NBA Roundtable

2010 Cap Space: Chicago

In Free Agency, General NBA, Trade Talk on March 2, 2010 at 4:28 pm

Update to previous post following the trades of John Salmons + Tyrus Thomas.

Chicago Bulls Salaries

Contracts above $5 million

  • Luol Deng – $11.35 million
  • Kirk Hinrich – $9 million
  • Derrick Rose – $5.55 million

Luol Deng has four years left on his increasing contract while Kirk Hinrich has only two seasons left on his decreasing deal. Derrick Rose will be entering the third season of his rookie contract.

These three players total $25.9 million.

Rest Of Team’s Salaries

  • Joakim Noah – $3.13 million
  • James Johnson – $1.71 million
  • Taj Gibson – $1.12 million

All three players are on their rookie contracts. Joakim Noah will be in the final year of his rookie deal and will be looking for a big pay increase the following year ($10 million?).

Those contracts amount to $5.96 million and take the Bulls total up to $31.86 million.

Other Costs

  • Draft Picks — The Bulls should finish with a mid first round draft pick in the #14-18 range. That comes with a cap hold of $1.2-to-$1.47 million.
  • Open Roster Spots — Chicago will have seven players on their books meaning a cap hold of about $2.38 million for open roster spots.

That gives us a new total of $35.44-to-$35.69 million.

The Cap

The league sent out a memo at the beginning of free agency this year citing these numbers as possible cap figures for 2010

The NBA’s ballyhooed free-agent summer of 2010 might have quietly taken another hit late Tuesday night.

In a memo announcing next season’s salary cap and luxury-tax threshold, sent out shortly before the league’s annual July moratorium on signings and trades was lifted at 12:01 a.m. Wednesday, NBA teams also received tentative projections from the league warning that the cap is estimated to drop to somewhere between $50.4 million and $53.6 million for the 2010-11 season.

2010 Cap Space

So, the Chicago Bulls will have between $14.96 to $17.9 million. It looks likely that we will see a high cap figure ($53-$54 million) which means the Bulls will almost definitely have enough to sign a max contract free agent.

Bulls Free Agency Options

This is the core that Chicago needs to build around

Derrick Rose + Max Contract FA + Luol Deng + Joakim Noah

Notes:

  • Kirk Hinrich is not part of the Bulls core. He is due $9 million. He could be used either in a salary dump or as an important role player following the acquisition of the max contract free agent.

The Bulls should be targeting the following five players

  1. LeBron James
  2. Dwyane Wade
  3. Chris Bosh
  4. Joe Johnson
  5. Amare Stoudemire

Any one of those five players would give the Bulls a strong enough core to build a contender and each of those players are young enough for the Bulls to maintain contender status for 5+ years.

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  1. Hello

    Just one question :

    why do you take into account roster charge, whereas it will decrease as they recrute new free agents ? If they recrute in a smart order they should sign the big FA at the end, and then have no roster charge at all. At least, when signing one player, one should consider that the roster charge will be decreased at the same time. hence (n – 1) players should be used in calculation, with n the number of free roster spots.

    Thanks 😉

    Julien

  2. Hey Julien,

    The cap hold for an empty roster spot is equal to a minimum contract for a rookie or second year player. Roughly $475k.

    So, (1) if a team where to sign a player to that contract there would be no difference to a team’s cap space. (2) if a team signed a veteran to a minimum contract they would be on the hook for $825k minus the cap hold, so an increase on the team’s payroll leading to a decrease of $350k on the team’s cap space (3) further increases in non-minimum contracts.

    In other words, any signing will add more to a team’s payroll than the cap hold for the empty roster spot costs.

    Therefore, there is no added benefit to signing your max contract player last. A team should sign that player early in the process so that it can then sign it’s minimum contract players without negatively effecting their cap space before it’s primary use.

    ——————————————————–

    You’re right, it should be (n-1) when working out a team’s new cap figure after they have signed a free agent.

    For example, let’s say Team X has $20 million in cap space with seven players + five cap holds for empty roster spots on their books. They sign a max contract free agent to a contract starting at $16.57 million. Now they have eight players + four cap holds … So they have $3.905 million [($20 million – $16.57 million) + $475k] left in cap space instead of $3.43.

    I am not 100% certain but it is my belief that you can only make that adjustment after the signing and not before. For example, Team Y has $9.5 million with ten players + two cap holds. They want to pay their prospective signing $10 million ($9.5 + $.475k) … I’m not sure if that is allowed … I think the cap hold remains on the books until after the singing is made. I am not 100% certain about that, but, that is my understanding of the situation.

    The reason for my uncertainty is that I have never seen it described in that manner through the media or in any of the salary cap sites. In theory, it sounds right … but I’m not sure so I’ll take the cautious approach.

  3. Hi Dave

    Many thanks for your quick answer.

    I agree with you on all your explanation. But it seems to me that it does not justify taking roster spot charge into account when forecasting room under salary cap and ability to recruit.

    Let’s say a team X have 4 empty roster spot, and $20m in cap space (including just payroll, not roster charge). They want to know to know if they can recruit players A, B, C and D respectively for $15m, $2m, $2m, $1m.

    If I take into account roster charge in my calculation, I would have to say “no”. The new cap space would be ($20m – .475 * 4) = $18.1m, that is less than what is needed. I agree that _real_ cap space before recruiting is $18.1m. But the question is only about ability to recruit.

    My opinion is the answer should be “almost”. Team X recruits the player A. Then cap space becomes $20m – 15 – .475 * 3 = $3.575m. Then $20m – 15 – 2 – .475 * 2 = $2.05m. Then $20m – 15 – 2 – 2 – .475 = $.525m.

    Here I come to the problem you mention. Can team X fill roster spot and remove the charge at the same time it recruits last player ? If yes, they can add $.475m to $.525 and remove $1m at the same time. If not, they cannot sign last player.

    But I think that even with that issue, the $18.1m cap space is meaningless. The only way to use it would be to decrease the projected salaries by $475k ($14.525m for player A, $1,525m for player B, …). Then it would work, but I don’t think this is very useful.

    What do you think ?

    BTW, I finally agree with you on the “smart recruiting order”. There is not point doing so.

    Again thank you for that nice answer, and looking forward to read you.

    PS1: have you noticed the new projected salary cap for 2010-11 : $56.1m, much higher than expected. That means you’ll have to recheck all your calculation 😉

    P2: I’m currently writing a group of articles on salary cap and contracts in one of the biggest French NBA news website. Hence my question.

  4. Hey Julien,

    I am trying to find a way to get an answer to your question but I have come up empty so far.

    This doesn’t give you an answer but here is some additional information around this issue that you may find useful:

    Side Issue — Minimum contracts

    The NBA sets different amounts as the minimum contract for players with different levels of experience. Here are the amounts for this season:

    0 years — $473k
    1 year — $762k
    2 years — $854k
    3 years — $885k
    4 years — $915k
    5 years — $992k
    6 years — $1.07 million
    7 years — $1.15 million
    8 years — $1.22 million
    9 years — $1.23 million
    10+ years — $1.35 million

    In order to keep veteran’s players job, the NBA agrees to subsidize contracts to older veterans.

    On a minimum contract, the NBA team only pays up to the second year veteran amount — $854k — and that is the figure that they both pay in cash + the figure used on their cap at the end of the season. The NBA pays the difference.

    So, for example, let’s say Team X signs a 9 year veteran to a minimum contract which is worth $1.23 million. Team X only has to pay $854k of that contract. The NBA makes up the difference ($376k).

    Note: The prices of the minimum contracts change year by year. A minimum contract for a rookie will cost $475k this season but only cost $457k last season. To get exact figure you can check out this site — Larry Coon’s CBA summary — that site will answer nearly all of your questions on the salary cap.

    Idea Of Cap Hold For Empty Roster Spots

    The idea behind the cap holds are to account for the minimum cost of filling out the rest of the roster.

    Okay, to make the math simpler — a team has $30 million in salaries for eight players. The cap is set at $50 million. So they would have $20 million available to them at this point —

    In our example above, the team would then be able to sign one player to a $20 million deal … but that was seen as a way of obfuscating the rules. Of working around the rules and taking advantage of them. Because then a team would be ignoring the salary cap … they would only have 9 players by the time they got to the cap line of $50 million.

    So, the NBA forces teams to account for the minimum cost of filling out their roster (judged as a 12 player team). The minimum cost = the minimum offered to a rookie player. If a team signs a second round pick or an undrafted player to fill out their roster they can keep their wage bill lower. That provides a minimum cost for filling out the rest of the team.

    So it’s four minimum contracts ($475k by 4 = $1.9 million). Giving us a new figure of $18.1 million.

    The Question

    Now, does that mean the team can sign that one player to an $18.1 million contract or to an [$18.1 million + cap hold ($475k)] $18.575 million contract?

    I am still trying to find an answer to that.

  5. Finding Solution Through The Past

    I had the idea of using a real life situation from last season to try and figure out the answer to this but I’m struggling to find a good example so far.

    Toronto = sign and trade for Hedo muddies the example
    Detroit = a good example except for Fabricio Oberto’s contract complication … before I noticed that, it appeared that $18.1 million figure was the right one and not $18.1 + $475k for the final signing made. Now it’s uncertain.

    No other team that was below the cap spent their full cap space.

    Detroit Pistons

    Detroit had six players on their books — Rip + Prince + Maxiell + Kwame + Stuckey + Bynum — and then signed Ben Gordon and Charlie Villanueva to contracts. Those deals give us a total of $49.83 million for eight players.

    Detroit also had a first round pick, Austin Daye, who came with a cap hold of $1.424 million. They did not sign Daye or any of their second round picks until after they used the last of their cap space so we use the cap hold figure. Nine players.

    Detroit waived Fabricio Oberto who had a contract worth $3.8 million with only $1.9 million guaranteed. Oberto’s $1.9 million counts against the cap but does not count as a used roster spot since he was no longer with the team.

    Detroit would then have three empty roster spot cap holds at $457k apiece totaling $1.371 million.

    This gives the Pistons a total of $54.525 million. The cap was set at $57.7 million so the Pistons should have $3.175 million in cap space.

    Detroit looked to spend the remainder of that money one last signing, another big man. They choose Chris Wilcox and signed him to a $3 million contract. That figure looks closer to our final cap figure than a cap space + cap hold figure but it’s definitive.

    To make matters more complicated — Detroit were able to offset some of Oberto’s contract to the team they had acquired him from, the Wizards, and saved another $627k — I only found out about this when double checking my figures and I do not think Detroit had this information at the time … but it muddies the example because then Detroit would have had a significant amount more in cap space ($3.8 million or $3.8 + $457k = $4.26 million) and choose not to spend the full amount.

    Anyway, not a definitive answer. For a moment it looked like we had an answer but not in the end!

    Summer of 2008

    I could try to work backwards on a past season but I don’t have that exact information on their payroll at the moment of the signings on my site. Only for last off-season. But I’ll try it and see where it lands us.

    Philadelphia 76ers

    The Sixers made a few moves early in free agency to free up as much money as possible to make one big name signing — Elton Brand — they spent all of the money available to them.

    Contracts — Iggy + Dalembert + Miller + Evans + Green + Young + Smith = $43.194 million
    Draft pick — Speights ~~ estimate of $1.285 million (signed after Brand joined)
    Free Agent — Lou Williams was a restricted free agent and did not sign until 20 days after Brand joined the Sixers. He earned $770k the year before and would have had a cap hold of 300% of that amount equaling $2.31 million
    Sub-total — $46.754 million for nine players
    Empty roster spots — three by $440k = $1.326 million
    Total — $48.115 million

    The cap was set at $58.7 million. That means the Sixers would have …..

    There is a mistake in the figures — ahh, Iguodala hadn’t signed his extension yet — Iggy was paid $2.804 million the year before and had a cap hold of 300% of that amount equaling $8.4 million. Not the $11.3 million he was on the books for.

    Sixers new total = $45.215 million
    Salary Cap = $58.7 million
    Cap Space = $13.485 million

    Elton Brand signed for $13.757 million …

    Estimate for Speights’ cap hold + differences between salary numbers on the internet and actual figures … uncertainty.

    Verdict

    Okay, I do not think this idea is going to pan out. Still not solution to this problem.

    Need To Know Answer

    Ahh, I’m curious now. I’m not going to be able to let this go for awhile.

  6. Hi Dave.

    Interesting thoughts. I war aware of minimum salary rules, as Larry Coon pages is one of my most relevant and interesting source 😉

    Now that means that the number of roster spot charges you want to take into account in your calculation depends on … the strategy you have for this team.

    For instance, in your Chicago example above, you’re strategy is to recruit one big FA and you’re “sure” to do it, then you should not count a spot charge against him. The spot charge are to be taken into account for all the other roster spots, as you do not know if they’ll filled. This is the same about what I wrote above about using n-1, but I wanted to point out that if your clear strategy is to recruit Dwayne Wade and Chris Bosh, then n-2 should be used. Moreover, if you intend to sign your first round draftee, then you should count a spot charge against him, as I would be double count…

    BTW, _if_ a team cannot remove the spot charge at the same time it signs a player, then what I said above about smart order to sign players is relevant.

    Team X has 2 empty roster spot and a $16m – 2 * $475k = $15,05m cap space, wants to sign big FA for $15m and a veteran for $1m. If it first sign the veteran, new cap is $16m – $1m – $475k = $14,575m, not enough for the big FA. But it does sign the other way round, it is the other player that is stuck.

    As for the BIG question, I would say it would be logical (but just my feeling) that a team could remove spot charge and sign the player at the same time. The idea is to force a team to have 12 players on its roster. If you have a $525m = $1m – $475k cap space, and want to sign $1m contract, I would be _logical_ that you can do it. Otherwise you could never have a payroll equal to the salary cap.

    But this is just logic, not facts.

    I have some experts on my website team. Don’t know if they are that experts, but I’ll ask them and let you know.

    BTW, what is your source for history salaries ? I have lots of data for current ones, but do you hold your own archives ?

    Thanks

  7. Hi Dave

    I think you should have a look at this thread. So direct answer to our question so far, but I quite related anyway

    http://forums.realgm.com/boards/viewtopic.php?f=4&t=992597&sid=53b7e9000977324b51980036f65b40c5

  8. Hey Julien,

    Basketball-Reference.com has each player’s salary history at the bottom of a player’s page (Garnett — total $251 million, earned $18 million in 05-06). It also has a list of each player’s salaries that played on the team that season at the bottom of their team’s page.

    There is an excellent salary site called storytellers.info. They have salaries going back about five years. Also, have very accurate information on things like partially guaranteed contracts. That is the salary site I use most often.

    —————————————————

    Earlier in the year, when I was reading Larry Coon’s articles (writes for NY Times occasionally and for ESPN recently) … I checked my salary cap figures against his and they were identical at the time. With the inclusion of the cap holds.

    I will see if I can find a link to one of those to show those figures.

    Link — Larry Coon’s article on the Knicks after they traded Jared Jeffries and Co. for Tracy McGrady.

    Larry Coon uses the same figure for total salaries after cap holds that I do in this post here — $21.57 million — giving the same answer for potential cap space.

    Still, not completely definitive, but it points us in a direction … that the cap holds stay on the books until after the signing is made.

  9. Thanks for the links. http://www.storytellerscontracts.com is just amazing.

    After our discussion and having reading different links, I’m fine with roster spot charge. We have to take it into account, and not forget to update it after each signing. Behind that, the main idea is that a team should not be able to give all its cap space to one big player, and recruit the rester of the roster as minimum salary players. OK.

    I don’t know if you were refering to my link to realgm forum when you said “I had forgotten about this”. But what it said makes me think that roster spot and signing can be done at the same time. For instance, user “answerthink” in the thread says

    “I believe the original point was that roster charges only restrict the allocation of cap space among a team’s players; they do not reduce a team’s total available cap space.”

    and removing spot charge after would indeed restrict total available cap space.

  10. Hey Julien,

    I was just getting around to reading that link to the RealGM now. I wanted to post the links to storytellers + basketball reference first and got sidetracked remembering that old article on the NY Times.

    The RealGM post was written by Larry Coon. He uses a lot of same information as the NY Times article I just linked to above. Strange, thinking of the same information but in two completely different places.

    Larry Coon goes into more detail on the RealGM page though. Very interesting reading. So, he accounts for the removal of one cap hold after the first signing to give a new cap space figure for the second signing.

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