And on the second to last day of the 2013-14 NBA Season, Danny Ferry makes a trade.
This trade needed to happen during the 2013-14 NBA Season. If Danny Ferry waited a day longer he would not have been able to reap the benefits of John Salmons contract. No doubt about it, this was a move made to clear cap space for the Hawks. And it cost the Hawks a very good player in Lou Williams and a solid prospect in Lucas Nogueira. Potentially the drafting of Walter "Edy" Tavares will soften the blow of losing Lucas, but that is a question for Danny and not me.
From a literal perspective, the Hawks are trading away Lou Williams ($5,225,000) and the rights to Lucas Nogueira ($0 for trade purposes) for John Salmons ($7,583,000). The Hawks used the traded player exception, which allows the team to take back 150% + $100,000 of their outgoing salary. This amount would be $7,937,500, and so the contract of John Salmons fits underneath this exception. Deal complete. The Hawks officially end the 2013-14 NBA Season above the Salary Cap with a Team Salary of $60,726,439.
This move was made mainly because of the intricacies of John Salmons contract. Per Shamsports.com (emphasis added):
Re-signed to a five year, $39,166,000 contract in July 2010.
Final season is only $1,000,000 guaranteed if waived on or before June 30th 2014.
Contract contains performance incentives currently listed as unlikely.
Signed via Bird rights.
Cannot be traded until February 10th, unless traded on his own, and cannot be traded to Sacramento this season
With today being June 30th, John Salmons will assuredly be waived to avoid paying him $7,000,000 for the 2014-15 NBA Season. This implies that the Hawks will be on the hook for $1,000,000 in Team Salary to a player who is not on the roster (and will not take up a roster space).
Furthermore, Danny Ferry is explicitly stating that he believes that the Cap Space from this deal is more valuable to the Hawks than Lou and Lucas at their current costs. I am not here to pass value on players, but one should take note that Cap Space is an asset. It allows a team to sign a free agent, and not all NBA teams have this ability. Since Cap Space is scarce, obtaining this scarce resource is valuable. And that is essentially the definition of an asset. It may be strange to think of this as an asset (since it will be turned into a different asset after it is used), but nonetheless it is and Danny values this.
As a bit of an aside with John Salmons, he does not have a Team Option. One way we know this is because he has a declining salary and you cannot have an option year that is less than the previous year's salary. This is surely minutiae, but Mark Deeks has been detailing an interesting scenario involving an NBA mistake on option years with Tim Duncan and Zach Randolph.
Amount of Cap Space Saved
While I used a value of $5,225,000 for Lou Williams in the trade, this was because the trade occurred in the 2013-14 NBA Season. For offseason purposes, Lou Williams would have counted $5,450,000 towards the Hawks Team Salary. Also, Lucas Nogueira would have counted $1,468,900 towards the Hawks Team Salary. So the Hawks have shed $6,918,900 in Team Salary commitments from Lou and Lucas.
However, the Hawks also added on a few commitments with this move. For one, they must pay John Salmons...
ahem, $1,000,000. But in addition to that, the Hawks will take on two incomplete roster charges (in their maximum cap space scenario) because they no longer have Lou or Lucas occupying a spot. John Salmons will not be on the team, and therefore he does not take up a roster spot.
So when we account for roster charges and payouts, this move actually clears $4,904,228 from our previous discussion on Cap Space for the Hawks. Such is life.
Offseason Implications (Updated to include Payne)
The most immediate implication from this move is that the Hawks cleared lots of Cap Space. It is not enough for the Hawks to offer a Maximum Contract to LeBron or Melo, yet. But with $4,904,228 cleared, the Hawks could potentially have a Team Salary of
$44,083,838 $45,122,602 which would imply $19,116,162 $18,077,398 in Cap Space with a Salary Cap at $63.2 million. This is likely to be enough for a maximum contract offer to a player with less than 7 years of experience and possibly less than 10, although we won't know for sure until July 10th at the latest. To get to enough Cap Space for a Carmelo Maximum Contract offer would require another $3,342,240 $4,381,004 in contracts cleared. As an update, the contracts the Hawks could move to increase cap room are:
- Al Horford $12,000,000
- Paul Millsap $9,500,000
- Jeff Teague $8,000,000
- Kyle Korver $6,253,521
- DeMarre Carroll $2,442,455
- Dennis Schröder $1,690,680
- Adreian Payne $1,546,100
- John Jenkins $1,312,920
(Muscala and Pero omitted as this is the maximum cap room scenario)
You can browse through the NBA Free Agent List to see what players would fall under this maximum contract distinction.
But more importantly, in this writer's opinion, is that the Hawks also cleared roster spots. Before this move, the Hawks had 10 players under contract along with 2 first round draft picks, 2 second round draft picks, and 5 free agents. Now one could bicker over how many free agents or draft picks would come over, but that is beside the point. Without having made a move, the Hawks were looking at the limit of 15 roster spots for legitimate NBA talent they could bring on to start the 2014-15 NBA Season.
Sure, it is possible that Danny Ferry hits a home run and is able to bring in one superstar with his cap space. If that is the case, then roster space is not a big deal. But in life, you should not put all your eggs in one basket. This move helps safeguard against other scenarios where Danny Ferry is not picking up one superstar, but possibly signing multiple players who are really good. Having options is a good thing.
(Edited 8:02 am 6-30-2014: Thanks to @BuddyGrizzard for point out the omission of Adreian Payne in calculations)