NBA Roundtable

2010 Tax Concerns: Indiana Pacers

In Free Agency, General NBA, Trade Talk on May 10, 2010 at 11:07 am

Indiana Pacers Salaries

Contracts above $5 million

  • Troy Murphy – $11.97 million
  • Danny Granger – $10.97 million
  • Mike Dunleavy – $10.56 million
  • TJ Ford – $8.5 million
  • Jeff Foster – $6.66 million

That gives us a sub-total of $48.66 million for a total of five players. A point guard, two wings and two big men.

Troy Murphy, Mike Dunleavy, TJ Ford and Jeff Foster are expiring contracts worth a total of $37.7 million. Danny Granger has four seasons left on his contract.

Rest Of Team’s Salaries

  • Dahntay Jones – $2.5 million
  • Brandon Rush – $2.07 million
  • Tyler Hansbrough – $2.0 million
  • Roy Hibbert – $1.68 million
  • Solomon Jones – $1.5 million

That gives us a sub-total of $9.75 million for a group of five players. Two wings and three big men.

Brandon Rush, Roy Hibbert and Tyler Hasnbrough are still on their rookie scale contracts. Solomon Jones is an expiring contract and Dahntay Jones has three years left (worth $8.1 million) on his contract.

Others Costs

  • Draft Picks — The Pacers hold a mid-lottery pick and are currently slotted into the #10 selection which would come with a cap hold of around $1.8 million.
  • Buyouts — Jamaal Tinsley — Tinsley was bought out by the club last summer but is still on the books for one more season for $5.46 million.
  • Non-guaranteed — Josh McRoberts + AJ Price — These two players are have non-guaranteed contracts worth $885k and $760k respectively. I think the Pacers are a near certainty to keep Price around for another season and a good bet to keep McRoberts around (excellent community service guy for a team that is overly concerned about such things).
    • Both are players are close to the veteran’s minimum anyway … so it won’t alter the figures much if they are discarded.
  • Open Roster Spots — None. The Pacers already have 13 players on their roster at this point.

The gives us a sub-total of $8.91 million.

Which gives us a new total of $67.31 million.

The Cap

David Stern recently announced

NBA commissioner David Stern said on Friday that the league is projecting the cap to come in at about $56.1 million. The actual number won’t be determined until early July, before teams can begin officially signing players.

Though that figure would still be lower than this season’s $57.7 million cap, it’s far better than estimates from last summer, when the league sent a memo to teams warning them of a potential sharp drop to between $50.4 million to $53.6 million.

The luxury tax threshold for a $56.1 million cap is $68 million.

2010 Cap Space

Okay, so the Pacers are directly below the luxury tax limit by about $700k.

Most first round picks are usually paid the maximum allowed (20% above cap hold) so that would trim that $700k in half.

So, the Pacers are only a few hundred thousand ($360k) below the luxury tax threshold as currently constituted.

Summer Options

The Pacers are waiting for the summer of 2011 to redevelop their roster.

This is what is inside their trade coffers

  • All-Star caliber wing + 25 point per game scorer = Danny Granger
  • $39 million worth of expiring contracts
  • A 2010 lottery pick
  • Three recent mid first round draft picks — Brandon Rush, Tyler Hansbrough and Roy Hibbert

The expiring contracts give the Pacers good cap flexibility but that flexibility would likely be better used next offseason via free agency than via a trade. The Pacers lack of high end prospects or young players with big reputations (Hibbert? maybe) limits their value as add-ons to expiring contracts as part of a trade package which lowers the likelihood of them hitting a home run in the trade market. Most likely, we are talking about second or third tier stars, borderline All-Stars rather than someone you can build a team around.

Therefore, I wouldn’t be overly optimistic about the Pacers making a big trade this offseason + if they did make a big trade, that move would likely only be a lateral move long term. Something which helps in the immediate future but does little to create a long term future.

In truth, the Pacers are in the middle of no-mans land and they have very little potential to improve their roster. The Pacers best method to building a high quality team is patient use of their cap space (Pacers are unlikely to be able to convince a top star to join their franchise due to the lack of roster quality outside of Granger) over the following 12-24 months (2011-to-2013).

As for next season, the Pacers have no cap flexibility and will be unable to use their MLE + will even be limited in their minimum contract signings + have solid but unexceptional trade assets (due to their lack of further incentives beyond their expiring contracts outside of this year’s lottery pick + future draft picks).

Roster Problems

  • Point guard play
  • Lack of shooting
  • Lack of quickness on their front line which forces them to play small ball lineups which creates their rebounding problems
  • Lack of offensive value outside of Granger + possibly Dunleavy

Unless the Pacers either (1) hit a home-run on their draft pick or (2) Mike Dunleavy regains his form of three years ago … the Pacers are very likely to finish right back where they were last season. With a decent but below average W-L record and standing outside of the playoffs.

Best Move

The Pacers will not do this — read: Larry Bird will not do this — but their best move is to auction off their expiring contracts to other teams for a comparable expiring contract but a lesser talent + an asset (say a future first round draft pick).

To send Troy Murphy, Mike Dunleavy and/or Jeff Foster to a contender.

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