rights of those picks with Curry (if needed). Another possibility would be to buy out Eddy Curry's contract but I doubt Eddy's ready to leave money on the table. Especially if he doesn't play at all. Of course, we better hope that the salary cap for 2010-2011 will be set at least at $54.6 million because teams will probably ask for the moon if we need more cap room.
D'Antoni will have to play Eddy Curry to showcase him. If Eddy's in shape, he can stay healthy and prove he can play then maybe we can trade him with $3 million cash for an $8 mil player. If he doesn't play at all for the rest of the season then it will be pretty hard to trade him.
As you can see below, there are two scenarios : the first one with two max players (we renounce Lee, Sergio and all our free agents and sign two max players) and the fall back plan meaning one max player + keeping Lee and Sergio (the number is their free agent amount or their cap hold if you prefer, how much they count against the cap until they're signed or renounced). In that second scenario, I guess we could also resign T-Mac so it could be either one max + Lee + T-Mac or just one max playe + Lee. Of course there can be a dozen other scenarios but I can't list them all.
Below the total row, you have the room under the cap (with Lee and Sergio and their cap holds on the right and without them on the left) depending the salary cap projection.
Larry Coon talks Knick options
Read more: http://www.hoopsworld.com/Story.asp?STO ... z0h2qml1io
Fans are frequently tripped up by the idea of cap room. The premise is pretty straightforward – there's a salary cap, and if the team's payroll is at or above this amount, they don't have any money to spend on free agents. But if they're below it, they do. In practice it's not so simple. Teams below the cap have less cap room than it might appear, and can actually be considered to be over the cap. Let's take a look at how all this works.
First the basics: the NBA has a "soft" cap, which means teams can be over it and still function – albeit with restrictions. In fact, a team being over the cap (especially during the season) is far more common than being under it. There are mechanisms called exceptions which allow teams to sign players or make trades while they are over the cap. For example, the Mid-Level exception allows teams over the cap to sign a player or players for up to five years starting at the league average salary. Another well known exception is Bird rights, which allow teams to re-sign their own players while they are above the cap. See question 19 of my FAQ for a complete list of these exceptions.
The system is designed so that teams may have either cap room or exceptions, but never both at the same time. In order to accomplish this, the league applies the following rules:
• When a team is below the cap, they add additional amounts to their team salary. This includes the value of any unused exceptions, the scale amount for any unsigned first round draft pick, a cap hold for any free agent to which the team has Bird rights, and a charge for any roster spots otherwise unaccounted for. This keeps the team from using its cap room on other teams' free agents, spending right up to the salary cap, and then using their exceptions and Bird rights to spend above the cap. A team really has cap room only when their payroll and all these extra charges add up to a value that is below the cap. See question 14 of my FAQ for a complete list of cap holds and roster charges.
• An exception is a mechanism that lets a team function while they're over the cap – a concept that doesn't apply when the team is below the cap. So if the team is ever far enough under the cap that their payroll plus all these added charges are still under the cap, then they don't get their exceptions. If they start out above the cap per these rules and they later drop below the cap, then they lose any unused exceptions.
• A team can renounce its exceptions or free agents at any time. By renouncing an exception a team gives up its right to use that exception, but potentially gains an equivalent amount of cap room (if the team is under the cap without the exception). When a free agent is renounced the team clears the player's cap hold off their books, but gives up its right to sign the player using the Bird exception.
Let's look at an example to see what this all means and how the rules prevent a team from having cap room and exceptions at the same time. We'll use the Knicks as an example, and assume the cap comes in at $53 million this summer.
Assuming Eddy Curry picks up his option for next season (which is a given), the Knicks will have four players under contract – Curry, Danilo Gallinari, Wilson Chandler and Toney Douglas, totaling $17.78 million. They also have Bill Walker signed through 2011-12, but his contract is not guaranteed as long as he is waived by July 7. Since the Knicks will be trying to sign free agents this summer, Walker will likely be waived.
Sergio Rodriquez will be a restricted free agent if the Knicks make a qualifying offer for $2.34 million. If they do, this amount will count on the Knicks' cap. Let's assume for this example that the Knicks extend Rodriguez a qualifying offer and make him a restricted free agent.
The Knicks will have eight unrestricted free agents this July, and these players also continue to count against the team's cap until the player re-signs, signs somewhere else, or is renounced. The exact amount of a free agent's cap hold depends on his previous salary and the type of free agent he is – see question 30 of my FAQ if you want all the details. The Knicks' unrestricted free agents (with their cap hold amounts) will be Tracy McGrady ($23.61 million), Al Harrington ($15.04 million), Cuttino Mobley ($14.25 million), David Lee ($10.5 million), Chris Duhon ($7.84 million), Eddie House ($5.87 million), J.R. Giddens ($1.10 million) and Jonathan Bender ($0.85 million). In all, a whopping $79.06 million will be added to the Knicks' cap to account for these players.
Finally, the Knicks also have two trade exceptions from deals they made near the trade deadline – one valued at $2.48 from the Jordan Hill trade, and another valued at $0.79 million from the Darko Milicic trade. In all, $3.27 million is added to the Knicks' cap to account for these trade exceptions.
Add up the players under contract, the qualifying offer to Rodriguez, the cap holds for their free agents, and the value of their trade exceptions, and you get a total of $102.45 million. But wait, there's more! Since this total is higher than our $53 million cap, the Knicks also get their Bi-Annual ($2.08 million) and Mid-Level (approximately $5.73 million) exceptions. This brings their total to approximately $110.26 million.
Let's stop a moment to reflect on the dichotomy – the Knicks will have $17.78 million in actual contracts, yet their cap figure will be well over $100 million.
Here is where you might say, "Wait a minute! I thought the Knicks were supposed to have nearly enough cap room to sign two maximum free agents." The answer is that they CAN have enough cap room to go after free agents like LeBron James, but they won't be able to do so unless they first do some maneuvering.
Let's first look at how they might gain as much cap room as they possibly can. Suppose they renounce McGrady, Harrington, Mobley, Lee, Duhon, House, Giddens and Bender, and that they withdraw their qualifying offer to Rodriguez (prior to July 23). The cap holds for all of the aforementioned players will come off their books, reducing their cap amount by $81.40 million. At this point they will have only four roster spots spoken for, so they have to incur a roster charge for eight additional spots. A single roster charge is equal to the rookie minimum salary ($473,604 this summer), so the Knicks' cap is charged a total of $3.79 million. All told, their team salary is reduced to $32.65 million -- but since this total is below the $53 million cap, they lose their exceptions. Their Mid-Level, Bi-Annual and trade exceptions drop off the books, removing another $11.08 million. Their actual team salary is therefore $21.57 million if they renounce everyone they can renounce.
With a $53 million cap and a $21.57 million team salary, the Knicks will have about $31.43 million in cap room. If they sign a player like LeBron James for $16.57 million, they will then have just $15.33 million to fill out the rest of their roster – and they will have no exceptions and no Bird rights to any of their free agents. Fortunately there are alternative strategies.
One alternative might be to clear as much cap room as possible while hanging onto David Lee. If we go through the same process as before but leave Lee's $10.5 million cap hit on the books, the Knicks team salary would be $31.60 million, leaving them $21.40 million to spend on free agents (note that they would have seven roster charges with this scenario, not eight). After signing a maximum free agent for $16.57 million they would be left with just $4.83 million to fill out their roster, but they would still have David Lee's Bird rights. They could, for example, sign a free agent for $4.83 million, then sign Lee for any amount up to the maximum, and finally fill out the rest of their roster with minimum salary contracts.
A third strategy might be to take advantage of temporarily being over the cap, which gives them the use of their exceptions. If they first sign two players with their Mid-Level and Bi-Annual exceptions, and THEN renounce their free agents, they would have $25.59 million in committed salaries, and six roster charges totaling $2.84 million, giving them a total of $28.43 million, Their trade exceptions would drop off the books, and they would be left with $24.57 million in cap room. After signing a maximum free agent for $16.57 million they'd have $8.00 million left for the rest of their roster – but they'd have a free agent signed to a maximum contract, players signed with their Mid-Level and Bi-Annual exceptions, AND an additional $8 million in cap room to show for it.
A fourth option would be to use their Mid-Level exception, then renounce all of their free agents except Lee. This would leave them with $23.51 million in salaries, Lee's $10.5 million cap hold, and six roster charges totaling $2.84 million, for a total of $36.85 million. They would have $16.15 million in cap room – slightly less than they'd need for a maximum offer to LeBron James, but perhaps they could adjust for this by spending slightly less than the full $5.73 million to sign a mid-level player. Spending $5.31 million on a mid-level player would leave them with enough cap room to give the maximum to James. So all told, with this scenario they'd keep Lee, sign a maximum free agent such as James, sign one additional player for slightly less than the mid-level, and still have to fill out the rest of their roster with minimum salary players.
Note that while a team can never have cap room and exceptions at the same time, the Knicks are in position to be one of the few teams that has both in the same offseason.
Also note that there is no specific date by which free agents need to be renounced. They can put off renouncing their free agents until the last moment, which keeps their options open as long as possible. Renouncing is only necessary when they need to clear the cap room to sign a free agent. This means they can come to a verbal agreement with a player, then renounce their own free agents, and finally sign the player with their newfound cap room. If they strike out in the free agent market, they can still come to terms with their own players.
The only exception to this is their restricted free agent, Rodriguez. As long as their qualifying offer is outstanding, Rodriguez is free to accept it. If he does, the Knicks are locked into a one-year contract with him for the amount of his qualifying offer. If they feel Rodriguez is worth the risk, they can leave his qualifying offer on the table. If not, then they don't have to submit a qualifying offer at all (which would make him an unrestricted free agent rather than restricted). They can also walk the middle ground – submitting a qualifying offer, but withdrawing it if they need to reclaim the cap room. If they decide to withdraw it, they must do so by July 23 – after that date, the qualifying offer can't be withdrawn without Rodriguez' consent.
In summary, even a seemingly straightforward concept like cap room has nuances that can get very complicated. As outlined here, these nuances provide teams with options, and a crafty GM can navigate these options to make the best moves that will equip his team for the upcoming season and beyond.
