Atlanta Hawks salary cap update after Paul Millsap, Tiago Splitter acquisitions

EDIT (7-7-2015): Small error with respect to minimum salaried players. The NBA only reimburses teams for minimum contracts of one year or less (10-day or rest-of-season). This has been corrected.

The Atlanta Hawks have made quite the splash in free agency so far. From various reports, we can surmise a three particular statements that I will take as fact:

• DeMarre Carroll has agreed to a contract in Toronto for 4 years around $60 million (with 4.5% raises, this implies a starting salary of around $14,052,000).
• The Hawks will acquire the contract of Tiago Splitter and will not send any currently rostered players to San Antonio (likely alluding that they absorb him through Cap Space).
• Paul Millsap has agreed to return to the Hawks for a 3 year deal around $58 to $59 million (one report indicates the starting salary is $18,800,000). He must be signed through Cap Space.

Although the Salary Cap will not be announced until around July 8th, we can still piece together some crucial pieces to understand what the hell the Hawks have done. This involves a bit of critical thinking and loose "guesstimation" of the Salary Cap. So let's dive in to better understand this situation:

Hawks Must Have Renounced All Their Free Agents

I state this with 99% certainty.

As we have discussed before, the Hawks current free agents are Antić, Ayón, Brand, Carroll, Jenkins, and Millsap. None of their rights are beneficial to the three assumed facts. The Hawks only own Early Bird Rights for Carroll and Millsap. The two's starting salaries are well above what the Early Bird Rights afford which makes the rights useless. The Hawks are better off renouncing their rights because Paul and DeMarre can only be signed through Cap Space at the stated values (this applies to any team signing Paul of DeMarre).

I have 1% uncertainty because there is some small chance that the Hawks could work out some sort of a sign-and-trade with Antić, Ayón, Brand, or Jenkins that would net the Hawks some sort of an asset. Actually, scratch this. After typing this out, I fully realise there is no market for the Hawks to sign-and-trade any of these players. They will renounce.

After Renouncing, Hawks Have $43,000,710 $43,239,218 Committed to Cap

So before we get to looking at one of the three moves, we know that the Hawks have renounced their free agents. So the amount of Cap Holds for the upcoming Season will look something to the effect of:

Player	2015--2016	2016--2017	2017--2018	Total
Al Horford	$12,000,000	$18,000,000	---	$12,000,000
Jeff Teague	$8,000,000	$8,000,000	$12,000,000	$16,000,000
Kyle Korver	$5,746,479	$5,239,437	$9,954,931	$10,985,916
Thabo Sefolosha	$4,000,000	$3,850,000	$7,315,000	$7,850,000
Mike Scott	$3,333,333	$3,333,334NG	$6,333,335	$6,666,667
Shelvin Mack	$2,433,333	$2,433,334NG	$4,623,335	$4,866,667
Kent Bazemore	$2,000,000	$2,600,000	---	$2,000,000
Dennis Schröder	$1,763,400	$2,708,582TO	$6,771,455	$4,471,982
Tim Hardaway Jr.	$1,304,520	$2,281,605TO	$5,704,013	$3,586,125
Austin Daye	$1,185,784NG	$980,431	---	$947,276
Mike Muscala	$947,276NG	$1,015,696NG,TO	$1,014,746	$1,927,707
Total (Under Contract)	$42,714,125	$28,826,723	$0	$0
Only Under Contract (Roster Charges added)	$43,239,218	$31,000,607	$6,749,916	$6,986,160
Notes: Red denotes cap hold; TO-Team Option; NG-Nonguaranteed. Mike Muscala and Austin Daye are minimum salaried players, their salaries count as 2-year vet minimum but are paid more based on years experience (except for Mike in 2015-16 when he is a 2-year vet). Austin Daye is actually paid $1,185,784 in 2015-16 which important to note.

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

This is the last point in time in this article that I can write with some sort of confidence (recall above, I'm at 99%).

At some point in this off-season, this is what the Hawks cap sheet will look like. You can surmise that at a Salary Cap of $67.1 million, the Hawks would have $24 million in Cap Space ($67,100,000 -  $43,000,710 $43,239,218 = $24,099,290 $23,860,782). If the Salary Cap comes in at a higher number, then you can use a bit of arithmetic to figure out the value of Cap Space. I should also point out that there are only 11 cap holds above and the CBA dictates there is an incomplete roster charge for fewer than 12. The charge is at $525,093, which is the minimum salary of a contract for an undrafted rookie.

At this point, we know that the Hawks need to sign Paul through Cap Space. That is the only given. We can expand our CBA knowledge in order to understand all the other possibilities at the Hawks' disposal.

Splitter's Trade Kicker

Currently, Tiago Splitter is scheduled to be paid $8,500,000 in 2015--16 and $8,250,000 in 2016--17. However, Tiago Splitter has a 15% Trade Kicker. What this means is that a bonus equal to 15% of the remainder of his contract ($16,750,00) will be paid to him by the San Antonio Spurs upfront ($2,512,500). For cap purposes, this amount is applied equally to the remaining years of Tiago's contract which implies that his contract will have a cap hit of $9,756,250 in 2015--16 and $9,506,250 in 2016--17 even though the Hawks will only pay him $8,500,000 and $8,250,000.

But this is slightly negotiable. The CBA allows a player to waive any amount of a Trade Kicker in order to make a trade fit. If Tiago is willing to forgo some amount of his Trade Kicker to be on a team that values him, then this implies that we have a range of salaries that Tiago could have. Tiago can have a salary ranging from $8,500,000 to $9,756,250 in 2015--16. This will have implications on how the Hawks off-season will go. Let's look into these.

The Obvious Scenario

The most straight-forward way to look at the Hawks chugging through this off-season is to assume the following occurs in this order:

1. DeMarre signs with Toronto and Paul signs his contract (around ~$18.8 million)

2. Hawks acquire Splitter through Cap Space.

The first step in the above scenario would imply the Hawks have $61,275,617 $61,514,125 (recall, incomplete roster charges) in committed salary. At this point, we do not know how much Cap Space the Hawks will have and because, again, the Salary Cap will not be set until around July 8th.

Suppose the Salary Cap is at the currently projected $67.1 million, then the Hawks have $5,824,383 $5,585,875 in Cap Space with 12 cap hits. And we know that Tiago will have a salary somewhere between $8,500,000 and $9,756,250. When the Hawks use Cap Space to acquire a contract via trade, they are restricted to not have their cap sheet exceed the Salary Cap plus $100,000. This amount would be $67.2 million.

Uh-oh.

This implies that the Hawks need to clear $2,575,617 $2,814,125 in the most optimistic scenarios of acquiring Tiago where Tiago waives his entire Trade Kicker. So what does this mean? This is the equivalent of the Hawks unloading Shelvin Mack ($2,433,333) somehow and sending Austin Daye ($947,276 $1,185,784) to San Antonio for them to waive. This would clear $2,855,516 $3,094,024 (recall, incomplete roster charge) and allow the Hawks to fit Splitter under their Cap Space. The Hawks can move other contracts, but under this scenario it must be the case that the Hawks clear contracts for Cap Space.

As the Salary Cap increases, the less the Hawks would need to send out. The less willing Tiago Splitter is to waive his full Trade Kicker, then the more the Hawks would need to send out.

This all hinges upon what the Salary Cap will be for 2015--16.

Can the Hawks Acquire Non-Guaranteed Contracts?

Yes. This is an option if the Hawks want to acquire Tiago Splitter's contract and not explicitly use their Cap Space in order to do so.

Here, we get to some timing complications but they are still straight-forward as follows:

1. Sign-and-trade DeMarre for Luke Ridnour's $2,750,000 non-guaranteed deal. Hawks sitting at $45,225,617 $45,464,125 in cap holds (~$21.6 million in cap space with $67.1 million cap).

2. Sign Paul to contract. Starting at $18,800,000 puts the Hawks at $64,125,617 $64,364,125 (~$2.7 million in cap space with $67.1 million cap).

3. Hawks acquire non-guaranteed contracts via trades while acquiring them under the cap.

4. Hawks aggregate non-guaranteed contracts in trade for Tiago Splitter.

I previously alluded to the Hawks acquiring Tiago Splitter through Cap Space, but this might not be the case. For a team that is under the luxury tax (the Hawks), they can acquire more salary in a trade than they send out. If the outgoing salary is less than $9.8 million, then the team can acquire up to 150% + $100,000 in return. This is the only plausible amount that matters. In the event that Tiago is willing to waive all of his Trade Kicker, then the Hawks would need to send out $5,600,000 to absorb his $8,500,000. If Tiago is unwilling to waive his Trade Kicker, then amount needed to absorb his contract is $6,437,500.

I need to reiterate from the table above that Austin Daye is actually paid $1,185,784 even though he only counts as a two-year veteran minimum towards the Hawks cap. This is important because the Hawks can count the amount to be paid to Austin as out-going salary in trades, which increases the amount that the Hawks can acquire in return.

Trading away Luke Ridnour, Austin Daye, and somewhere between $1,664,216 (waives entire Kicker) and $2,501,716 (does not waive Kicker) in non-guaranteed salary would be enough to acquire Tiago. The mystery becomes, who can the Hawks acquire through cap space that has a non-guaranteed contract of at least $1,664,216?

Let Me Explain

If the Salary Cap is at $67.1 million, then the Hawks have around ~$2.7 million in Cap Space. So they would not need to trade a current contract. The Hawks could trade a future draft pick or the rights to a previous 2nd round draft pick they own in exchange for some non-guaranteed contracts. One prickly issue here is that the Hawks must acquire all of the non-guaranteed contracts through their Cap Space.

A common misconception of the CBA is that a player cannot be traded for 2 months after being traded. This only matters if a player was acquired through the use of the Traded Player Exception and if the Hawks acquire said players through Cap Space then they avoid this issue entirely.

So where might the Hawks look to acquire somewhere between $1,664,216 to $2,501,716 in non-guaranteed contracts? I suggest Utah who has the Christapher Johnson ($981,348), Jack Cooley, Elijah Millsap, and Bryce Cotton (all three on $845,059) as expiring contracts. Bud should phone up his old pal Quin to see if he could grab a few of these non-guaranteed deals in exchange for an old or new draft pick. The Hawks did acquire 2 second round draft picks the other day, so maybe that will work?

This is simply a hypothetical scenario that could work. I am not asserting that the Hawks will do this.

Remarks

I can actually add on a few facts that we know about the Hawks this off-season from the moves discussed.

1. The Hawks will not be able to use the Non-Taxpayer or Taxpayer Mid-Level Exception.
2. The Hawks will not be able to use the Bi-Annual Exception.
3. The Hawks will be able to use the Room Mid-Level Exception ($2,814,000). This can be split up between multiple free agents but cannot be combined with any other exception. It is also limited to a 2 year contract.
4. The Hawks can sign players through the Minimum Player Exception that will cost the Hawks $947,276 or less. This can only be for up to 2 years.
5. The Hawks can trade away contracts to acquire other contracts but are limited in the amount they can receive. The only one off-limits is Paul because he will have signed a new contract and cannot be traded until December 15th.

That's it. That is all the Hawks can do for acquiring players for the rest of the off-season. This is because of the Collective Bargaining Agreement (CBA) and in no way reflects the Hawks willingness to spend. Ressler could intend to have a payroll this season of $200 million but the fact of the matter is he cannot because of how the NBA functions.

So please, no comments about the Hawks not willing to spend. They are literally restrained by the CBA in how much they can spend.

And keep in mind, we still do not know what the Salary Cap will be set at. That will be announced around July 8th. So sit tight.