Let's talk about the salary cap implications of the trades we made before the deadline (and Mobley's cap relief) and our future (summer 2010 and 2011). I won't talk about the trades, if they're good or bad (it has been debated at length already by everyone). I will focus on our salary cap situation, how we can move forward and the best next step to take.
Here are the trades (players only, cash and picks don't impact the salary cap) :
Trade 1 : Darko Milicic for Brian Cardinal
Trade 2 : Larry Hughes, Jared Jeffries and Jordan Hill for Tracy McGrady and Sergio Rodriguez
Trade 3 : Nate Robinson and Marcus Landry for Eddie House, J.R. Giddens and Bill Walker (at least that's how the trade is reported for now)
If you add all three trades, you have :
- IN : $35,651,770
- OUT : 34,602,736
TOTAL : $1,049,034 added to the Knicks payroll this season.
The Knicks also waived Cuttino Mobley and the NBA granted the team cap relief. Cutino Mobley's entire salary ($9,500,000) is removed from the Knick's team salaries (luxury tax relief for the Knicks).
If you add the trades and Cutino Mobley then the Knicks saved $8,450,966 this week. Jimmy Dolan must be happy ! LOL
Thanks to Cutino Mobley's medical retirement, the Knicks will only pay $5.4 million for the luxury tax at the end of the season.
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.
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.
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.
Donnie Walsh went all in with the trades he made today. If he signs Lebron and Bosh next summer then he will have several possibilities and scenarios to build a perennial championship contender. There's no doubt about that.
FALL BACK PLAN :
If Lebron and Wade stay with their respective team then I guess Donnie Walsh will go after Joe Johnson (Chris Bosh may stay in Toronto or Donnie rather have David Lee at a reasonable salary than Bosh at the max).
If we sign Joe Johnson and the salary cap is set at $52 million then Joe's max salary will be 105% of his previous salary : $15,725,592. If its more than $52 million then it will be 30% of the salary cap and his salary will be higher but not by a wide margin. For example, if the salary cap is set at $56 million it will be $16,800,000 (only $1 million more for his starting salary). Of course Johnson at the max is overpaying but after today's trade where we gave up the control of our first round picks in 2011 and 2012, Donnie Walsh went all in and he has to sign players next summer (evenif it means overpaying). That's the clear downside of his strategy. There's no turning back. If Lebron, Wade and Bosh don't sign then he needs at least to sign Joe Johnson and retain Lee.
If we sign Joe Johnson then I guess we won't keep Tracy McGrady. D'Antoni will probably play Chandler at SF, Gallo at PF and Lee at C. Not a receipe for success but a short term solution until Donnie sorts that out via trade.
The key in that scenario would be to try to resign Lee at a reasonable price ($9 million). If his contract starts at $9 million then it translates to a six year contract worth $68.2 million ($11.4 million per season) and other teams would have to give Lee a contract starting at $12 million to match that number. In that scenario, the sixth year could give us an advantage if Lee really wants to stay in NY. In that scenario we would not resign T-Mac.
Depending on the off-season 2011 scenario (four different scenarios below), we could have enough room to sign one other max player or maybe two $10 million player or we could use that cap space to trade for a very good player on a longer contract.
In the scenarios 3 and 4, Chandler or Gallo would be traded during the season 2010-2011 for draft picks or youth (promising players on the first year of their rookie contract). Same as the Bulls did with Tyrus Thomas but of course hoping either the first round pick would be higher or the players attached to the pick would be better and more useful to us. Getting a defensive center to protect the paint would really help us.
As conclusion, I'd say that if Donnie Walsh can sign at least one of Lebron, Wade or Johnson (if we can only attract one FA then Joe is more attractive than Bosh for us because we already have Lee) then his plan could work. If not then the situation will be very difficult for us as either the other free agents play the same (natural) position as Lee (Amare and Boozer) or they won't improve us that much (at least not enough to become a championship contender or a real perennial playoff team).
