Last week I wrote about the two most important free agents for the Atlanta Hawks: Paul Millsap and DeMarre Carroll. Now, it's time to turn to the remaining free agents for the Hawks. If you want to review the Salary Cap Sheet for the Hawks, then I direct you to this article. Now with that out of the way, let's dive into an inordinate amount of detail provided on the Hawks free agents.
Pero is coming off of a two-year contract which paid him $1,200,000 the first year and $1,250,000 in the second. His two years of experience with the Hawks means that Pero will be an Early Bird Free Agent which implies that his cap hold will be 130% of his previous salary: $1,625,000. Early Bird Rights allow the Hawks to exceed the Salary Cap in order to re-sign Pero to at least a two year deal starting at 104.5% of the Average Salary along with 7.5% raises. This amount is not yet known because the NBA needs to conduct its audit of league finances. We will know sometime in July what this amount is, as I have already mentioned with respect to DeMarre Carroll, but expect this amount to be slightly south of $6 million.
Because Pero only has two years of experience in the NBA, he is also subject to be a Restricted Free Agent if the Hawks choose to tender him a Qualifying Offer. A Qualifying Offer is a standing one-year fully guaranteed contract offer extended to a free agent with 3 or fewer years of experience in the NBA in order to make the free agent a Restricted Free Agent. If Pero is made a Restricted Free Agent, this implies that the Hawks would have the Right of First Refusal in any NBA contract offer (technically called an offer sheet) that Pero receives. This is generally referred to as the right to match any contract offer. Further, if Pero is tendered a Qualifying Offer, then he will be subject to the "Gilbert Arenas" Provision that would limit other teams to only be able to offer Pero a starting salary of at most $5,464,000 (the amount equal to the Non-Taxpayer Mid-Level Exception). The Hawks could still choose to exceed this amount via Cap Space or Early Bird Rights if they desire.
If you recall the free agency of Jeremy Lin and Omer Asik, they were also subject to the "Gilbert Arenas" Provision. This could be a highly interesting topic if there were a realistic chance that some other NBA team is willing to offer Pero a salary above $5.5 million a year. However, this is highly unlikely so I won't delve into this topic. If you do want to read up on this, here is an article on Jeremy Lin's free agency and how the provision was related.
In my opinion, Pero is likely to be tendered a Qualifying Offer and thus become a Restricted Free Agent. His Qualifying Offer is a one year fully guaranteed contract at $1,562,500, which is less than his cap hold. Pero can decide to sign or leave it unsigned after receiving. This implies that making Pero a Restricted Free Agent does not take away any potential cap space to the Hawks (unless the Hawks wanted to renounce all rights to Pero to free up his $1,625,000 cap hold). The Hawks also have the ability to revoke the Qualifying Offer anytime before July 23rd if their plans change and they decide they no longer want to make Pero a Restricted Free Agent.
The Hawks have until June 30th to tender a Qualifying Offer to Pero. Last year, the Hawks waited until June 30th to extend a Qualifying Offer to Shelvin Mack and Mike Scott while the public was unable to determine that Gustavo Ayón did not receive a Qualifying Offer until July 1st. There is no reason to believe that the Hawks will deviate from their previous working order of waiting until the last day.
At the beginning of the 2014-15 NBA Season, the Hawks had to make a decision on whether or not to pick up the second option year on the contract of John Jenkins by October 31st. This option year was to pay John $2,228,025 for the 2015--16 NBA Season. They did not pick up that option. This creates a little bit of a sticky situation.
John has played for the Hawks for 3 consecutive seasons. Normally, this would mean that John Jenkins is a Bird Free Agent. However, this is not the case because John Jenkins original contract was a rookie scale. Normally, players with 3 or fewer years experience are subject to Restricted Free Agency. However, this is not the case because John Jenkins original contract was a rookie scale and his second team option was declined.
John is neither a Restricted Free Agent or a Free Agent with Bird Rights. Instead, he only has the limitation that the Hawks cannot sign John Jenkins to a contract that starts above the amount that his Team Option would have been, i.e. $2,228,025. If another team wants to offer John a contract starting above this amount, he is free to sign. The Hawks would be powerless to match (they have no Right of First Refusal anyway) and it is higher than what the Hawks could potentially pay.
Given that John Jenkins cap hold is for $2,228,025 and the Rights that the Hawks hold for him are effectively worthless, I would expect to hear that the Hawks renounce his rights at some point in time this off-season. If John were to return, the Hawks would likely sign him with cap space or via the minimum player exception. And oddly enough, John would have Bird Rights at the end of said contract. If that happens, then John also inherits veto rights to trades. This can be avoided if John is signed to a contract of two or more years. So if John is brought back and it is for more than one year, then the reason is to avoid giving John Jenkins the unnecessary right to veto a trade.
Did you know that last season, Elton Brand also had the right to veto any trade? Of course you did. Elton recently came off of a one-year contract for $2,000,000 and he now has Early Bird Rights because the previous season he played on was with the Hawks for one year and $4,000,000. What this means is that the Elton carries a cap hold equal to 130% of his previous salary: $2,600,000. This also allows the Hawks to sign him to a contract starting at 104.5% of the Average Player Salary for at least 2 years and with raises of 7.5%.
There is no reason to discuss Elton Brand's Early Bird Rights. He is not going to be signed with them because they would require 2 guaranteed years of salary and Elton has already been debating retirement for the upcoming season. Hell, he even debated playing this season:
Elton Brand has not decided to play another season. Will take time to decide. Sounded like he thinks he can still play. #ATLHawks— Chris Vivlamore (@CVivlamoreAJC) May 5, 2014
Brand will almost assuredly be renounced because his $2,600,000 cap hold takes up too much space relative to his production. However, I do not believe this means the Hawks will not re-sign Elton.
The Hawks would still be able to re-sign Elton with the minimum player exception. The minimum player exception is an exception to the Salary Cap which implies that the Hawks can be over the Salary Cap and still sign a player using this. For Elton, he would be paid $1,499,187 as a 10+ veteran minimum but would only count as $947,276 towards the Hawks' cap. Further, this would only cost the Hawks $947,276 because any amount above the 2-year veteran minimum is reimbursed to the team via the NBA. So there is still a chance that Elton could return.
Gustavo Ayón (Really? Yes, really.)
Technically (pushes up glasses), the Hawks still have rights on Gustavo Ayón. There is a bit of a dispute as to whether or not the Hawks have Bird Rights or Early Bird Rights. This stems from when the Milwaukee Bucks waived Gustavo Ayón on July 25, 2013 and the Hawks were awarded him on July 29, 2013. You see, around June 2012, the US Courts declared that a waived player who was then claimed would still retain Bird Rights (stemming from Billups, Hickson, Lin and Novak transactions earlier that year). However, a few days later the NBA settled this "dispute" with the NBPA to amend that players claimed off of waivers would retain Early Bird Rights.
It is unclear if the settlement applied for future contracts or retroactively for all contracts. Gustavo's original contract was signed in 2011 with the New Orleans Hornets. If he has Early Bird Rights, then his cap hold is for $1,950,000. But if he has Bird Rights, then his cap hold is $2,850,000. So that is the dispute, which is moderately interesting and completely irrelevant for practical purposes.
I have now devoted three paragraphs to Gustavo Ayón. This is totally unnecessary. If the Hawks decide to create Cap Space in order to re-sign Paul, DeMarre, or some other free agent, then Ayón is the first to be renounced. But in case you want to know why Ayón is still on the cap sheet for the Hawks, it's because they didn't need to renounce him at all last year to open up cap space. And if you do not need to do an action, then you do not do that action. OK that's enough Gustavo talk for the rest of the year.
Are there Exceptions Available?
There are two general scenarios this off-season:
- The Hawks operate the entire off-season above the Salary Cap; or
- The Hawks renounce Free Agents and Exceptions in order to operate below the Salary Cap for some period.
The first scenario is highly unlikely, but technically possible. This scenario would imply that the Hawks would be able to use any Rights to sign their own free agents and could use the Non-Taxpayer Mid-Level Exception (NTMLE) plus the Bi-Annual Exception (BAE). The NTMLE can be split up among many different free agents but the total amount of starting salary cannot exceed $5.464 million for this off-season. The contracts can be for 1 to 4 years with 4.5% raises. The BAE can also be split up among free agents but the total starting salaries cannot exceed $2.139 million and the contracts are limited to be between 1 and 2 years. Further, the BAE cannot be used in consecutive years, so Hawks would not be able to use the BAE in the 2016 off-season. And finally, use of either the NTMLE or BAE would hard cap the Hawks at the Apron, a level which is $4 million above the Luxury Tax. The Hawks are nowhere near the Luxury Tax and it would take multiple trades in order for the Hawks to even approach this level. So any discussion of the Luxury Tax is unwarranted.
The previous scenario is highly unlikely in my opinion. The more likely scenario is that the Hawks operate far enough under the Salary Cap that they will not be able to use the NTMLE and BAE. In this scenario, the Hawks would only have the Room Mid-Level Exception (RMLE) of $2.814 million. This can be split up across free agents and for one or two year contracts with 4.5% raises. Obviously, it only makes sense to use the RMLE after the team has used up all of its Cap Space. The RMLE can be used to sign any player. This implies that the Hawks could renounce Pero and then re-sign him via the RMLE. It also means that the Hawks could use the RMLE if they want to sign an overseas player whose rights they own (Lamar Patterson and Edy Tavares will be discussed later, and FYI it is a bad idea to sign either of them with the RMLE).
In all likelihood, the Hawks will clear cap space this off-season and be left with the RMLE to sign free agents after using their cap space.
OK, this is only mentioned so I cover all the bases this off-season. Now suppose the Hawks want to terminate Thabo's contract because of the Prohibited Activities in the Uniform Player Contract:
12. PROHIBITED ACTIVITIES.
The Player and the Team acknowledge and agree that the Player’s participation in certain other activities may impair or destroy his ability and skill as a basketball player, and the Player’s participation in any game or exhibition of basketball other than at the request of the Team may result in injury to him. Accordingly, the Player agrees that he will not, without the written consent of the Team, engage in any activity that a reasonable person would recognize as involving or exposing the participant to a substantial risk of bodily injury including, but not limited to: (i) sky-diving, hang gliding, snow skiing, rock or mountain climbing (as distinguished from hiking), rappelling, and bungee jumping; (ii) any fighting, boxing, or wrestling; (iii) driving or riding on a motorcycle or moped; (iv) riding in or on any motorized vehicle in any kind of race or racing contest; (v) operating an aircraft of any kind; (vi) engaging in any other activity excluded or prohibited by or under any insurance policy which the Team procures against the injury, illness or disability to or of the Player, or death of the Player, for which the Player has received written notice from the Team prior to the execution of this Contract; or (vii) participating in any game or exhibition of basketball, football, baseball, hockey, lacrosse, or other team sport or competition. If the Player violates this Paragraph 12, he shall be subject to discipline imposed by the Team and/or the Commissioner of the NBA. Nothing contained herein shall be intended to require the Player to obtain the written consent of the Team in order to enable the Player to participate in, as an amateur, the sports of golf, tennis, handball, swimming, hiking, softball, volleyball, and other similar sports that a reasonable person would not recognize as involving or exposing the participant to a substantial risk of bodily injury
The Hawks may have had a case here if Thabo's activities at 1 Oak were in some way against Team Rules. However, the ability of the Hawks to terminate his contract is pretty much out the window with quotes from Steve Koonin and Mike Budenholzer effectively condoning Thabo, as well as Pero, going to nightclubs during late hours:
Q. What policy do you have about players going out nights before a game, if any?
A. No, there is no policy.
Q. Is there a curfew?
Q. Will you institute a curfew policy from here on out?
Q. Is it disappointing that they would be out that late?
A. I think that was asked earlier. Right now, I think it’s crucial that we support Pero and Thabo. None of us want to bring any type of negativity, myself, Pero, Thabo, anybody. We’ve got a great group, a great organization. They are a huge part of that. So, I don’t think that word is in my mindset right now. I really want to support them and believe in them. We’ll continue to gather the information and the facts and move forward.
So we can forget about the idea of terminating Thabo's contract due to the Prohibited Activities clause out. But this doesn't mean there are no other interesting scenarios related to Thabo.
Suppose that Thabo's injury is career ending, or at least appears to last throughout the 2015--16 NBA Season. Might there be some options available to the Hawks? Yes, and they depend on whether or not the Hawks would prefer a Salary Cap Exception or to clear Cap Space.
If the Hawks want an exception and Thabo will not be able to play in the 2015--16 NBA Season, then they can apply for a Disabled Player Exception. We have actually discussed the Disabled Player Exception back in 2014. This was after Al Horford suffered his season-ending injury. If granted, the Hawks would be able to acquire a player (via trade or free agency) to a one-year contract up to $2,000,000 (actually $2,100,000 if it is via trade). The value comes from half of Thabo's 2015--16 Salary of $4,000,000. Because this Exception does count against the Salary Cap, the Hawks should not apply for the Exception until after using all of their Cap Space. This would not preclude Thabo from being able to play in the 2015--16 Season, but if it appears likely that Thabo can play then the NBA is unlikely to grant this exception.
Now if the Hawks want to clear their Cap Space and Thabo has a career-ending injury, the Hawks can apply to have his contract removed on the one-year anniversary of his last game played, which was April 7th, 2015. So even if Thabo's injury is career-ending, the Hawks would not be able to have Salary Cap relief until April 7th, 2016. The Hawks would not be able to benefit from this until the 2016 off-season, so there is not much to discuss with respect to the Thabo injury at the moment.
Now this next bit does not matter to fans too much, but if Thabo's injury is career-ending then the Hawks could have insurance cover his contract. Insurance details are not known to the public, so it is not the case that I can look into the CBA and find the details of what acts are covered by insurance of player contracts. So we have to rely on Larry Coon's explanation, which is:
If an insured player is disabled, there is a 41 game waiting period, after which the insurance company pays 80% of the guaranteed portion of the player's remaining base salary, up to $175,000 per regular season game. The waiting period can span seasons, and the player even can attempt to come back -- if he does and finds that he is unable to play, the 41-game count resumes (as long as he stopped playing due to the same injury).
It is not known if the 41-game count includes the playoffs. For reference, Thabo missed 5 regular season games and 16 playoff games. So the Hawks may be able to collect on 80% of Thabo's future salary after the 20th game of the 2015--16 Season or the 36th, depending on how playoff games are handled. It is also important to note that NBA Salaries are not paid by game (out of 82) but instead paid out by day (out of the total number of days between the first day of the regular season and the last). Because the 2015--16 NBA Season has not been released, I cannot give you an approximate value of how much insurance would pay the Hawks.
The Hawks likely have a good grip on how to handle insurance policies in contracts. Hell, they signed Speedy Claxton to a 4 year $24.1 million contract of which he was healthy for 42 games in his first season, 0 in his second, 2 in his third, and 0 in the final season. So the Hawks are well versed in this, hopefully, unlikely event that Thabo's injury keeps him out long.
To close out, I'll simply state what I find to be most likely. The Hawks will likely go under the Salary Cap this off-season in an attempt to re-sign Paul and DeMarre. I expect them to push Paul hard on accepting his Early Bird Max, but only after getting a verbal agreement from DeMarre to sign for the Cap Space that the Hawks clear. We won't know what this amount is until early July, so it would not be prudent for me to put out a number more specific than some amount starting above $10 million. To me, this appears to be Plan A for the Hawks and would likely leave them with the ability to re-sign Antić and Brand as well as pursue another free agent through the RMLE.
If Plan A fails, then this will turn into a wild off-season.