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Jeff Teague trade gives Atlanta Hawks more financial flexibility

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Here is an updated look at the Atlanta Hawks' salary cap situation following the Jeff Teague trade.

Dale Zanine-USA TODAY Sports

A little over a month ago, I wrote up a piece to update Atlanta's cap sheet heading into the off-season. That piece is now out of date with the news that Jeff Teague has been traded away for the No. 12 pick in the upcoming draft. In addition, there are new reports that the NBA is anticipating the Salary Cap to rise to $94 million. The short of these two pieces is that Atlanta will have about $10 million more in cap space than previously expected, which will be enough for a max contract offer to a player with 0-6 years of experience, about $3 million short for a player with 7-9 years of experience, and around $7 million short for a player with 10+ years of experience.

Allow me to update the cap sheet, revisit some details on a few options Atlanta has this off-season, and close by discussing Jeff's potential extension.

Post-Teague Cap Sheet

In the event that Atlanta intends to stay over the cap (which I detail much more here), nothing has actually changed. Trading away Jeff Teague generates a $8,000,000 traded player exception which carries a cap hold and the team will start off with $96,377,715 on their cap sheet. The team can easily expunge this amount, and the various other exceptions, by renouncing their rights to create cap space. It's fairly likely that Atlanta intends to use their cap space this summer, which would effectively make the rights to the Teague trade exception, Kirk Hinrich, Non-Taxpayer MLE, Bi-Annual Exception, and Holiday trade exception a total of $23,670,692 in worthless cap holds. So let's get rid of them for the moment.

Player 2016--2017 2017--2018 Total
Paul Millsap $20,072,033 $21,472,407PO $20,072,033
Al Horford $18,000,000 --- ---
Tiago Splitter $8,550,000 $12,825,000 $8,550,000
Kyle Korver $5,239,437 $9,954,931 $5,239,437
Thabo Sefolosha $3,850,000 $7,315,000 $3,850,000
Mike Scott $3,333,334NG $6,333,335 $3,333,334
Kirk Hinrich $5,692,416 --- ---
Kent Bazemore $2,600,000 --- ---
Dennis Schröder $2,708,582 $6,771,455 $2,708,582
Tim Hardaway Jr. $2,281,605 $5,704,013 $2,708,582
Kris Humphries $1,200,000 --- ---
Walter Tavares $1,000,000 $1,014,746NG $1,000,000
Mike Muscala $1,015,696NG $1,014,746 $1,015,696
Lamar Patterson $874,636NG $1,014,746 $874,636
2016 NBA Draft (#12) $1,931,900 $2,018,800 $3,950,700
2016 NBA Draft (#21) $1,249,800 $1,306,000 $2,555,800
Total (only guaranteed) $46,883,357 --- ---
Total $52,107,023 --- ---
Total + FA cap holds $79,599,439 --- ---
Exceptions $16,778,276 --- ---

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

Exceptions that carry cap holds are in the last row. The Holiday trade exception expires 2/18/2017 and is $947,276. The Teague trade exception expires one year after the trade is officially made and is $8,000,000. The Non-Taxpayer MLE is for $5,628,000 and the Bi-Annual Exception is for $2,203,000.

(Contract data from BasketballInsiders.com)

After renouncing said cap holds, Atlanta would have 10 players under contract and 2 draft picks accounting for $52,107,023. Al Horford's $18 million cap hold is crucial in re-signing him. That ends up being 13 roster spots totaling $70,107,023.

At a $94 million salary cap, this means Atlanta will be at around $24 million in cap space. The projected maximum salary classifications for players with 0-6 years, 7-9 years, and 10+ years of experience would be about $23 million, $27 million, and $31 million per Albert Nahmad of HeatHoops (seriously a wonderful resource for Salary Cap insight).

So Atlanta has enough cap space to throw a max contract at the 0-6 year players, like a Hassan Whiteside. But to reach the 7-9 year players, like Kevin Durant, the Hawks need to clear an additional $3 million. And what do you know, Mike Scott has a non-guaranteed contract for $3,333,334 next season (it guarantees on July 10th).

If Atlanta wants to clear cap space to a 10+ year player, then they likely need to make trades. Although Mike Muscala and Lamar Patterson have non-guaranteed contracts, the benefit of waiving them is minimal because Atlanta would fall to below 12 players/holds. For each player/hold under 12, a team is assessed a $543,471 cap hold. So while it may look like waiving Lamar and Mike would free up $1,890,332 it would only free up $803,390. So there needs to be a trade.

Off-Season Options

I won't rehash too much here, but in some loose order of events and links to where these are talked about in more detail:

  • The team needs to decide what to offer Al, which can be for as little as 1 season or as many as 5 and Atlanta has the ability to offer him the most money. Effectively, Al will have the choice to re-sign (and decide what structured contract looks best), leave elsewhere, or try and work out a sign-and-trade. Those were all detailed here.

    For those of the younger fans, I gave a short comparison between the a potential Horford Max versus Joe Johnson's Max. But if Al leaves, that frees up $18 million in cap space.
  • If Atlanta plans to bring back Kent Bazemore, it will have to be through cap space because Atlanta only holds Early Bird Rights on Kent. But this doesn't exactly mean those Early Bird Rights are worthless as Atlanta is able to offer Kent 7.5% raises while all other teams are limited to 4.5% raises, which I discuss more here.
  • While cap space is valuable in signing free agents, it can also be helpful for Atlanta to acquire a player through cap space and then aggregate said player with another contract for an even larger contract. Normally, when a team trades for a player they need to wait 2 months before they can re-package a player in another trade...unless that player was acquired with cap space. A team can also renegotiate certain contracts with cap space, which I talk about here.
  • Dennis and Tim are both eligible for rookie extensions. Although agreeing to an extension for either player will not affect the current cap standing, it will have an impact on the 2017 off-season. I talked about this here.

Jeff's Future

I want to close here by rehashing a potential Jeff Teague extension (more detail here). Indianapolis is going to go into this off-season with cap space. They are going to be able to renegotiate Jeff Teague's salary of $8 million up to his maximum salary of about $27 million (although this must be with cap space) and then tack on two additional seasons. If they wait 6 months, then Jeff can sign for another season which would give him a 3-year extension.

Jeff is in a good position to gain some more financial security. He's also able to do this in his hometown of Indianapolis. Those are two positive things that he can takeaway from this trade.

(Edited 2016-6-24: Jeff Teague's traded player exception is for $8,000,000 as draft picks, even unsigned, do not count as salary in trades.)