Cap Order of Operations (’15 LMA -> SA)

There has been some building momentum on the Spurs free agency front as being players in the max contract sweepstakes for priority target LaMarcus Aldridge.   The following will illustrate San Antonio’s potential cap order of operations to clear near the requisite $18,922,200 in cap room assuming a $67.1M cap to sign Aldridge.

*Note: These cap moves will largely be determined during the July Moratorium where the Spurs will better gage the interest of these max level targets and make the corresponding adjustments to team salary. In other words, these moves will not without a great deal more certainty, likely after reaching agreement with Aldridge during the Moratorium (which counts only as a negotiation during that time).  Timing is really everything here.

Also, in terms of team salary under the following cap sheet, assumptions are made pertaining to the likely performance incentives for Diaw and Mills.  Diaw’s contract has $500,000 in essentially weight bonuses, gaining $150K for being at or under 254 pounds on October 25th, $150K for the same on the first Tuesday after the All-Star game and $200K for the same on April 1st.  Multiple sites have Diaw listed at 250 currently, and I am obviously not privy to precise scale amounts in the Spurs facility, thus the following assumes he met those benchmarks, which would thus make next seasons $500K in bonuses “likely” if met this season, and includable in team salary.   Mills also contains $333,333 in annual conditioning bonuses, though I do not have specifics there.  The following assumes they were met this year, rendering them includable in team salary next season as “likely” incentives.

2015 Offseason Cap Sheet

Aggregate Guaranteed Salary (5):

Tony Parker:  $13,437,500

Tiago Splitter: $8,500,000

Boris Diaw:  $7,500,000

*Includes $500,000 in likely performance incentives for conditioning benchmarks.

Patty Mills:  $3,578,947

*Includes $333,333 in likely performance incentives for conditioning benchmarks.

Kyle Anderson:  $1,142,879

Free Agent Amount Cap Hold/QO (Restricted)

Kawhi Leonard:  (250% x $2,894,059) $7,235,148

*Qualifying Veteran, QO = $4,433,683

Cory Joseph:  (250% x $2,023,261)  $5,058,153

*Qualifying Veteran, QO = $3,034,891

Aron Baynes:  (190% x $2,077,000)  $3,946,300

*Qualifying Veteran, QO = $2,596,250

Free Agent Amount Cap Holds (Unrestricted)

Tim Duncan  (150% x $10,361,446)  $15,542,169

*Qualifying Veteran

Manu Ginobili (150% x $7,000,000)  $10,500,000

*Qualifying Veteran

Danny Green (190% x $4,025,000) $7,647,500

*Qualifying Veteran

Marco Belinelli  (130% x $2,873,750)  $3,735,875

*Early Qualifying Veteran

Jeff Ayres  (130% x $1,828,750)  $2,377,375

*Early Qualifying Veteran

Matt Bonner (Min Salary 2 Yr Vet)  $947,276

*Qualifying Veteran

Former Player Free Agent Amount Cap Holds (Unrestricted)

Robert Horry, Jacque Vaughn, Nick Van Exel, Glenn Robinson, Damon Stoudamire and Tracy McGrady

Aggregate Non-Guaranteed Salary

Reggie Williams (Fully Non-Guaranteed) $1,185,784

100% Scale Amount Cap Hold 2015 First Round Pick:

Nikola Milutinov $991,600 (26th Pick)

Scale Amount Cap Hold Unsigned First Round Pick:

Livio Jean-Charles (Scale amount of 28th pick)  $957,200

Cap Order of Operations

1.Extend Kawhi Leonard a $4,433,683 qualifying offer and simultaneously a maximum qualifying offer for the required 5 years fully guaranteed with 7.5% raises starting at an estimated $15,768,500, rendering him a restricted free agent.

Kawhi is eligible for an enhanced qualifying offer of the 9th pick in his draft class (as opposed to his #15 slot) having met starters criteria for games started in his third and fourth seasons (41 games in each).  Being as though Kawhi’s free agent amount is still greater than even the enhanced starters criteria qualifying offer, his cap hold is still his free agent amount, rendering the qualifying offer a higher investment formality (unless of course Kawhi actually accepts his QO, which would then have team salary implications via a lesser salary hold).

The maximum qualifying offer, as touched on in a recent post, has the effect of requiring any prospective team who submits an offer sheet to Kawhi to submit a minimum 3 year offer with no options in those three years, as opposed to the dreaded Parsons 2 years + 3rd year player option structure. The maximum qualifying offer also does not count as a cap hold, rendering it a very logical move for the Spurs.

2.Do not extend qualifying offers to Cory Joseph or Aron Baynes, rendering them unrestricted free agents.

To maximize cap room and minimize the risk of either player accepting their qualifying offers, Joseph’s QO of $3,034,89 and Baynes’ QO of $2,596,250 should not be offered. The Spurs can retroactively retract either QO if offered through July 23rd without the player’s consent, thus there is recourse to clear cap room further along in the process. However, if either player accepts their QO in the interim it impinges on San Antonio’s cap room. Given both players will likely not demand a salary figure outside of their QO range, there is not substantial risk in losing either as an unrestricted free agent.

3.Waive Reggie Williams.

Williams’ $1,185,784 contract is fully nonguaranteed with no guarantee date I could locate. Williams can always be retained at a later date, undoubtedly for the minimum, and waiving him would afford the Spurs $660,691 in extra cap room (the difference between Williams’ salary and the minimum roster charge of $525,093), in conjunction with other moves.

4.File a written statement to the league that Livio Jean-Charles, 28th overall pick in 2013, and 2015 first round pick Nikola Milutinov will not play for the Spurs during the 2015/16 season.

The salary for unsigned first round picks (at the amount of their draft slot in the current draft class pick slot) is counted as a cap hold from July 1st to the first day of the regular season unless a team files a written statement to the league (signed by the player) that the player will not play for the team during that season. Jean-Charles is already under contract to play in France for ASVEL Villeurbanne through the 15-16 season, and there are no reports to suggest Jean-Charles is seeking an immediate relocation to the NBA. Thus, reducing Jean Charles’ cap hold of $957,200 (the 28th pick in the 2015 draft) to a minimum roster charge of $525,093 again in conjunction with other moves creates an extra $432,107 in cap room for the Spurs.  The same analysis applies to Milutinov.

5.Renounce all free agent amount cap holds to both current and former players, including Manu Ginobili, as well as exception cap holds (non-taxpayer midlevel, bi-annual) other than Danny Green.

The Spurs have the cap holds to six former players on team salary: Robert Horry, Jacque Vaughn, Nick Van Exel, Glenn Robinson, Damon Stoudamire and Tracy McGrady. Under the current CBA given that none of these players (all retired) played for the Spurs during the 2014/15 season, none can be signed and traded, rendering their only value to service the Spurs if they choose to remain over the cap. In this scenario with cap room the ultimate goal, these cap holds will need to be renounced.

Ginobili’s cap hold, as well as those of the aforementioned Baynes and Joseph along with Belinelli, Ayres and Bonner will all need to be renounced. As explained below, there will be a recourse to retain a player like Manu, Joseph, or Belinelli, even with renouncing early qualifying free agent rights, and Ayres and Bonner can be retained later via the minimum salary exception. Renouncing these cap holds will clear $42,107,148 in team salary, replacing the number of cap holds under 12 with minimum roster charges of $525,093.

Exceptions such as the non-taxpayer and bi-annual exceptions are lost automatically if a team falls far enough under the cap where the difference in team salary and the salary cap is greater than the exception amounts.  However, exceptions can also be renounced.  Either way, the Spurs in pursuing this avenue will need those two exceptions off team salary operating under the cap.

6.Keep Danny Green’s $7,647,500 free agent amount hold on team salary, retaining qualifying veteran free agent rights.

As will be demonstrated below, renouncing Green would equate to the requisite cap room to sign a max level free agent. However, Green is invaluable to the Spurs as a proven-three point ace who makes big shots and serves as an excellent wing defender. There will surely be some argument about his monetary value on the open market of a Spurs’ “system player” who has clear limitations handling the ball and as a shot creator, but Green is at the forefront of what teams desire in a “3 & D” player. Green may give San Antonio a hometown discount, but I don’t see him taking a contract below $10M (and could see up to $12M). Regardless, his current cap hold is likely below his first year salary in a new deal, especially if San Antonio chooses to start at a higher number and place future years on a 7.5% declining scale of first year salary. The Spurs would do well to keep the soon to be 28-year-old Green, and if not renounced could do so up to the maximum salary of a veteran with 6 years service (an estimated $15.7M).

7.Trade Either Boris Diaw or Tiago Splitter for Draft Pick Compensation and no returning player contract salary.

Tiago is easier to move and net assets for, considering his positional versatility and cap friendly contract over the next two seasons.  The Spurs would probably prefer to move Diaw, but his reputation as a non-Spur in the league is less than stellar (see Charlotte Bobcats stint).  There could be some buyers anxiety there, and the Spurs are unlikely to return the same assets as they would with Splitter.  The Bucks for instance have a plethora of cap space and a need at center.  Similarly, the Hawks might be in need of another big if Millsap departs, and there is system familiarity there.  Regardless, Diaw or Splitter will have to be moved in order to regain Green’s cap hold and sign Aldridge.

8.Re-Sign Tim Duncan to a 2 Year Contract with a Year 1 Salary worth $5.1M and a Year 2 salary worth $5,482,500 (7.5% raise).

There are a lot of different ways to structure Duncan’s contract to eventually get to Duncan making $10M this season and retire after while simultaneously maintaining maximum cap space.  The easiest is just to either fully guarantee or partially guarantee Duncan’s contract for the amount required to get Duncan’s salary to the $10M guarantee range by utilizing 2016 team salary.

Duncan could retire and the Spurs could stretch his remaining salary (eg $4.9M guaranteed) over 2 x the remaining years +1, or  a $1.63M cap hit over the 2016/17, 2017/18 and 2018/19 seasons.  The Spurs will have through August 31st to decide what is the best avenue next summer, and could just decide to keep Duncan’s full amount of dead money on the books for ’16.

The takeaway here is that there are multiple ways to accomplish this, and Duncan’s salary would indeed count against team salary in ’16 under this structure.

9.Sign Aldridge to a max contract for a year 1 estimated salary under the presumed $67.1M cap of $18,922,200 utilizing space space.

*The CBA permits a team to exceed the salary cap by $100,000 to sign a player

10.Re-Sign Kawhi Leonard to a Year 1 Max Salary for his 4 years of service tier of $15,768,500 to exceed the cap.

11.Re-Sign Danny Green to a deal exceeding his cap hold in the $10-12M annual range to further exceed the cap.

12.Utilize the created $2,814,000 cap room midlevel exception to re-sign the renounced Ginobili to either the full amount of the exception or a partial amount, potentially leaving the remainder for another free agent.

When a team utilizes cap space to sign a player and drops far enough below the cap to the point where various exceptions such as the non-taxpayer midlevel exception and bi-annual exception are lost (a team can also just renounce these exception holds), a team becomes eligible to utilize the cap room midlevel exception. This exception also does not count as a cap hold, and can be split between multiple players or utilized to sign one player up to the maximum $2,814,000 starting salary in 2015 with 1 or 2 years total, as well as a 4.5% raise over year one salary. Thus, the Spurs would likely choose to re-sign Manu for at least part of the exception to a one year contract, and if not fully utilized, allocate the other portion to sign another free agent (it’s unlikely Belinelli would fit here as well).

13.Fill out the Roster with Minimum Contracts via the Minimum Salary Exception.

Players such as Matt Bonner can always be retained with the minimum salary exception, likely on 1 year contracts with the reduced cap hit of $947,276.

Overall Scenarios Outlook

The following Spurs can clear the requisite cap space to sign Aldridge multiple ways.  The most preferable and realistic from my vantage point is trading Splitter and keeping Green’s cap hold, however, three potential scenarios are outlined in the following spreadsheet, each a realistic chance of occurring.

Spurs Cap Sheet