Author Topic: Salary cap situation and FAQs  (Read 30040 times)

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Re: Salary cap situation and FAQs
« Reply #60 on: June 30, 2008, 08:10:55 PM »

Offline BudweiserCeltic

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Roy, you mentioned in the other thread that teams under the cap were able to backload their contracts. I've tried reading around but wasn't able to find the information I was looking for.

Let's say you're WAY under the salary cap. Let's say you give one player a MAX type of contract for 5 years. And let's say you give some other guy a 6 year long contract.

Can you explain what the restrictions are on raises from year to year (if any) in both of these cases? I'm having a hard time finding the figure I'm looking for. I'm leaning towards 10.5% of something, but I think I'm reading the wrong thing, and that Coon's CBA write up doesn't seem to address this properly.

Thanks.

I think I had a brain spasm when I was talking about back-loading contracts.  The maximum raise you can give a player *playing on the same contract* is a 10.5% raise.  This also applies when you extend a contract.  In this case, it's a maximum 10.5% annual raise over the previous year's deal, rather than a raise capped at 10.5% of the first year salary.

Note that the 10.5% raise applies only to resigning your own free agents.  If you're signing a free agent off of another team, the most you can offer is 8% annual raises (which is one of the reasons some teams work out sign-and-trades).

If you want to really torture yourself, you can find the actual CBA here:  http://www.nbpa.com/cba_articles.php

Thanks. I was trying to wrap my head around Garnett's extension and how he was capable of lowering next year's salary to 16 million. From what I'm reading around, it's supposed to be impossible. But then I remember that his contract is one of those wierd ones that was made before the current CBA, that has some sort of trade kickers, etc. so I really don't know how that actually affected or made it possible for Garnett to sign as low as he did.

Re: Salary cap situation and FAQs
« Reply #61 on: June 30, 2008, 08:16:12 PM »

Offline Roy Hobbs

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Roy, you mentioned in the other thread that teams under the cap were able to backload their contracts. I've tried reading around but wasn't able to find the information I was looking for.

Let's say you're WAY under the salary cap. Let's say you give one player a MAX type of contract for 5 years. And let's say you give some other guy a 6 year long contract.

Can you explain what the restrictions are on raises from year to year (if any) in both of these cases? I'm having a hard time finding the figure I'm looking for. I'm leaning towards 10.5% of something, but I think I'm reading the wrong thing, and that Coon's CBA write up doesn't seem to address this properly.

Thanks.

I think I had a brain spasm when I was talking about back-loading contracts.  The maximum raise you can give a player *playing on the same contract* is a 10.5% raise.  This also applies when you extend a contract.  In this case, it's a maximum 10.5% annual raise over the previous year's deal, rather than a raise capped at 10.5% of the first year salary.

Note that the 10.5% raise applies only to resigning your own free agents.  If you're signing a free agent off of another team, the most you can offer is 8% annual raises (which is one of the reasons some teams work out sign-and-trades).

If you want to really torture yourself, you can find the actual CBA here:  http://www.nbpa.com/cba_articles.php

Thanks. I was trying to wrap my head around Garnett's extension and how he was capable of lowering next year's salary to 16 million. From what I'm reading around, it's supposed to be impossible. But then I remember that his contract is one of those wierd ones that was made before the current CBA, that has some sort of trade kickers, etc. so I really don't know how that actually affected or made it possible for Garnett to sign as low as he did.

I *think* -- don't quote me on this -- that you're allowed to negotiate a decrease in salary into your contract.  I haven't researched that particular issue, but from what I've read, restrictions are only placed on raises, not decreases.

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Re: Salary cap situation and FAQs
« Reply #62 on: June 30, 2008, 08:18:52 PM »

Offline BudweiserCeltic

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Roy, you mentioned in the other thread that teams under the cap were able to backload their contracts. I've tried reading around but wasn't able to find the information I was looking for.

Let's say you're WAY under the salary cap. Let's say you give one player a MAX type of contract for 5 years. And let's say you give some other guy a 6 year long contract.

Can you explain what the restrictions are on raises from year to year (if any) in both of these cases? I'm having a hard time finding the figure I'm looking for. I'm leaning towards 10.5% of something, but I think I'm reading the wrong thing, and that Coon's CBA write up doesn't seem to address this properly.

Thanks.

I think I had a brain spasm when I was talking about back-loading contracts.  The maximum raise you can give a player *playing on the same contract* is a 10.5% raise.  This also applies when you extend a contract.  In this case, it's a maximum 10.5% annual raise over the previous year's deal, rather than a raise capped at 10.5% of the first year salary.

Note that the 10.5% raise applies only to resigning your own free agents.  If you're signing a free agent off of another team, the most you can offer is 8% annual raises (which is one of the reasons some teams work out sign-and-trades).

If you want to really torture yourself, you can find the actual CBA here:  http://www.nbpa.com/cba_articles.php

Thanks. I was trying to wrap my head around Garnett's extension and how he was capable of lowering next year's salary to 16 million. From what I'm reading around, it's supposed to be impossible. But then I remember that his contract is one of those wierd ones that was made before the current CBA, that has some sort of trade kickers, etc. so I really don't know how that actually affected or made it possible for Garnett to sign as low as he did.

I *think* -- don't quote me on this -- that you're allowed to negotiate a decrease in salary into your contract.  I haven't researched that particular issue, but from what I've read, restrictions are only placed on raises, not decreases.

Nope, the NBA doesn't allow to renegotiate salary decreases. That's why teams get screwed so much. You're only allowed to renegotiate increases, if under the cap. You can get decreases in contract extensions, but only by the 10.5% of the last year of the previous/current contract. So the numbers still don't make much sense.

That's my understanding of the situation.

Re: Salary cap situation and FAQs
« Reply #63 on: June 30, 2008, 08:29:56 PM »

Offline Roy Hobbs

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Nope, the NBA doesn't allow to renegotiate salary decreases. That's why teams get screwed so much. You're only allowed to renegotiate increases, if under the cap. You can get decreases in contract extensions, but only by the 10.5% of the last year of the previous/current contract. So the numbers still don't make much sense.

That's my understanding of the situation.

I don't think so.  Lots of players have salary decreases.  Chicago signed Hinrich and Ben Wallace to deals that decrease over time.  Camby's deal decreases.  I'm sure there are others.  It's fairly good management to frontload contracts when you can.

You can't *renegotiate* an existing contract downward.  However, you can sign a deal where your annual salary decreases from year to year, either on a new contract, or on an extension of an old one.

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Re: Salary cap situation and FAQs
« Reply #64 on: June 30, 2008, 08:32:58 PM »

Offline Gainesville Celtic

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Nope, the NBA doesn't allow to renegotiate salary decreases. That's why teams get screwed so much. You're only allowed to renegotiate increases, if under the cap. You can get decreases in contract extensions, but only by the 10.5% of the last year of the previous/current contract. So the numbers still don't make much sense.

That's my understanding of the situation.

I don't think so.  Lots of players have salary decreases.  Chicago signed Hinrich and Ben Wallace to deals that decrease over time.  Camby's deal decreases.  I'm sure there are others.  It's fairly good management to frontload contracts when you can.

You're right Hobbs -- a salary can increase or decrease by the same max 10.5%.

Our own Elrod Enchillada (who's been a guest on CelticsStuffLive) posted 2 terrific articles discussing "frontloading" contracts over at RealGM. Essential reading in my opinion:

This is a general introduction
http://celtics.realgm.com/articles/352/20080131/frontloading_an_alternative_approach_to_nba_contracts/

This is his application of the practice "past the KG era"
http://celtics.realgm.com/articles/353/20080131/frontloading_the_cs_past_the_garnett_era/

And you're right to point out that it's good management -- when applicable, which Elrod goes into -- to frontload contracts.  Let's hope Ainge has either read them or skipped them since he knows/understands and agrees with them!
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Re: Salary cap situation and FAQs
« Reply #65 on: June 30, 2008, 08:37:19 PM »

Offline BudweiserCeltic

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Nope, the NBA doesn't allow to renegotiate salary decreases. That's why teams get screwed so much. You're only allowed to renegotiate increases, if under the cap. You can get decreases in contract extensions, but only by the 10.5% of the last year of the previous/current contract. So the numbers still don't make much sense.

That's my understanding of the situation.

I don't think so.  Lots of players have salary decreases.  Chicago signed Hinrich and Ben Wallace to deals that decrease over time.  Camby's deal decreases.  I'm sure there are others.  It's fairly good management to frontload contracts when you can.

You can't *renegotiate* an existing contract downward.  However, you can sign a deal where your annual salary decreases from year to year, either on a new contract, or on an extension of an old one.

Ok, I think I got a clear view of what occured with Garnett now.... let me know if I'm on the right track.

He got an extension. The first year of that extension is apparently irrelevant to the previous salary. But through the extension, the salary can be raised or decreased per year based on 10.5% of the last year of the original contact.

So for Garnett, he can decrease his salary by 2.6m per year, but that doesn't prevent them from starting off the extension at more than that 10.5%.

How does my explanation look at the moment?

Re: Salary cap situation and FAQs
« Reply #66 on: June 30, 2008, 08:43:16 PM »

Offline Roy Hobbs

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Nope, the NBA doesn't allow to renegotiate salary decreases. That's why teams get screwed so much. You're only allowed to renegotiate increases, if under the cap. You can get decreases in contract extensions, but only by the 10.5% of the last year of the previous/current contract. So the numbers still don't make much sense.

That's my understanding of the situation.

I don't think so.  Lots of players have salary decreases.  Chicago signed Hinrich and Ben Wallace to deals that decrease over time.  Camby's deal decreases.  I'm sure there are others.  It's fairly good management to frontload contracts when you can.

You can't *renegotiate* an existing contract downward.  However, you can sign a deal where your annual salary decreases from year to year, either on a new contract, or on an extension of an old one.

Ok, I think I got a clear view of what occured with Garnett now.... let me know if I'm on the right track.

He got an extension. The first year of that extension is apparently irrelevant to the previous salary. But through the extension, the salary can be raised or decreased per year based on 10.5% of the last year of the original contact.

So for Garnett, he can decrease his salary by 2.6m per year, but that doesn't prevent them from starting off the extension at more than that 10.5%.

How does my explanation look at the moment?

Sounds right to me.  I'm actually going to have to read the CBA cover to cover one of these days, so that I don't rely on Larry Coon as much as I do.  His FAQ is incredible, but it doesn't answer every question.

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Re: Salary cap situation and FAQs
« Reply #67 on: June 30, 2008, 10:25:37 PM »

Offline Gainesville Celtic

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Budweiser + Hobbs -- actually the reason KGs contract drops next season has nothing to do with frontloading, sorry I didn't read the original post closely enough.

KGs extansion starts at a lower annual salary b/c just like min salaries per year of service are spelled out in the CBA, so too are maximum salaries.

KGs current deal - which was to end after next season - was signed under the old CBA. Contracts like his that last past the old CBA remain in effect obviously, but extensions to them, like the one KG agreed to when he got traded here are governed by the max salaries spelled out in the new CBA.
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Re: Salary cap situation and FAQs
« Reply #68 on: June 30, 2008, 10:38:55 PM »

Offline Roy Hobbs

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Budweiser + Hobbs -- actually the reason KGs contract drops next season has nothing to do with frontloading, sorry I didn't read the original post closely enough.

KGs extansion starts at a lower annual salary b/c just like min salaries per year of service are spelled out in the CBA, so too are maximum salaries.

KGs current deal - which was to end after next season - was signed under the old CBA. Contracts like his that last past the old CBA remain in effect obviously, but extensions to them, like the one KG agreed to when he got traded here are governed by the max salaries spelled out in the new CBA.

KG isn't an example of front-loading, because he signed an extension that is subject to raises. 

However, the reason he took a pay cut isn't due to salary limitations in the CBA.  Due to his service time, he was able to sign a contract extension for significantly more than the $16.4 million starting salary he chose to accept. 

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Re: Salary cap situation and FAQs
« Reply #69 on: July 01, 2008, 09:13:25 AM »

Offline Gainesville Celtic

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Budweiser + Hobbs -- actually the reason KGs contract drops next season has nothing to do with frontloading, sorry I didn't read the original post closely enough.

KGs extansion starts at a lower annual salary b/c just like min salaries per year of service are spelled out in the CBA, so too are maximum salaries.

KGs current deal - which was to end after next season - was signed under the old CBA. Contracts like his that last past the old CBA remain in effect obviously, but extensions to them, like the one KG agreed to when he got traded here are governed by the max salaries spelled out in the new CBA.

KG isn't an example of front-loading, because he signed an extension that is subject to raises. 

However, the reason he took a pay cut isn't due to salary limitations in the CBA.  Due to his service time, he was able to sign a contract extension for significantly more than the $16.4 million starting salary he chose to accept. 

Sorry for all the off-point posts yesterday.

Hmm... could have sworn I'd read that KG's extension was lower b/c of the CBA, but can't find that amount now in Larry Coon's FAQ.

So KG voluntarily lowered his salary to ~$17M to start the extension? Interesting.
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Re: Salary cap situation and FAQs
« Reply #70 on: July 01, 2008, 09:19:34 AM »

Offline BudweiserCeltic

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Budweiser + Hobbs -- actually the reason KGs contract drops next season has nothing to do with frontloading, sorry I didn't read the original post closely enough.

KGs extansion starts at a lower annual salary b/c just like min salaries per year of service are spelled out in the CBA, so too are maximum salaries.

KGs current deal - which was to end after next season - was signed under the old CBA. Contracts like his that last past the old CBA remain in effect obviously, but extensions to them, like the one KG agreed to when he got traded here are governed by the max salaries spelled out in the new CBA.

KG isn't an example of front-loading, because he signed an extension that is subject to raises. 

However, the reason he took a pay cut isn't due to salary limitations in the CBA.  Due to his service time, he was able to sign a contract extension for significantly more than the $16.4 million starting salary he chose to accept. 

Sorry for all the off-point posts yesterday.

Hmm... could have sworn I'd read that KG's extension was lower b/c of the CBA, but can't find that amount now in Larry Coon's FAQ.

So KG voluntarily lowered his salary to ~$17M to start the extension? Interesting.

From what I understand, salary wise... I think he's still owed a trade kicker, so he should be making more than what the salary says he is. I wouldn't know for sure. So, in order to facillitate the trade, he lowers the salary so the trade kicker doesn't kill the deal, so instead of making the most he could through salary and on top of that get the trade kicker, he chose a lower salary to soften the blow.

That's my take on it, if I'm wrong please let me know.

Re: Salary cap situation and FAQs
« Reply #71 on: July 02, 2008, 11:12:53 PM »

Offline DinoR

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Hobbs thanks for helping steer us all through these tricky waters.

I've looked around in this thread and on the net, but haven't seen anything recent about my questions below.

I know we have our MLE and that's our best tool for signing free agents, but did we keep our bi-annual exception (and is it 1.8 Mil ? ) and do we have an LLE ( if so, how much is it? ) ?

Thanks for the info.

Re: Salary cap situation and FAQs
« Reply #72 on: July 02, 2008, 11:15:59 PM »

Offline Roy Hobbs

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Hobbs thanks for helping steer us all through these tricky waters.

I've looked around in this thread and on the net, but haven't seen anything recent about my questions below.

I know we have our MLE and that's our best tool for signing free agents, but did we keep our bi-annual exception (and is it 1.8 Mil ? ) and do we have an LLE ( if so, how much is it? ) ?

Thanks for the info.

The "LLE" and the "bi-annual exception" are one and the same.  We didn't use it last season, meaning we have access to it this year.  It's valued at $1.91 million this year.

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Re: Salary cap situation and FAQs
« Reply #73 on: July 03, 2008, 11:49:34 AM »

Offline RonJohn

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Roy,

Can you speculate what the hold up could be on Giddens' contract? Bartelstein said there were complicated problems, but isn't the salary fixed? Could you be so kind as to post your answer in the Giddens not in camp thread? There were a lot of questions and speculation on what the hold up is so that the C's can get Giddens in camp!

Thanks

Re: Salary cap situation and FAQs
« Reply #74 on: July 03, 2008, 12:07:08 PM »

Offline BudweiserCeltic

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No, the salary isn't fixed. It's a range, I doubt the scale has been done, but a 30th pick should be around $800,000.  The team can offer him a contract in as little as 80% of that figure and as much as 120% of that figure.

Then you also need to consider contract length, team options, etc.

This is not an automatic thing. Negotiations need to happen.