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Atlanta Hawks salary cap: Evaluating Tyler Dorsey’s contract

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Sorting through what the Hawks decided to do with the team’s second round pick.

NCAA Basketball: Oregon at UNLV Joshua Dahl-USA TODAY Sports

The Atlanta Hawks officially announced the signing of 2017 second round pick Tyler Dorsey last week and this was an errant move. I am not referring to Tyler as a player or even as a draft pick. I am specifically referencing Atlanta’s timing of this contract. There is literally no reason to have done this before making other moves and it unnecessarily cost Atlanta $815,615 in cap space.

Per Chris Vivlamore of the AJC, Tyler agreed to a two-year minimum contract. This is the kind of contract that falls into what is called the “Minimum Player Salary Exception” (7.6.i in the CBA). For a contract to fall within this exception, it needs to be no more than 2 seasons and at the player’s respective minimum salary. It is an exception to the salary cap which means that a team can sign as many players as they would like via this exception. Even over the cap. It would make sense for a team to use this exception after using up all of their current salary cap space. But Atlanta did not and, frankly, it makes no sense.

Tyler Dorsey is not getting any more money by signing a minimum contract now than he would in a few weeks once Atlanta presumably will use the rest of their cap space. Back channels have leaked information to media to indicate that a contract has been agreed to by both parties, but it is not official and doesn’t need to be. Atlanta is not at risk of losing Tyler to Europe because Tyler’s agent would risk severely harming their reputation by backing out of a deal. And Tyler is not at risk of having Atlanta pull an offer for similar reasons. There is literally no reason for this signing to be officially completed before Atlanta has used their remaining cap space.

Those are the facts, but allow me to give the gory details of how I came to that conclusion. I will detail Atlanta’s current set of moves that we know about. Then detail the official moves that have been announced and how Atlanta’s cap sheet currently looks. I will further describe how Atlanta could have used cap space in a Tyler deal that makes sense for them, but probably not for Tyler. And then I’ll close with the implications of a two-ear deal for Tyler as it relates to his potential free agency in the 2019 off-season.

Known Atlanta Moves

In a roughly chronological order of moves, here are the known moves that relate to the Atlanta cap sheet this off-season:

  • Paul Millsap agreed to a contract with the Denver Nuggets (with no agreed upon sign-and-trade), which implies Atlanta would renounce his $30 million cap hold.
  • Atlanta hopped into a three-way trade with the Los Angeles Clippers and Denver Nuggets to acquire Jamal Crawford, Diamond Stone, and Houston’s 2018 first round draft pick. Because all that Atlanta sent away was a 2nd round pick (from Washington in 2019), Atlanta must have acquired all salaries via cap space. This implies that Atlanta needed to either renounce Ersan Ilyasova (they didn’t) or Kris Humphries and Thabo Sefolosha (they did).
  • Tim Hardaway Junior agreed to an offer sheet with the New York Knicks of $71 million over 4 years. Atlanta declined to match and thus the cap hold of Tim Hardaway Junior disappeared.
  • Atlanta came to a buyout agreement with Jamal Crawford. Chris Vivlamore reported that Jamal Crawford’s cap hit for this season will be around $11 million which would imply a cap hit of around $2.5 million for 2018-19. And Eric Pincus eventually gave the correct value of $10,942,762 for this season. I’ll eventually write more detail on this topic.
  • Atlanta agrees to a 2 year minimum contract with Tyler Dorsey.
  • Atlanta agrees to re-sign Mike Muscala to a $10 million contract over 2 years with the second year a player option. Because the second year is a player option, it’s technically a one-year contract where Muscala will have Bird rights at the end. That implies Mike has an implicit no-trade clause. Mike currently has a cap hold of $1.5 million, so Atlanta is wise to use up their cap space and then sign Mike via his Bird Rights. When signing via Bird Rights, Atlanta can exceed the cap in order to give Mike his contract with a starting salary around $4,807,693 to $5,000,000 (he gets 8% raises from Bird rights). Because of CBA minutiae, an option year cannot decline in value. So Mike cannot have his first year salary higher than $5,000,000.
  • Atlanta agreed to a contract with Dewayne Dedmon worth $14 million over 2 years with the second year a player option. This must be signed via cap space, there are no exceptions available to Atlanta to use for a contract of this magnitude. The same salary restrictions apply to Dewayne except he can only receive 5% raises, so his salary could range from $6,829,269 to $7,000,000.
  • Atlanta agreed to a one contract with Ersan Ilyasova worth $6 million. Ersan previously had a cap hold of $12.6 million. Atlanta will end up signing him with cap space, there is no reason to sign him via Bird rights because it’s not possible for Atlanta to exceed the salary cap after this signing, they’ll actually be opening up cap space with this signing. And also, this contract gives Ersan an implicit no trade clause because it is for 1 year and he will have Bird rights at the end of it.

The chronological order is not of major importance. Atlanta can structure their official signings in a way to maximize cap space. And yet they did not, which was dumb.

Official Announcements

At this time, there have only been three official announcements which have been acknowledged by Atlanta’s public relations department: John Collins signs his rookie deal, the Crawford/Stone trade, and Tyler Dorsey signed his contract.

They Hawks also implicitly acknowledged that Paul Millsap, Tim Hardaway Jr., and Thabo Sefolosha are no longer on their cap sheet with their tributes. You can always check the “official transactions” via NBA.com. Once something is official official, it goes onto the cap sheet. Given all of this, we have an official cap sheet for Atlanta at the moment which looks something like this:

Post-Dorsey Cap Sheet

Player 2017-18 2018-19 2019-20 2020-21 Notes Cap Hold
Player 2017-18 2018-19 2019-20 2020-21 Notes Cap Hold
Kent Bazemore $16,910,113 $18,089,887 $19,269,662 - 19-20 PO $27,134,831
Dennis Schroder $15,500,000 $15,500,000 $15,500,000 $15,500,000 performance bonuses $23,250,000
Miles Plumlee $12,500,000 $12,500,000 $12,500,000 - performance bonuses $18,750,000
Marco Belinelli $6,606,060 - - - $12,551,514
Malcolm Delaney $2,500,000 - - - restricted FA $3,250,000
Taurean Prince $2,422,560 $2,526,840 $3,481,986 - 18-19 and 19-20 TO $10,445,958
John Collins $1,936,920 $2,299,080 $2,686,560 $4,137,302 19-20 and 20-21 TO $8,059,680
DeAndre' Bembry $1,567,200 $1,634,640 $2,603,982 - 18-19 and 19-20 TO $7,811,946
Mike Muscala $1,471,382 - - - CAPHOLD! $1,471,382
Diamond Stone $1,312,611 - - - $1,514,547
Tyler Dorsey $815,615 $1,351,118 - - $1,603,638
Roster Charge #1 $815,615 - - - One fewer than 12
Jamal Crawford (buyout) $10,942,762 $2,304,226 - -
Mike Dunleavy (waived) $1,662,500 - - -
Total $76,963,338 $56,205,791 $56,042,190 $19,637,302 2017-18 Non-Tax MLE: $8,406,000
Total (Guaranteed) $76,963,338 $52,044,311 $28,000,000 $15,500,000 2017-18 Tax MLE: $5,192,000
Salary Cap $99,093,000 $102,000,000 $108,000,000 $113,400,000 2017-18 Room MLE: $4,328,000
Total (w/cap holds) $76,963,338 2017-18 Bi-Annual: $3,290,000
Cap Space $22,129,662 2017-18 Roster Charge: $815,615

(Ersan hasn’t officially signed, and there’s no reason to keep his cap hold on the books when he will re-sign at a lower value. Atlanta can renounce him and that has no effect on his Bird rights for next year. He will re-acquire Bird rights after completing his one-year contract.)

There are normally roster charges for instances when an NBA team has fewer than 12 players or free agent cap holds. Officially, the signing of Tyler removed a roster charge. But we also know that Dedmon and Ersan are missing from this sheet. Tyler didn’t actually remove a roster charge and that cannot explain the signing. But Ersan and Dedmon will be signed via cap space. Although the “official” cap space at the moment is $22,129,662, those two signing will remove about $13 million of that. Which puts the team at $9,945,277. But they should have $10,760,892 because Tyler should not have been signed yet.

What would be helpful with cap space and Tyler?

All contracts signed via cap space can be for between 1 and 4 years. The Minimum Player Salary Exception cannot exceed 2 years and it is also for the minimum salary. So an obvious reason why signing Tyler with cap space could be helpful is if Tyler was receiving a 3rd or 4th year. Or if Tyler signed for more than the minimum. But he didn’t. And that’s puzzling.

I can imagine some might try and point out that Tyler is earning more money after signing his contract, but this is not right. Certain contracts can have up to a 50% advance in their salary prior to October 1st. But this isn’t the case with minimum salaried contracts. A minimum salary contract can only receive a 7.5% advance in their salary. That is $61,171. Which is a substantial figure, but Tyler Dorsey’s agent is a part of a large agency. If he was in dire straits for money, could they have not given him an advance? Which would also cull goodwill with Atlanta by delaying the signing. If the literal cause for a Tyler signing this early is because of a little more than the median United States income, then that itself is puzzling as well.

What’s the deal with two-year contracts?

Tyler has no NBA experience. That is important for calculating a player’s years of service. For all non-first round draft picks, a player is subject to Restricted Free Agency when they are a free agent and have 3 or fewer years of experience. That implies that Tyler will be a free agent at the end of his first Atlanta contract. And if Tyler signs a Qualifying Offer, then the next off-season he will again be a Restricted Free Agent. That is because he will have 3 years of experience and he’s still subject to Restricted Free Agency.

One potential issue with a two-year contract is that Tyler Dorsey will only have Early Bird Rights with his contract. This likely triggers PTSD with Hawks fans, but it’s not that bad in this situation. Early Bird Rights allow a team to exceed the salary cap by the greater of 175% of previous salary or 105% of the Average Player Salary for the previous year. Since Tyler is at the minimum, it’ll be at 105% of the Average Player Salary. This amount should be enough for Atlanta to re-sign Tyler if they are above the Salary Cap at the time. But there’s an additional benefit to having Tyler as a free agent with 2 years of experience.

Arenas Provision

The maximum salary that another team can offer Tyler in an offer sheet (because he’ll be a Restricted Free Agent) is limited to the Non-Taxpayer Mid Level Exception (NTMLE) in the first year of an offer sheet. We won’t know that value until the 2019 off-season starts but the NTMLE for this off-season was $8,406,000. And as a nice caveat, the Early Bird exception can be used to match an offer sheet even if the NTMLE ends up being for more than the allotted 105% of the Average Player Salary.

Tyler’s offers will undoubtedly suppressed because of this provision. So that is a nice thing for a team to have. And it lessens the blow of not gaining a 3rd year in Tyler’s contract. Because it is clear that having a 3rd year would be helpful. In fact, one of the most ideal contracts of Tyler for Atlanta should be a 2 + 1 non-guaranteed contract where the third year is a Team Option. This way Atlanta could control whether or not Tyler is an Arenas RFA or a regular RFA. Alternatively, a 3 + 1 wouldn’t be too shabby either because of cost control and the option to make Tyler an RFA if need be (this is what Muscala had).

Tyler does not need to accept a 2+1 contract offer. In fact, he does not need to accept any offer from Atlanta. He only needs to accept an Atlanta offer if he wishes to play in the NBA because Atlanta has exclusive rights to negotiation of an NBA contract over Tyler. But, again, why did Atlanta offer a contract which could fit under the Minimum Player Salary Exception prior to the team utilizing all of their cap space?

The only obligation that Atlanta has to Tyler Dorsey is that they must submit a Required Tender prior to September 6th (10.4.e). A Required Tender is a one-year non-guaranteed minimum salaried contract. Tyler can accept this or not. His alternative is presumably a European contract. But I am skeptical that a European club would be offering more than $815,615 to Tyler, although it is a certainty that the guaranteed money would be more since it is 0 with a Required Tender. But if Tyler accepts the Required Tender and is eventually cut from Atlanta, he is then free to negotiate a contract with any of the 29 remaining NBA clubs.

Conclusion

There is only one reason I can find for Tyler signing before Atlanta has utilized all of their cap space. And that is if Atlanta already knows they won’t utilize all of their cap space this off-season and is saving it for being a useful trade partner for this year.

But if this is the case, then it makes no sense as to why Atlanta hasn’t officially announced the signings of Dedmon, Ilyasova, and Muscala. With the exception of Muscala, the others must be signed with cap space. And to Muscala, if they want to exceed the cap to re-sign him then wouldn’t they want the most available cap space to begin with?

In the end, it’s pretty obvious. Atlanta made an $815,615 mistake by signing Tyler too early. That was an error but it is not the end of the world, as it is less than 1% of the salary cap. And yet — especially for someone preaching flexibility — that 1% can make all the difference.