Detailing the salary cap situation for the Atlanta Hawks

As I have maintained all along, we need to know the Salary Cap details before we can make any assumptions about what the Atlanta Hawks moves will be. Now that we know the Salary Cap has been set at $70 million for the 2015-16 NBA Season, we can start to understand the off-season moves by the Atlanta Hawks.

We can also add on information provided by Chris Vivlamore of the AJC, the Hawks have waived Austin Daye and renounced the rights to Gustavo, Pero, Elton, John, and DeMarre.

Hawks have waived Austin Daye.

— Chris Vivlamore (@CVivlamoreAJC) July 9, 2015

For those capologists, Hawks renounced rights to DeMarre Carroll, Pero Antic, Elton Brand, John Jenkins and Gustavo Ayon.

— Chris Vivlamore (@CVivlamoreAJC) July 9, 2015

The order of these events do not particularly matter and the fact that the Hawks did not renounce Paul does not matter too much either. The moment that Paul signs his new contract, his previous cap hold disappears and his starting salary is put on the Team Salary. So I will leave Paul out of our recap, but let's look at the Hawks Cap Sheet that we know of right now:

(Contract data from ShamSports.com and BasketballInsiders.com)

So with Daye and all the free agents off of the Hawks books, they have $42,578,527 in contracts and roster charges for total Cap Space of $27,421,473. Cool stuff, now let's get to the moves we have seen reported:

• Hawks officially announce Tiago Splitter is acquired via a trade with the San Antonio Spurs. It has been reported that he has a 15% Trade Kicker, so he may need to waive some or all of this in order for the trade to fit within $100,000 of the Salary Cap. Eric Pincus reports that the Trade Kicker has a cap of $600,000 which implies Tiago's Salary cannot rise above $8,800,000 in 2015--16.
• Hawks officially re-sign Paul Millsap to what will be a close-to-a-Max contract for two years plus a player option for the third (his Max is $19,689,000) . This must be via Cap Space.
• Hawks officially announce signing of Edy Tavares. If via Cap Space, the contract can be for 1 to 4 seasons. But if it is via the Minimum Player Exception or Room Mid-Level Exception then the contract can only be for 1 to 2 seasons.
• Hawks officially sign Justin Holiday to a fully guaranteed two-year contract. The contract can be via either Cap Space, Minimum Player Exception, or Room Mid-Level Exception.

Although the Hawks have made official announcements, this does not imply this is the official order of the above events occurring. In fact, it has to happen in a different order if Tiago Splitter has a Trade Kicker. So here's my best guess as to what the order is:

First, Sign Edy

As I have previously discussed, the Hawks have some flexibility with Edy's buyout. This comes from the Excluded International Player Payment Amount which the Hawks can use up to $625,000 in order to entice Edy and Gran Caneria to allow Edy out of his contract and come to play for Atlanta. This amount does not count towards the Cap.

Signing Edy to at least a 3 year deal is critical in securing Edy's Bird Rights. As we saw with Paul and DeMarre, a lack of Bird Rights will limit a team's ability to re-sign its free agents.

If Edy signs for his minimum ($525,093), then this will simply replace a roster charge and leave the Hawks with the same amount of Cap Space as stated above: $27,421,473. For every amount above his minimum, this will eat away at the Cap Space of the Hawks.

It is still possible that Edy does not sign via Cap Space and this move occurs later. Let me say that if this is the case, then I believe this to be a mistake by the Hawks. That, or Edy's agent put pressure on the Hawks to only sign a 2-year deal (which is not necessarily an error).

After 2 seasons, Edy would be a restricted free agent and subject to the Gilbert Arenas Provision which lowers his starting salary to not exceed the Non-Taxpayer Mid-Level Exception ($5.797 million in the 2017 off-season). So this may be a calculated risk by the Atlanta Hawks to limit Edy's salary through other means. This does not seem like a wise move to me because of uncertainty of the future contracts of Hawks and how the CBA may have unexpected changes that negatively affect a free agent like Edy.

Sign Paul

It is difficult to determine what Paul's starting salary will be. Chris Vivlamore announced that the previous report of a starting salary of $18.8 million is no longer correct:

With rise in salary cap, Paul Millsap will get more money than reported at time of contract agreement.

— Chris Vivlamore (@CVivlamoreAJC) July 9, 2015

This is partly why the NBA has a moratorium, because the specific values of contracts cannot be determined. But for the sake of being overly pessimistic, let's take Paul's Salary to be his Maximum Salary of $19,689,000. This puts the Hawks Cap Space at $8,257,566 (recall, roster charges).

Uh-oh.

We can already tell that this amount would mean that the Hawks cannot absorb Tiago Splitter's contract. So one thing we know, Paul did not sign for his Max. He signed for some amount slightly less. But we are left without knowing this amount until we can use backwards induction from the next step.

Trade for Tiago

We have already discussed how Tiago Splitter has a Trade Kicker. Tiago can waive said Trade Kicker only in the event that waiving his Trade Kicker would allow a trade to occur within the CBA rules. The CBA rules for the Hawks that would apply here is that they can exceed the Salary Cap by $100,000 in order to acquire Tiago. Using some backwards induction, suppose that Tiago Splitter waived the entire portion of his Trade Kicker. If this happened, then that would imply adding Tiago's $8,500,000 Salary to the Hawks Team Salary would put them at $70,100,000. From here, we can back out Paul's hypothetical Max.

The Hawks can be sitting at $61,600,000 in Team Salary before the Tiago move. The Hawks would have $42,578,527 in Team Salary before signing Paul (this assumes Edy is not signed or signed for the minimum). So this difference would be $19,546,566 (recall the roster charge which Paul would remove by signing)¹. So this is the actual Maximum that the Hawks can offer him now, which is $142,434 less than his CBA defined Max.

The less Paul takes as his starting salary, then the more that Tiago can receive as a Trade Kicker. It also means the more that Edy could potentially sign for.

What About Justin Holiday?

Well, if Paul wants to take vastly less than his Maximum, then it's possible that Holiday will sign via Cap Space. But this isn't likely. Which leaves Justin Holiday the option of signing after all other moves have been made to either a minimum salaried contract or through some portion of the Room Mid-Level Exception ($2.814 million). Signing Justin through Cap Space will only eat away at the starting salary of Paul and we already know that Paul is earning slightly less than his Max.

So expect this order: Edy to Paul to Tiago to Justin. It would be a shame if the Hawks could not sign in that order because that implies that Edy will not have a contract for at least three seasons. But I have no inside information, I only have a working knowledge of the CBA.

^{1. I try not to complicate things too much when I write, but this particular issue is likely avoided by never renouncing Paul. If the Hawks do not renounce Paul, then his $12,350,000 cap hold stays in place and there is no $525,093 roster charge. This would leave the Hawks with Cap Space of $15,596,566 instead of the $27,421,473 I mention throughout this article. The reason why I ignore this is because by keeping Paul's cap hold in place I open up confusion as to how the Hawks can sign Paul to a contract around $19 million when I state their Cap Space is only around $15.6 million. The reason why is because Paul's cap hold disappears when he signs his new contract in a simultaneous motion. This also explains why the Hawks did not announce renouncing Paul as some people interpret the CBA to mean that the incomplete roster charge is only removed after the 12th contract is signed. This is not an issue for the Hawks, they can renounce Paul or not renounce Paul and continue on with their particular moves, but I wanted to expand on this issue in case anyone was concerned. ↩}