Shelden and Baby cheap contracts = C's looking at a big 2010 FA?

[Global Celtic]

Remember that Rondo is a tricky situation as well. By next offseason, we will either have to extend him a new contract (around 8-12 per year) which would count against the cap, or, if we wanted that cap space, we'd have to let him go.

The only other option is to offer him a qualifying offer and let him become a Restricted Free Agent. Remember, though, that in order to prevent teams from signing a free agent with their cap space then turning around and signing their own free agents using bird rights, a team's free agents still count against the cap in the form of "holds." check this out:

From Larry Coon's Salary Cap FAQ:

30. How much do free agents count against their team's salary cap?

The free agent amount depends on the player's previous salary and what kind of free agent he is:
Kind of free agent    Previous salary    Free agent amount
Any    Minimum salary    Portion of minimum salary not reimbursed by the league (see question number 11)
Larry Bird, except when coming off rookie scale contract    At least the average salary    150% of his previous salary*
Larry Bird, except when coming off rookie scale contract    Below the average salary    200% of his previous salary*
Larry Bird, following the fourth season of his rookie scale contract    At least the average salary    250% of his previous salary*
Larry Bird, following the fourth season of his rookie scale contract    Below the average salary    300% of his previous salary*
Larry Bird, following the third season of his rookie scale contract    Any    The maximum salary the team can pay the player using the Bird exception
Early Bird, following the second season of his rookie scale contract    Any    The maximum salary the team can pay the player using the Early Bird exception
Early Bird (all others)    Any    130% of his previous salary*
Non-Bird    Any    120% of his previous salary*

* Not to exceed the player's maximum salary, based on years of service (see question number 11). If the difference in salary between the last two seasons of the player's contract exceeded $4 million, then the percentage is based on the average salary in the last two seasons of the contract.

A restricted free agent counts against his team's salary cap by the greatest of:

    * His free agent amount (as defined in the table above)
    * The amount of his qualifying offer (see question number 36)
    * The first year salary from any offer sheet the player signs with another team (see question number 36)

This means that if we refuse to extend rondo at 8-12 or whatever he's worth but don't want to just renounce his rights and let him walk, he would still count against our cap for about $6,300,000 minimum or whatever the best offer he receives is on the market(and you know it will be pretty good).


So basically, Rondo himself will probably take up around 10 mil of our cap. The only way to avoid this would be to:
-trade him for future picks to a team under the cap
-trade him for a younger player with a few years left on his rookie deal
-let him walk away for nothing.

OK, after reading this I have just one question for you:... why don't you admit that YOU ARE DANNY AINGE? We're all reading this and thinking "Wow, this guy should be a GM!"

Now seriously, thanks a lot. Very good read.

[Fan from VT]

thank you very much for great post. it helps understand all this a BIT more...

but i have question concerning point #4 on Raises... does this mean that a team such as the celtics could sign a FA and avoid going over the cap this way....

celtics have only $5 million in cap room. so they sign a FA for $4,999,999 in year one of the contract, then in subsequent year provde huge raises to bring the salary up tl mayb $20,000,000.

which over the life of the contract would provide the FA with the same total amount of salary as if he had signed for $17,000,000 per year.

thanks.

Easy answer is no. There are caps on how much yearly raises can be, at most raises can be 10.5% per year.



Just to cover my bases, there is ONE scenario in which a team can offer a salary with a major inter-year jump, but it has to involve:
1. A 2nd rounder or undrafted player who has been in the league 2 years and is now a restricted free agent, and
2. A different team that is far under the cap and wants to sign said player to a big deal:

37. What is the "Gilbert Arenas" provision?

With the previous CBA it was sometimes possible to sign restricted free agents to offer sheets their original teams couldn't match. This happened when a player was an Early Bird or Non-Bird free agent (see question number 19) and the team didn't have enough cap room to match a sufficiently large offer. For example, Gilbert Arenas was Golden State's second round draft pick in 2001, and became an Early Bird free agent in 2003. Golden State therefore could only match an offer sheet (or sign Arenas themselves) for up to the average salary (see question number 24), which was about $4.9 million. Washington signed Arenas to an offer sheet with a starting salary of about $8.5 million, which Golden State was powerless to match.

This loophole was addressed in the current CBA (although not closed completely -- see below). Teams are now limited in the salary they can offer in an offer sheet to a restricted free agent with one or two years in the league. The first-year salary in the offer sheet cannot be greater than the average salary (see question number 24). Limiting the first year salary in this way guarantees that the player's original team will be able to match the offer sheet by using the Early Bird exception (if applicable -- see question number 19), or Mid-Level exception (provided they haven't used it already).

The second year salary in such an offer sheet is limited to the standard 8% raise. The third year salary can jump considerably -- it is allowed to be as high as it would have been had the first year salary not been limited by this rule to the average salary. Raises (and decreases) after the third season are limited to 6.9% of the salary in the third season. The offer sheet can only contain the large jump in the third season if it provides the maximum salary allowed in the first two seasons. In addition, the offer must be guaranteed and cannot contain bonuses of any kind.

If the raise in the third season exceeds the standard raise (8% of the salary in the first season of the contract), then they place an additional restriction on the team. In order to determine the size of the offer the team can make, they don't fit just the first year salary under the cap. Instead, they must fit the average salary in the entire contract under the cap. So a team $8 million under the cap is limited to offering a total of $24 million over three years, $32 million over four years, or $40 million over five years. If the offer sheet does not contain a third-season raise larger than 8% of the first-season salary, then they only have to fit the first year salary under the cap.

Putting this all together, if a team is $11 million under the cap, wants to submit a five year offer sheet, and wants to provide a large raise in the third season, they can offer a total of $55 million. If the average salary is $5 million, then the second year salary will be $5.4 million (8% raise). This leaves $44.6 million to be distributed over the final three seasons. With 6.9% raises in years four and five, the entire contract looks like this:
Season    Salary    Notes
1    $5.0 million    Average salary amount
2    $5.4 million    8% raise over season 1
3    $13.907 million    This is the amount that yields $44.6 million over the final three seasons with 6.9% raises*
4    $14.867 million    Raise is 6.9% of season 3 salary
5    $15.826 million    Raise is 6.9% of season 3 salary
Total    $55 million    Average is $11 million, which equals the team's cap room

[Fan from VT]

Thanks guys, but nope, no GM. Just a guy who's about to start Med school and thus may not have so much time on my hands with which to discuss the Celtics, so I'm getting a last bit in now.


Anyway, everything I learned about the salary cap was from the salary info on www.hoopshype.com or www.shamsports.com and, of course, about all the salary cap stuff from the incredibly helpful NBA Salary Cap FAQ by Larry Coon: http://members.cox.net/lmcoon/salarycap.htm#Q37

Just read through it and pay attention to free agent salary talk and you'll get it.

[Fan from VT]

thank you very much for great post. it helps understand all this a BIT more...

but i have question concerning point #4 on Raises... does this mean that a team such as the celtics could sign a FA and avoid going over the cap this way....

celtics have only $5 million in cap room. so they sign a FA for $4,999,999 in year one of the contract, then in subsequent year provde huge raises to bring the salary up tl mayb $20,000,000.

which over the life of the contract would provide the FA with the same total amount of salary as if he had signed for $17,000,000 per year.

thanks.

Easy answer is no. There are caps on how much yearly raises can be, at most raises can be 10.5% per year.



Just to cover my bases, there is ONE scenario in which a team can offer a salary with a major inter-year jump, but it has to involve:
1. A 2nd rounder or undrafted player who has been in the league 2 years and is now a restricted free agent, and
2. A different team that is far under the cap and wants to sign said player to a big deal:

37. What is the "Gilbert Arenas" provision?

With the previous CBA it was sometimes possible to sign restricted free agents to offer sheets their original teams couldn't match. This happened when a player was an Early Bird or Non-Bird free agent (see question number 19) and the team didn't have enough cap room to match a sufficiently large offer. For example, Gilbert Arenas was Golden State's second round draft pick in 2001, and became an Early Bird free agent in 2003. Golden State therefore could only match an offer sheet (or sign Arenas themselves) for up to the average salary (see question number 24), which was about $4.9 million. Washington signed Arenas to an offer sheet with a starting salary of about $8.5 million, which Golden State was powerless to match.

This loophole was addressed in the current CBA (although not closed completely -- see below). Teams are now limited in the salary they can offer in an offer sheet to a restricted free agent with one or two years in the league. The first-year salary in the offer sheet cannot be greater than the average salary (see question number 24). Limiting the first year salary in this way guarantees that the player's original team will be able to match the offer sheet by using the Early Bird exception (if applicable -- see question number 19), or Mid-Level exception (provided they haven't used it already).

The second year salary in such an offer sheet is limited to the standard 8% raise. The third year salary can jump considerably -- it is allowed to be as high as it would have been had the first year salary not been limited by this rule to the average salary. Raises (and decreases) after the third season are limited to 6.9% of the salary in the third season. The offer sheet can only contain the large jump in the third season if it provides the maximum salary allowed in the first two seasons. In addition, the offer must be guaranteed and cannot contain bonuses of any kind.

If the raise in the third season exceeds the standard raise (8% of the salary in the first season of the contract), then they place an additional restriction on the team. In order to determine the size of the offer the team can make, they don't fit just the first year salary under the cap. Instead, they must fit the average salary in the entire contract under the cap. So a team $8 million under the cap is limited to offering a total of $24 million over three years, $32 million over four years, or $40 million over five years. If the offer sheet does not contain a third-season raise larger than 8% of the first-season salary, then they only have to fit the first year salary under the cap.

Putting this all together, if a team is $11 million under the cap, wants to submit a five year offer sheet, and wants to provide a large raise in the third season, they can offer a total of $55 million. If the average salary is $5 million, then the second year salary will be $5.4 million (8% raise). This leaves $44.6 million to be distributed over the final three seasons. With 6.9% raises in years four and five, the entire contract looks like this:
Season    Salary    Notes
1    $5.0 million    Average salary amount
2    $5.4 million    8% raise over season 1
3    $13.907 million    This is the amount that yields $44.6 million over the final three seasons with 6.9% raises*
4    $14.867 million    Raise is 6.9% of season 3 salary
5    $15.826 million    Raise is 6.9% of season 3 salary
Total    $55 million    Average is $11 million, which equals the team's cap room

However, to expand on example 4, let's make up a simple (but unrealistic) example for this discussion. Pretend the salary cap is $55,000,000 and does not change year to year. say there's a hypothetical team that has 14 players, each with 5 year deals without any raises and each deal is worth $3,214,286. Do the math, and you'll find that this team has $10,000,000 in cap space and one free roster spot. So they offer Player X a contract for 5 years, at $10,000,000, with 10.5% raises. Well, just from this player, by year 5, the payroll of this team is at $59.9 million; they're 5 million over the cap, and this was just one player receiving raises. Imagine if you were the Knicks in the Dolan/Isaiah years; they had about 70 million dollars worth of players each getting big raises every year.

[billysan]

Wait you are saying 13 million for 3 years or are you saying $13M each year?  Under the former he would be taking a pay cut of $16 to $17 million for that option year.  Under the latter be he be taking an 8 million pay cut in the option year.  NO WAY MAN.  Why would any sane human being do that? 

You may not have seen or remember it, but a few years back Shaq 'restructured' his deal with the Heat so he was only making 20 million per to help Micky Aronson sign more and better players. He agreed to more years as the trade off for making 25+ million per.

I think the general point is that Paul Pierce may extend his contract for a few extra years to stay a Celtic at less money per year. Say he takes a 5 year contract for 60 million instead of a 3 year contract for 48 million. That's several years past his prime, still getting paid, job security and helping his beloved Celtics.


The numbers seem small per year but the total money is the key. Look at KG's contract, he did something similar so we didnt get the cap hit all at once, 16 million one year and 21 million in a later year all after making around 20 million in a previous year.

[Actionjakson]

It makes more sense for us to be saving money so we can offer Rondo an extension. Roy just signed a 5 year 80 mil extension. I wouldnt be surprised to see Rondo get something close to that (prolly slightly less). also, Perk is gonna want more money and we will need to continue to bolster our bench as the team ages. These signings are for the long run, but prolly nothing huge

[Jon]

The C's will be players in the 2012 or 2013 FA market and players on the trade market in the summer of 2011 with expiring contracts.  They will not be players on the FA market next year. 

[NeedForSheed]

So in two years will Glen Davis have earned more money in his first four years in the NBA than if he was a late 1st rounder in his draft year?

[jv2764]

Wait you are saying 13 million for 3 years or are you saying $13M each year?  Under the former he would be taking a pay cut of $16 to $17 million for that option year.  Under the latter be he be taking an 8 million pay cut in the option year.  NO WAY MAN.  Why would any sane human being do that? 

You may not have seen or remember it, but a few years back Shaq 'restructured' his deal with the Heat so he was only making 20 million per to help Micky Aronson sign more and better players. He agreed to more years as the trade off for making 25+ million per.

I think the general point is that Paul Pierce may extend his contract for a few extra years to stay a Celtic at less money per year. Say he takes a 5 year contract for 60 million instead of a 3 year contract for 48 million. That's several years past his prime, still getting paid, job security and helping his beloved Celtics.


The numbers seem small per year but the total money is the key. Look at KG's contract, he did something similar so we didnt get the cap hit all at once, 16 million one year and 21 million in a later year all after making around 20 million in a previous year.

25 mil to 20 mil is a big difference between 21M and 4.33M.  You got Pierce at $13M for a total package of 3 years against a one year players option of 21M.  So he loses 8 Million and he loses 2 years as well.  No way man.

[billysan]

The C's will be players in the 2012 or 2013 FA market and players on the trade market in the summer of 2011 with expiring contracts.  They will not be players on the FA market next year.  

Exactly my view as well, unless we find another 'Sheed-like' value for the bench next season. Then we may use the whole midlevel to shore that area up a little more.

I dont see us being big players in the FA market as far as max contract guys at all under Danny Ainge. I think we will build with low end draft choices and we will try to acquire higher draft choices. I think he will make the trades of expiring contracts at the deadline when it counts and send out a committee of veterans to campaign like we did with PJ and Sheed to get players on the cheap.

[guava_wrench]

The C's will be players in the 2012 or 2013 FA market and players on the trade market in the summer of 2011 with expiring contracts.  They will not be players on the FA market next year. 

We will need to pickup a FA backup wing next season unless Giddens and Walker become legit backups.

In other words, if we are not at least minor players in the FA market next year, then we have no bench players after Sheed and BBD.

[billysan]

25 mil to 20 mil is a big difference between 21M and 4.33M.  You got Pierce at $13M for a total package of 3 years against a one year players option of 21M.  So he loses 8 Million and he loses 2 years as well.  No way man.

I never said 3 years for 13 million. I never said 13 million per year.

I said I believe Paul Pierce will restructure and extend his contract. I hope he follows the precedent I illustrated using KG and Shaq as examples. By doing so, he allows the team more financial flexibility to sign and keep better players. This will be in his best interest if he wants to continue playing for a winner and stay in Boston for a few more years.

[jv2764]

I can step in:

No way.

1. Paul is not opting out.

2. We'd better hope that Rondo doesn't take the QO listed...that means he'd be an unrestricted free agent after. Not keeping him?

3. Rasheed Wallace will account for about 5.5 million (he signed a 2 year MLE deal)

4. Cap is going backwards.

I can see a situation where paul opts out to get a guarenteed 13 million for 3 years. Like wise I think Ray could resign for slightly less too

You say above I can see a situation where paul opts out to get a guaranteed 13M for 3 years.

[jv2764]

The comment was not directed to you about the $13M guaranteed for 3 years but it was put out there.