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Atlanta Hawks salary cap situation heading into the offseason

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Revisiting previous articles on the various options that the Atlanta Hawks will have entering this off-season. I touch on Al's options, Kent's free agency, how much cap space the Hawks can clear, and the usefulness of cap space in the 2016 off-season.

Kevin C. Cox/Getty Images

Now that there is a bit of break in basketball action, let's take a short stroll down the long list of options that the Hawks will have at their disposal entering the 2016 off-season. Let's revisit their cap sheet (*subject to change if Al is voted to an All-NBA Team), a few important dates upcoming, and then give some background on a few available avenues that Atlanta can stroll down for improving their team now and in the future.

Committed Salaries and Important Dates

First, the cap sheet which I gave a small update on a few weeks ago. If we assume that the NBA will have a $92 million cap then the Hawks will enter the off-season over the cap at a total cap sheet of $94,445,815. Have no fear, this does not mean they cannot use cap space it just means the Hawks need to relinquish a few of their exceptions in order to use cap space. The Hawks will have the following exceptions available to them on July 1st when the off-season begins: Bird Rights to Kirk and Al, the Early Bird Rights to Kent, the Non-Bird Rights to Kris, the traded player exception from Justin Holiday, the Non-Taxpayer Mid-Level Exception, and the Bi-Annual Exception.

Player 2015--2016 2016--2017 2017--2018 Total
Paul Millsap $18,671,659 $20,072,033 $21,472,407PO $60,216,099
Al Horford $12,000,000 $18,000,000 --- $12,000,000
Tiago Splitter $8,800,000 $8,550,000 $12,825,000 $17,350,000
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
Kirk Hinrich $2,996,008 $5,692,416 --- $2,996,008
Kent Bazemore $2,000,000 $2,600,000 --- $2,000,000
Dennis Schröder $1,763,400 $2,708,582 $6,771,455 $4,471,982
Tim Hardaway Jr. $1,304,520 $2,281,605 $5,704,013 $3,586,125
Kris Humphries $1,000,000 $1,200,000 --- $1,000,000
Walter Tavares $1,000,000 $1,000,000 $1,014,746NG $3,014,746
Mike Muscala $947,276 $1,015,696TO, NG $1,014,746 $1,962,972
Lamar Patterson $525,093 $874,636NG $1,014,746 $1,399,729
Terran Peteway $75,000 --- --- $75,000
2016 NBA Draft (#21) --- $1,249,800 $1,306,000 $2,555,800
Total (only guaranteed) $72,162,768 $52,951,457 $1,306,000 $126,417,225
Total $72,162,768 $58,175,123 $23,793,153 $154,131,044
Total + FA cap holds $72,162,768 $85,667,539 $86,726,379 ---
Exceptions $947,276 $8,778,276 $8,066,000 ---

Notes: Red denotes cap hold; PO-Player Option; TO-Team Option; NG-Nonguaranteed.

Although Petteway is not on the roster, he had $75,000 guaranteed on his contract for 2015--16.

Exceptions that carry cap holds are in the last row. The Holiday trade exception expires 2/18/2017. The 2016+ exceptions are Non-Taxpayer MLE and Bi-Annual Exception.

(Contract data from BasketballInsiders.com)

In addition to the above, there are a few notable dates:

  • The NBA Draft on June 23rd
  • Mike Muscala's Team Option for the 2016--17 Season needs to be picked up by June 29th or else he becomes a Restricted Free Agent (assuming Atlanta tenders him a paltry $1,215,696 Qualifying Offer)
  • Contract negotiations can begin on July 1st but cannot be signed until July 7th
  • Sometime before July 6th, the Salary Cap will be set along with the Maximum Salary, Luxury Tax, and Average Player Salary
  • Mike Scott's contract guarantees on July 10th
  • Kyle Korver is eligible for an extension on July 12th
  • Jeff Teague and Tiago Splitter are eligible for an extension on July 13th

For more details on extension talk and Mike Muscala's team option, you can take a look at what I wrote about these topics this past November.

Al Horford's Free Agency

I touched on what Al Horford's Potential Free Agency would look like back in February. Of particular note, Atlanta holds a distinct advantage over other teams in that Atlanta can offer Al a contract of up to 5 seasons with 7.5% raises and include a no-trade clause. All other teams are constrained to be able to offer Al only 4 seasons with 4.5% raises. Allow me to repeat myself with a few relevant quotes in the previously referenced article:

...we can now put some parameters around what Al's decision will entail. I will assume a Salary Cap of $89 million and starting maximum salary of $25 million for Al:

  • Atlanta can offer up to almost $145 million over 5 years ($25m to $26.875m to $28.75m to $30.625m to $32.5m with the 7.5% raises).
  • All other teams can offer up to almost $107 million over 4 years ($25m to $26.125m to $27.25m to $28.375m with the 4.5% raises).
  • If Al agrees to a sign-and-trade, then he is bound to the $107 million over 4 years.

This effectively describes Al's Max given a few options. But this assumes that Al is only looking for the most years and money at the 2016 off-season. He may also be considering factors such as earning the extra 5% in his maximum salary by accruing 10 years of service after the 2016-17 season, projecting how the Salary Cap may further increase his earning potential, anticipating a change in the Collective Bargaining Agreement, marketing opportunities based upon team, local taxes, and non-pecuniary lifestyle amenities.

Al will have 9 years of experience this off-season and is therefore bound by the Collective Bargaining Agreement to a starting salary of approximately 30% of the Salary Cap. However, once Al gains a 10th year of experience he moves up a rung to having a maximum starting salary of approximately 35% of the Salary Cap. This may be a potential factor that drives Al towards a so-called 1+1 contract, a one year deal with a player option for the second year. However, there is a bit of uncertainty for what a potentially new CBA may look like in the 2017 off-season. Will the new CBA contain harsher maximum salaries for players? Will it further limit the contract length that Atlanta can offer? Or potentially increase the amount of years that can be offered? In addition to all of this, a player option year will need to be exercised before a potential lock-out (or strike) occurs on July 1, 2017. This may make the 2+1 style contract that Paul signed last off-season more attractive to Al.

At the core of Al Horford's free agency will be a negotiation between the two sides over contract length. If Al wants to take on risk, he will aim for a shorter contract to then cash in on his increase in experience. Atlanta may also prefer a shorter contract so that they can keep financial flexibility going forward. However if Al wants more certainty, then he will push for a 5 year contract to stay in Atlanta. This is where can versus will becomes an issue. Atlanta can offer approximately $145 million over 5 years, but will they? Atlanta's competition for Al's services can only offer around $107 million over 4 years. This leaves a range of values that Atlanta and Al will negotiate over the 5th year. The competition can offer a 4th year at approximately $28.375 million, would this be a fair assessment for the hypothetical 5th year? And further, if Al wants to secure a no-trade clause as another form of long-term security then how much will that cost him?

I'm not here to give advice or predictions on what kind of contract Al will sign, but these are the factors at play.

Kent Bazemore's Free Agency

My most recent article detailed Kent's options, although for the most part this is a largely unknown and currently unknowable issue. Any contract above $7 million will necessitate that the team signing Kent use cap space, this applies to Atlanta as well as any other team. But what is Kent's market value? We know that the Hawks can clear the cap holds of Kirk and Kris in order to offer Kent a contract starting at around $16 million, but is this enough? Atlanta could further clear another $3,333,334 by waiving Mike Scott and have around $19 million in cap space, would that suffice? Honestly, we don't know at this point and this is all assuming that Al will re-sign with Atlanta after they use up said cap space. If Atlanta does not retain Al Horford, then this would clear up his $18 million cap hold and give Atlanta plenty of cap space to offer Kent.

If you want to start thinking about odd scenarios, then why not consider the possibility that Kent will pursue a 1-year contract with Atlanta in order to gain Bird Rights for the 2017 off-season? This could be a mutually beneficial option as Kent potentially increases his earning potential while Atlanta maintains financial flexibility.

As another wrinkle, it is possible that Atlanta uses their cap space in a sign-and-trade of Kent Bazemore to then exceed the Salary Cap. Because Kent's salary will likely start above $9.8 million, Atlanta would be permitted to receive up to Kent's starting salary plus $5 million in return. Hypothetically speaking, if Kent signs for $12 million then Atlanta could receive $17 million worth of players in return.

Cap Space's Value

The obvious benefit of having cap space in any off-season is that it allows a team to sign a free agent, but this is not the only benefit. Last off-season, Atlanta used their cap space in order to acquire Tiago Splitter from the Spurs and this will remain true. But an additional benefit of cap space is that a team can start to get creative in their moves. I have previously mentioned that contract re-negotiations and extensions are one benefit, but another benefit of cap space is that trading becomes much easier.

If a team makes a trade and ends up below the Salary Cap (technically, it's no more than $100,000 above the Salary Cap), then they do not need to match salaries. In addition, any player acquired in a trade where the acquiring team uses cap space can then be aggregated with other players in order for the team to acquire even more salary in a subsequent trade.

As an example, if Atlanta trades for a $10 million player with their cap space, then they could package that $10 million player with Mike Scott's $3.3 million contract. In doing so, Atlanta would be sending away $13.3 million in salaries and could therefore acquire a player earning $18.3 million. This would only work if Atlanta uses their cap space to acquire the $10 million player. If Atlanta were over the cap, then they wouldn't be able to re-package said $10 million player for another 2 months.

There's potential for the trade market this off-season to be quite active and therefore eschewing that 2 month window would be very beneficial. And in light of the trade market, potentially I will have a few interesting thoughts on this avenue for the Atlanta Hawks...