They finally did it. The Pacers finally “freed” themselves of the steel bear trap that is Jamaal Tinsley’s contract. They spent more than a year desperately trying to find a trading partner for the mercurial point guard, but to no avail. So, with an arbitration hearing to formally resolve the issue less than a week away, Indiana’s leadership elected to be done with the matter once and for all. Wednesday afternoon, they gnawed through their ankle to escape and bought out Jamaal’s contract.
Per policy, neither the Pacers nor Tinsley’s agent commented on any terms of the deal. Both sides were cordial and resolute not to discuss anything publicly. This, of course, prevented anyone from knowing how much the Pacers paid — for nearly 12 full hours.
Mike Wells of the Indianapolis Star soon reported that the buyout agreement will pay Tinsley approximately $10.7 million of the $14.7 million remaining on the last two years of his contract.
When a player is bought out, the amount of the buyout replaces the original salary on the team’s payroll for salary cap purposes. It is spread over the remaining years with the same timing as the original contract. So in buying out Jamaal’s contract, the Pacers were able to immediately reduce their cap figure by roughly $1.9 million this year and $2.1 million next season. (Or, if Jamaal signs with another team for greater than the veteran’s minimum, which is $1.2 million for a player of Tinsley’s age and experience, the Pacers’ cap hit will be reduced by one half of the difference between the contract signed and the minimum.)
That’s what happened. But what does it mean?
The Bloody Stump
There’s very little question that the resolution of the “Tinsley question” was vital to the Pacers future. There is a sense of overwhelming relief flowing throughout the Pacer faithful. With Jamaal’s departure, the team is rid of the last of the players identified with the utter embarrassment that has befallen this franchise in the five years since the infamous Malice in the Palace in November 2004.
Furthermore, both the $4.0 million savings and clearing roster spot are going to be very valuable to this team over the next two years. These both give the team flexibility, and there are few more precious commodities for a team operating in such tight fiscal quarters. This move has allowed the Pacers to move forward.
But while they have freed themselves from the bear trap, they’re not entirely out of the woods yet. While the team did save $4.0 million, it’s important to remember that they really did have to “gnaw off an ankle” to get it. Indiana will still be paying $10.7 million to a player who is likely going to be wearing another uniform. That’s close to 10% of their total cap going to dead salary.
While the $14.7 million owed to Tinsley seemed particularly onerous given the fact that he won’t play, it should be noted that it pales in comparison to the $23.0 million owed to Troy Murphy over the next two years. Mike Dunleavy is similarly owed $20.3 million over the next two years, and even the most optimistic estimates don’t have him returning to the lineup before the January, 2010. And TJ Ford and Jeff Foster are still under contract for $17.0 million and $12.7 million, respectively, over the next two years.
As everyone knows, this franchise was dealt a severe blow by the brawl all those years ago. Just as much damage has been done by desperate reactionary moves since then, however.
Follow the bouncing ball:
(1) Ron Artest burns his Indianapolis bridge by demanding a trade and is traded for (2) Peja Stojakovic, who gets a ridiculous offer from (3) New Orleans, who agrees to do a sign-and-trade deal that gives the Pacers front office (4) a “trade exception” that they use to acquire (5) Al Harrington — who comes over from the Hawks to begin his second tenure as a Pacer, aka, Al Harrington Part Deux, aka, 2 Al 2 Harrington — but he flops both critically and commercially at the box office and gets lumped into another deal with Golden State as a sweetener so that the Pacers can unload (6) Stephen Jackson (who, believe it or not, was a bigger pariah in the community than either Ron Artest or the bear trap in question here) in a trade that nets a return of (7) Mike Dunleavy, (8) Troy Murphy, and (9) something on the order of $33 million in additional salary, which virtually guarantees that there is no way that the Pacers would be able to offer a significant extension for the 2009-2010 season to (10) Danny Granger without unloading the $23 million salary owed to (11) Jermaine O’Neal at that time.
Phew…
Now, Jamaal’s buyout basically ensures that the Pacers will not only stay under the luxury tax threshold this season but probably still have $2 to $3 million of wiggle room once they fill out their roster. This helps in a number of ways, the first of which aligns with the rumored Pacers/Celtics sign-and-trade deal that will send Marquis Daniels to Boston. The buyout and the resulting wiggle room makes almost any of the proposed scenarios with Boston doable without a threat of exceeding the luxury tax limit. (The popular speculation has the Pacers acquiring one or more of Bill Walker, Eddie House, Tony Allen, JR Giddens or Gabe Pruit if the deal goes through.)
That breathing room will evaporate next summer, however. With doom-and-gloom projections coming from the NBA corporate office, it is likely that the luxury tax threshold will drop from $69.9 million this year to no more than $65.0 million next season — and people are saying it could drop as low $62.0 million if the NBA’s overall “basketball-related income” drops by a scary-but-possible 5 percent.
Meanwhile, the Pacers are already committed to over $62.5 million in guaranteed contracts next season for only nine players. If you include the partially unguaranteed contract of Josh McRoberts and the guaranteed contract of the team’s first round pick next summer, they would already eclipse the potential $65 million luxury tax ceiling — and they would still need to fill three or four roster spots.
The Shining Beacon of Hope
The Pacers have paid the luxury tax in the past – and spent several years with one of the higher payrolls in the League – but they have been absolutely committed to avoiding it over the last two to three years. This financial philosophy makes perfect sense given the team’s current level of performance both on the floor and on the bottom line. Fiscal prudence isn’t exciting, but it’s a necessary quality if the franchise is to survive these rocky days of sparse attendance and apathetic public support in Indianapolis.
As the ship gets back on course, the summer of 2011 is the shining beacon for both Pacer ownership and Pacer fans. It is the hope held in the distance — the day Indiana can finally be back on track to make the bold, aggressive moves necessary to improve this franchise’s lot.
The Pacers have over $43 million in contracts that expire in the summer of 2011. These can be used either to create cap space to acquire free agents or as trading chips before the trade deadline in 2011. Given the Pacers history on the free agent market — or, more accurately, the lack thereof — the popular assumption is that major talent acquisition must be done through trade or the draft.
Thus, it will be very important to watch how the Pacers organization, and specifically its ownership, approaches the 2010-2011 luxury tax issue. Recent history says they will do what they can to get avoid the tax. But clearing salary will be difficult and Indiana will have a tough time finding takers for contract dumps. They face two separate issues that preclude teams from wanting to take on salary: (1) the declining, Leaguewide basketball-related income and salary cap structure, and (2) the rapidly approaching, much-ballyhooed and long-dreamt-about summer of 2010, the year for which many teams have been specifically clearing space to lure big fish free agents like LeBron James, Dwyane, Chris Bosh, Dirk Nowitzki and Carlos Boozer.
There are two crucial questions here:
1. Can the Pacers find a way to avoid the luxury tax for the 2010-2011 season?
2. Can they do it without severely undermining their opportunities for the following summer?
Hoping the Wound Will Heal
The Pacers are certainly not in an enviable position. The relief gained from the Tinsley buyout, while fantastic emotionally, is limited financially. It continues to be a step in the right direction, however. The team seemed to not understand how to cut their losses, as evidenced by the Artest to Peja to Harrington to Holy-Mary-Mother-of-God-who-gave-them-those-contracts routine.
Tinsley’s buyout may have been a blow to the pride of Bird and the Simons, and I’m sure it gives plenty of Pacers fans heartburn. Still, it was the prudent thing to do. Bird, Morway, et al, face a grueling uphill climb to get a competitive team on the floor while straightening out the finances.
I guess we’ll find out if they’re up to the job.
Eight years ago as a rookie, Jamaal Tinsley averaged 9.4 ppg and 8.1 apg and looked like one of the most promising young players in the game. After a long-term contract extension and a series of off-court problems, however, the Pacers are now viewing the reality of paying him to not play for the team as a relief — even if the actual cap relief of the buyout is minimal.
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