Cap & Trade

Buried at the bottom of Ric Bucher’s “3 Seconds” feature on page 84 of the November 16th issue of ESPN the Magazine, was this little blurb:

It’s early, but league officials estimate the NBA salary cap will dip from $53 million to $50 million.

Yet another piece of bad news to the beleaguered franchises around the league, most notably, your Indiana Pacers. John Hollinger first noted this back in January, and Marc Stein echoed those sentiments in July.

The passage most germane to the Pacers is this:

If BRI [basketball related income], as it is referred to in the NBA, decreases by 5 percent, teams would be looking at a $50.4 million salary cap and a luxury-tax line of $61.2 million in 2010-11.

As I had noted in my column about dumping Droopy McTinsleberry, the Pacers were already perilously close to the luxury tax threshold when it was projected at $65 million. Now, despite all of their wrangling the last two years, they are back in cap hell.

According to Shamsports.com, the Pacers already have $60.2 million tied up in contracts for only 12 players next year. Two of those contracts are partially unguaranteed (McRoberts & Price), but they’re minimum level contracts and would have to be replaced by other mininimum level contracts. Adding to the Pacers’ misery is the fact that they have to pay Jamaal Tinsley another $5.5 million on top of that number.

So, all told, they’re basically committed to roughly $65.7 million in payroll next year at this point. Add in another roughly $2.5 to $3.0 million for their draft picks next year, and the Pacers are sitting between $7 and $8 million over the tax threshold. Once you factor in the distribution that they won’t receive for being under the tax (an average of about $3.0 million), this news could cost the floundering Pacers $10 to $11 million next season.

Ouch.

In order to avoid this, the Pacers would have to find someone willing to take one of their large contracts in exchange for an expiring. Jeff Foster was a likely candidate, but his $6.7 million may not be big enough. Unless you want to throw Danny on the table, that leaves the Pacers going around, hat in hand, trying to find a taker for T.J. Ford ($8.5 million), Mike Dunleavy ($10.6 million) or Troy Murphy ($12.0 million).  Unfortunately, they’ll be jostling with several other teams trying to do the same thing — possibly with even better players being offered for peanuts — and knocking on the doors of teams who won’t be anxious to take on salary — even for good players. Plus, let’s admit that the players they’ll be offering, at those prices, aren’t exactly enticing even in a healthy fiscal environment.

It seems the best of the very, very long shots might be working out a deal with Cleveland, trading Murphy for Big Z. This has been floated around the internet, but there’s really no reason to believe there’s any substance to it.  However, Murphy would make a nice complement to both Shaq and LeBron, and if Cleveland continues to unimpress, it might be do-able. Then again, Cleveland has already been mentioned as interested in trading for Stephen Jackson with the Warriors, but some reporters have noted the Cavs reluctance to give up Big Z due to both him being a big expiring deal ($11.5 million) they could use for something else later and “Shaq insurance,” meaning a back-up plan for the team in case Shaq gets hurt/doesn’t work out.

Ultimately, the Pacers can see the shore of cap relief ahead in the Summer of 2011, but the seas are getting rougher — and it is getting harder for the Pacers not to drown, financially, in sight of it.

The 2010-11 Salary Cap: Here Thar Be Monsters.

Related Topics: Cap & Trade

{ 1 comment }

Just a quick reminder that Halloween is a very meaningful date for the Pacers and a couple of their young players.  According to Larry Coon’s FAQ:

Teams have until the October 31 preceding the player’s second season to exercise their option for the player’s third season. Likewise, they have until the October 31 preceding the player’s third season to exercise their option for the player’s fourth season (see question number 50 for more information on options). If the team invokes both options (keeping the player for all four seasons) then the player becomes a restricted free agents following his fourth season (see question number 36 for more information on restricted free agency). If the team declines either option, then the player enters free agency as an unrestricted free agent.

So, as Pacer faithful, you should keep an eye out for the announcements on the disposition of the options for both Brandon Rush and Roy Hibbert.  According to ShamSports.com, Rush’s option is for $2,069,040, while Hibbert’s is for $1,685,280.  It is an almost foregone conclusion that these options will be picked up, but it’s pretty much the only suspense we have left going this preseason.

Related Topics: Cap & Trade

{ 2 comments }

Though basketball is a game, the NBA is a business. As much as we would like all of the decisions of the Indiana Pacers to be dictated by their needs on the basketball court, the reality is that financial concerns and limitations play a very large role.

To help those interested in the Pacers find some clarity between these two inextricable worlds of basketball and finance, Eight Points, Nine Seconds is introducing a new feature called “Cap & Trade.” It’s purpose is to help explain the salary cap and luxury tax implications of any personnel moves made by Pacers, and occasionally explain why certain moves were not made. This will generally appear as a companion piece to the more important (and more entertaining) basketball analysis, but there will also be periodic updates at key points, such as the start of the season, and the beginning of the summer free-agency period.

We will also have a resource page called “Salary Central” (coming soon) that will show player salaries by year, along with information on cap and tax positions, player/team options, trade and other exceptions available to the Pacers.

For our sources, we will use Shamsports, Hoopshype and the ESPN Trade Machine. For CBA questions, we will rely on the fine work of Larry Coon’s Salary Cap FAQ. Other sources, such as the NBA Players’ Association Website, will be noted when used.

Here’s an update on where the Pacers currently stand on a few notable fronts.

Payroll
The Pacers current payroll for the 2010 season is about $65.4 million, including the Jamaal Tinsley payout. They are over the $57.7 million salary cap, but they are still about $4.5 million below the luxury tax.

Exceptions
The Pacers had three types of exceptions available to them to use to sign free agents this summer, and they’ve used up two of them. They used their Mid-Level Exception (MLE) to sign Earl Watson and Dahntay Jones. They used their Bi-Annual Exception (BAE/LLE) to sign Solomon Jones. This leaves only Minimum Player Exceptions (MPE) available to them if they want to sign any free agents.

Roster Spots
The Pacers currently have 13 of their 15 allowable roster spots filled. They are almost certain to add one more player before the season starts, but probably not two. Here is a breakdown:

• Bigs (6): Troy Murphy, Jeff Foster, Roy Hibbert, Tyler Hansbrough, Solomon Jones, Josh McRoberts
• Wings (4): Danny Granger, Mike Dunleavy, Brandon Rush, Dahntay Jones
• Points (3): T.J. Ford, Earl Watson, Travis Diener

Allen Iverson: AYFKM?
Rumors have circulated that the Pacers might be interested in adding The Answer at a one-year deal around the full MLE. Though these have been attributed to his agent, they are wholly unreliable. The Pacers, as noted above, no longer have their MLE. The only two ways they could get Iverson would be through a sign-and-trade with Detroit (very doubtful) or if AI were to accept the veteran minimum (to play in Indy???). This dog don’t hunt.

Marquis Daniels
The Pacers still hold the rights to Marquis Daniels, affording them the option of re-signing him without needing one of the exceptions listed above. This almost certainly will not happen. Instead, the Pacers are hoping to negotiate a sign-and-trade deal with the Celtics that will bring them back some asset, be it a promising young prospect, draft picks, cash or some combination of them. As of 8/8, it appeared that a deal with Boston would be unlikely. The Pacers have no interest in taking back either Brain Scalabrine or Tony Allen, and they have been unable to find a third team to broker the deal.

A.J. Price
The other player in limbo is second round draft pick A.J. Price from Connecticut. The Pacers hold his rights, as well, so they don’t need one of the exceptions to sign him. As the 52nd pick, he has little leverage, so he will probably have to wait for a resolution of the Daniels situation before getting a contract offer. If he signs, it will likely be at or slightly above the rookie minimum of about $450 thousand.

Will It Be 14 or 15?
Both Larry Bird and Jim O’Brien have expressed the desire to enter the season with only 14 players on the roster. This would provide flexibility in terms of adding players later in the year, either through free agency or taking back more players than they send out in a trade. It also makes sense not to spend a million or so dollars to pay someone to wear a suit on the end of the bench.

All in all, unless something can shake loose in the Daniels/Celtics situation, expect a quiet August and September from the Blue and Gold.

Related Topics: Cap & Trade

{ 6 comments }