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Atlanta Hawks Salary Cap: Post-Dwight Howard trade edition

Taking a look at where we are after the dust settles.

NBA: Charlotte Hornets at Atlanta Hawks Brett Davis-USA TODAY Sports

Well, for the second year in a row, the Atlanta Hawks have made a trade prior to the NBA Draft. Atlanta traded away Dwight Howard and the #31 draft pick and received Miles Plumlee, Marco Belinelli, the #41 draft pick, and (probably, explained below) a traded player exception worth $4,346,942 that expires on 2018-06-20 unless Atlanta renounces it prior to then because the traded player exception takes up cap space.

Let’s take another look at Atlanta’s cap sheet, discuss trade ramifications and restrictions, detail potential moves around the draft, and talk about the stretch provision.

Cap Sheet

Post-Dwight Cap Sheet

Player 2016-17 2017-18 2018-19 2019-20 2020-21 Notes Cap Hold
Player 2016-17 2017-18 2018-19 2019-20 2020-21 Notes Cap Hold
Paul Millsap $20,072,033 $21,472,407 - - - 17-18 PO $30,108,050
Kent Bazemore $15,730,338 $16,910,113 $18,089,887 $19,269,662 - 18-19 PO $27,134,831
Miles Plumlee $12,500,000 $12,500,000 $12,500,000 $12,500,000 - performance bonuses $18,750,000
Ersan Ilyasova $8,400,000 - - - - $12,600,000
Marco Belinelli $6,333,333 $6,606,060 - - - $12,551,514
Mike Dunleavy $4,837,500 $5,175,000 - - - 17-18 gt'd $1,662,500 $9,832,500
Kris Humphries $4,000,000 - - - - $5,200,000
Thabo Sefolosha $3,850,000 - - - - $7,315,000
Dennis Schroder $2,708,582 $15,500,000 $15,500,000 $15,500,000 $15,500,000 performance bonuses $23,250,000
Malcolm Delaney $2,500,000 $2,500,000 - - - restricted FA $3,250,000
Taurean Prince $2,318,280 $2,422,560 $2,526,840 $3,481,986 - 18-19 and 19-20 TO $10,445,958
Tim Hardaway Jr. $2,281,605 - - - - Qualifying Offer: $4,588,840 $5,704,013
#19 2017 Draft Pick - $1,936,920 $2,299,080 $2,686,560 $4,137,302 120%, 19-20 and 20-21 TO $8,059,680
DeAndre' Bembry $1,499,760 $1,567,200 $1,634,640 $2,603,982 - 18-19 and 19-20 TO $7,811,946
Mike Muscala $1,015,696 - - - - $1,471,382
Ryan Kelly $286,785 $1,577,230 - - - 17-18 nongt'd until 7/7/2017 $1,471,382
Jose Calderon $247,991 - - - - $1,471,382
Dwight Howard (TPE) $4,346,942 - - - - expires 2018-06-20
Mike Scott (TPE) $3,333,334 $3,333,334 - - - expires 2018-02-23
Mo Williams (TPE) $2,194,500 $2,194,500 - - - expires 2018-01-18
Tiago Splitter (TPE) $150,000 $150,000 expires 2018-02-22
Walter Tavares (waived) $1,000,000 - - - -
Jarrett Jack (waived) $980,431 - - - - 2017-18 Non-Tax MLE: $8,406,000
Ryan Kelly (waived) $418,228 - - - - 2017-18 Tax MLE: $5,192,000
Lamar Patterson (waived) $128,625 - - - - 2017-18 Room MLE: $4,328,000
Gary Neal (10-day) $57,672 - - - - 2017-18 Bi-Annual: $3,290,000
Matt Costello (waived) $50,000 - - - - 2017-18 Roster Charge: $815,615
Total $101,241,635 $93,845,324 $52,550,447 $56,042,190 $19,637,302
Total (Guaranteed) $91,216,859 $65,117,853 $48,388,967 $28,000,000 $15,500,000
Total (w/cap holds) $147,938,743

Currently, Atlanta has no cap space due to the $10,024,776 in trade exceptions. Trade exceptions have a cap hold and can be used to acquire a contract via trade or a waiver claim. Trade exceptions cannot be combined, so the largest contract Atlanta could acquire is for the Dwight Howard trade exception and that would be a contract valued at $4,446,942 (there’s a $100,000 buffer with trade exceptions). Trade exceptions are formed from trades in which a team that is over the cap trades away more salary than they receive -- the difference is the value of the trade exception -- although this exception expires after one calendar year.

The Salary Cap is $94,143,000 until July 1st when the moratorium starts and the 2017-18 NBA Salary Cap begins (although we don’t know what the Salary Cap will be at that time). If Atlanta decides they want to use cap space, then they can renounce all their trade exceptions which would result in the team having $2,926,141 in cap space.

Trade Ramifications

There are two ways that the Atlanta-Charlotte trade could have happened from a cap perspective. The primary way (and generally assumed) is for Atlanta to stay over the cap and acquire a traded player exception from trading away Dwight Howard for Miles Plumlee and Marco Belinelli.

Since Atlanta would be technically over the cap after this trade, they would need an exception to make this move and this particular exception comes with a restriction: Miles and Marco cannot be aggregated/combined in a trade for two months. Miles or Marco could be traded individually right now without a problem, but Atlanta cannot combine their salaries in order to receive more salary in return.

By example, this means that Atlanta could trade away Miles and his $12.5M salary for a player earning $17.5M or less. But if Atlanta wanted to receive a player worth more than $17.5M, then Miles would not be eligible to be combined with another contract in a trade. This restriction wears off on August 20th.

The other way that the Atlanta-Charlotte trade could be structured is for Atlanta to have renounced all of their trade exceptions and acquire the Plumlee and Belinelli contracts with their cap space. If this is how Atlanta structured the deal, then Plumlee and Belinelli would not be under any two month restriction and would be available to be packaged in another trade immediately.

Draft Trade Activity

As of right now, only $1,662,500 of Mike Dunleavy’s contract is guaranteed for the 2017-18 season. His contract becomes fully guaranteed on July 1st. If Atlanta wants to clear more cap space for the 2017 off-season, they could waive Dunleavy to partially avoid his $5,175,000 salary. Atlanta would also have the option to absorb his $1,662,500 fully in the 2017-18 season or stretch this amount over the next 3 seasons at $554,167 each.

Alternatively, Atlanta could look to deal Dunleavy to a team that wants to unload salary. If Atlanta stays over the cap, then another team could trade up to $7,356,250 in salaries for Dunleavy. Atlanta could also add on Ryan Kelly’s non-guaranteed contract to acquire up to $7,786,428 in salaries.

Adding on other contracts are possible, but then it becomes questionable as to why a team attempting to clear cap space would accept a guaranteed contract. And if Atlanta is OK with renouncing their trade exceptions, they could actually use cap space in receiving contracts from a Dunleavy trade. This would allow Atlanta to bring back $7,863,641 in salaries with Dunleavy outgoing and $8,150,426 if Kelly is attached.

And lastly, Atlanta can be either buyers or sellers of draft picks. They have $2.35 million in cash to use in a trade. On the other side, they can receive up to $2.75 million in a trade. These values reset on July 1st to be $5.1 million for the 2017-18 season.

Stretch Provision

The Dwight Howard trade has brought up much discussion on the stretch provision. The stretch provision is a mechanism for spreading waived salary across multiple salary cap years. This was introduced in the 2011 CBA. Previously, when a player was waived their remaining guaranteed salary continued to count towards the salary cap for each year the contract lasted for.

With the stretch provision, a team has the option to extend the remaining guaranteed salary over more years than the contract lasted for. The number of years is equal to two times the number of years remaining plus one if utilized prior to September 1st. If it is utilized after September 1st, then the current season counts fully and any future remaining years are what can be stretched.

Stretching happens in conjunction with waiving a player and it must occur within one day of waiving said player. This is also a permanent action. A team cannot decide to stretch a previously waived player’s salary nor can it amend a previously stretched salary to go onto current cap space. Any time that the stretch provision occurs, it also coincides with a player being waived.

Stretch Dwight

Season Salary Stretch 2017 Stretch 2018
Season Salary Stretch 2017 Stretch 2018
2017-18 $23,500,000 $9,463,945 $23,500,000
2018-19 $23,819,725 $9,463,945 $7,939,908
2019-20 --------- $9,463,945 $7,939,908
2020-21 --------- $9,463,945 $7,939,908
2021-22 --------- $9,463,945 ---------
Total $47,319,725 $47,319,725 $47,319,725

The stretch provision has been discussed with respect to Dwight Howard and Miles Plumlee. Dwight Howard has 2 years remaining at $47,319,725 on his contract. If he were to be stretched, then Dwight would count as $9,463,945 over the next 5 seasons on Atlanta’s cap sheet. For Miles Plumlee, he has 3 years remaining at $37,500,000 and stretching him would result in 7 years of $5,357,143 cap hits for Atlanta.

Stretch Miles

Season Salary Stretch 2017 Stretch 2018 Stretch 2019
Season Salary Stretch 2017 Stretch 2018 Stretch 2019
2017-18 $12,500,000 $5,357,143 $12,500,000 $12,500,000
2018-19 $12,500,000 $5,357,143 $5,000,000 $12,500,000
2019-20 $12,500,000 $5,357,143 $5,000,000 $4,166,667
2020-21 --------- $5,357,143 $5,000,000 $4,166,667
2021-22 --------- $5,357,143 $5,000,000 $4,166,667
2022-23 --------- $5,357,143 $5,000,000 ---------
2023-24 --------- $5,357,143 --------- ---------
Total $37,500,000 $37,500,000 $37,500,000 $37,500,000

Now the stretch provision as it relates to Dwight and Miles does not have to be used this off-season. It’s also possible that a team would not want to stretch either player until further down the line. The amount of how the stretch would apply to a team’s cap is detailed in the tables above.

The Flexibility of the Deal

Travis Schlenk is clearly one to value flexibility with respect to the salary cap. He broke down an approximately $23.5 million contract into a $6.6 million and $12.5 million. That’s an immediate savings of $4.4 million on the 2017-18 cap and more manageable contracts in a potential trade. The next year sees an $11.4 million savings on a salary cap currently projected by the NBA to be at $102 million. This does come at the cost of reducing the amount of potential cap space in 2019-20 by $12.5 million, although by that time the salary cap is projected to be up to $111 million.

This is an important time to note that cap space can be utilized for more than simply signing free agents. Cap space greatly relaxes the constraints on trades and opens up the possibility to renegotiate current contracts in a way to appease players (a-la Russell Westbrook this past off-season).

Schlenk has positioned himself to at least have the option of utilizing cap space. Prior to this trade, Schlenk’s options were more limited in the near future but now Schlenk at least has a viable option to make further trades and or signings. And that option value is certainly valuable even though it may be difficult to quantify.