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Atlanta Hawks Salary Cap Update: Post-Jamal Crawford edition

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Taking stock of the salary cap situation.

NBA: Los Angeles Clippers at Atlanta Hawks Jason Getz-USA TODAY Sports

There have been three bits of information related to the Atlanta Hawks which have occurred this off-season.

  1. The Salary Cap was officially set to $99,093,000
  2. Paul Millsap agreed to a contract with the Denver Nuggets
  3. Atlanta will acquire Jamal Crawford, Diamond Stone, and Houston’s 2018 1st round draft pick for the cost of a 2019 draft pick in a three-way trade with Denver and the Los Angeles Clippers.

These moves cannot become official until noon on July 6th at the earliest.

A mere 14 minutes prior to details of that three-way trade emerging, I put together a hypothetical three-way trade involving those exact teams and a decent chunk of the parameters except I assumed that Atlanta would sign-and-trade Paul away. The reason why I assumed that is because it would allow for the most flexibility going forward (and clear around $14M in cap space for Denver at the cost of either Will Barton, Jameer Nelson, or Darrell Arthur).

With that in mind, let me provide an update on the current cap sheet of the Atlanta Hawks, further explain how Atlanta’s recent moves have hindered flexibility rather than enhanced, and describe how a Jamal Crawford buyout would work.

Cap Sheet

The three-way trade which brings Jamal Crawford and Diamond Stone onto Atlanta’s cap sheet can only happen through cap space because Atlanta is not trading away any salaries. This implies that Atlanta must clear $14,246,988 in cap space to absorb Jamal Crawford. Diamond Stone is on a minimum salaried contract, so Atlanta does not technically need to clear cap space for him but they will acquire his contract through cap space because that’s the way the numbers bear out.

The last primer I had on the salary cap (Post-Dwight trade) pointed out that Atlanta had $147,938,743 which included Paul Millsap’s $30,108,050 cap hold (which vanishes when he signs with Denver). That alone is not enough to create the necessary cap space for Jamal, Atlanta needs to renounce all five of their trade exceptions (from Dwight, Mike Scott, Mo Williams, Ryan Kelly, and Tiago Splitter deals) as well as their Mid-Level Exception and Bi-Annual Exception.

Except, as you can see below, that is still not enough cap space cleared in order to acquire Jamal Crawford:

Post-Crawford 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
Jamal Crawford $14,246,988 $14,500,000 - 18-19 gt'd $3,000,000 $21,750,000
Miles Plumlee $12,500,000 $12,500,000 $12,500,000 - performance bonuses $18,750,000
Ersan Ilyasova (caphold?) - - - $12,600,000
Marco Belinelli $6,606,060 - - - $12,551,514
Kris Humphries (caphold?) - - - $5,200,000
Thabo Sefolosha (caphold?) - - - $7,315,000
Dennis Schroder $15,500,000 $15,500,000 $15,500,000 $15,500,000 performance bonuses $23,250,000
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
Tim Hardaway Jr. (caphold) - - - Qualifying Offer: $4,588,840 $5,704,013
John Collins $1,936,920 $2,299,080 $2,686,560 $4,137,302 120%, 19-20 and 20-21 TO $8,059,680
DeAndre' Bembry $1,567,200 $1,634,640 $2,603,982 - 18-19 and 19-20 TO $7,811,946
Mike Muscala (caphold) - - - $1,471,382
Diamond Stone $1,312,611 - - -
Mike Dunleavy (Waived) $1,662,500 - - - 2017-18 Non-Tax MLE: $8,406,000
- - - - 2017-18 Tax MLE: $5,192,000
- - - - 2017-18 Room MLE: $4,328,000
- - - - 2017-18 Bi-Annual: $3,290,000
- - - - 2017-18 Roster Charge: $815,615
Total $77,164,952 $67,050,447 $56,042,190 $19,637,302
Total (Guaranteed) $77,164,952 $51,388,967 $28,000,000 $15,500,000
Salary Cap $99,093,000
Total (w/cap holds) $109,455,347
Cap Space -$10,362,347

Atlanta still needs to clear an additional -$10,362,347 in salaries or cap holds for the Crawford trade to work out. Which leaves us to the obvious conclusion: Atlanta must renounce 1) Ersan Ilyasova or 2) Kris Humphries and Thabo Sefolosha. While renouncing these free agents cap hold does not necessarily mean that Atlanta can no longer work out a sign and trade with these players, it does severely limit Atlanta’s ability to do so.

Renouncing a player is a way for a team to expunge a free agent’s cap hold from the teams cap sheet. At the same time, it also takes away a team’s right over said player (Bird, Early Bird, and Non-Bird rights) to be able to exceed the salary cap in signing the player. At least one Atlanta free agent will lose a form of their Bird rights, which would limit their ability to gain their full market value.

Atlanta’s Flexibility

Atlanta will now be a team that is operating below the Salary Cap and loses all of their exceptions. Some of these exceptions may have never exist — for Atlanta’s sake I hope it never did — and that is the Dwight Howard Trade Exception. I mentioned this at the time, but Atlanta had the choice to 1) create a Trade Exception worth $4,346,942 which would only be valuable if the team stays above the cap or 2) acquire the contracts of Miles Plumlee and Marco Belinelli with the team’s cap space (and thus renouncing all their trade exceptions in the 2016-17 Season).

The benefit to the second strategy is that Miles Plumlee and Marco Belinelli would be immediately eligible to be traded again and aggregated with other salaries. However, if Atlanta decided to generate a trade exception in the Dwight trade then Miles and Marco cannot be aggregated in a trade until August 20th.

We don’t know if Atlanta did or did not create a trade exception and all we can do is speculate. But if Atlanta had a reasonable idea that they would operate the 2017 Off-Season under the cap, then they were well off to not create a trade exception.

Further hampering Atlanta’s flexibility is they lose out on the ability to use the larger Non-Taxpayer Mid-Level Exception (NTMLE) — valued at $8,406,000 — and its sibling the Bi-Annual Exception — valued at $3,290,000. Instead, Atlanta will only have the Room Mid-Level Exception ($4,328,000) to work with after they utilize all of their cap space.

While there is a substantial difference in the value of the Mid-Level Exceptions, there is an additional issue with the number of years that a contract can be signed via these exceptions. The Room MLE can only be used for a contract up to 2 years in length while the NTMLE allows for 4 years in length.

This becomes problematic in signing Tyler Dorsey to a contract because a contract which is only 2 years in length would only give Atlanta Early Bird rights over the rookie. It is generally preferable to sign a rookie to at least a 3 year contract in order to gain Bird rights over them. Atlanta can still sign a 4 year contract with Dorsey through cap space, but this does limit the team’s spending power ever so slightly (and changes the order with which they must complete transactions).

On a positive note with respect to Atlanta’s flexibility is their ability to immediately re-package Jamal Crawford and Diamond Stone with anyone on the roster (except maybe not Plumlee and Belinelli) in a trade. As previously mentioned implicitly but not explicitly, Jamal and Diamond were acquired through cap space and when a player is acquired through cap space they are not under the 2 month restriction for trade aggregation. It is important to keep in mind that Jamal is taking up $14,246,988 in cap space at the moment, which is surely a limit on the team’s flexibility. And it should also be noted that the cap space Jamal is taking up is a majority of the cost of acquiring Houston’s 2018 1st round pick. Although this amount of cap space might be reduced.

A Jamal Crawford Buyout

Jamal Crawford is owed $14,246,988 this season and his 2018-19 salary is guaranteed for $3,000,000 for a total of $17,246,988 in guaranteed compensation. If Jamal wishes to forgo some of that compensation in the form of a buyout, then Atlanta would be able to reduce their cap hits and Jamal would be free to sign a contract with another team. It depends on how much Jamal is willing to forgo and if Atlanta wants to stretch the amount equally over 5 years or have the buyout applied to his current level of guaranteed compensation.

To illustrate this hypothetical, let’s say Jamal will accept $12,000,000 of his remaining salary in order for his release from Atlanta. Here would be the two options for Atlanta in a buyout:

Jamal Buyout (Hypothetical)

Current Guaranteed Non-Stretch Buyout Stretched Buyout
Current Guaranteed Non-Stretch Buyout Stretched Buyout
2017-18 $14,246,988 $9,912,679 $2,400,000
2018-19 $3,000,000 $2,087,321 $2,400,000
2019-20 - - $2,400,000
2020-21 - - $2,400,000
2021-22 - - $2,400,000
Total $17,246,988 $12,000,000 $12,000,000
Agreed Buyout: $12,000,000 (Hypothetical)

Effectively, Atlanta is deciding between whether or not they want to use cap space now or later. If Atlanta wants the cap space now, then they should stretch Jamal’s buyout. But given that the team was recently willing to take on the contract of Miles Plumlee to rid themselves of Dwight’s large salary obligation, I would imagine they prefer the cap space in the future.

Even in this hypothetical situation, the above amounts are not correct. This is because of a clause called the “right of set-off” which allows the waiving team to off-set some of the future salary earned by the player they waived. Jamal and Atlanta do have the option to waive this right — which would then make the above amounts correct — but they do not have to.

The cap hits for Jamal would be adjusted by half the salary that Jamal earns in excess of the 1-year veteran minimum ($1,312,611). In actual numbers, if Jamal signs his own veteran minimum contract ($2,328,652) then Atlanta would be able to forgo paying Jamal an amount equal to $508,021. This amount is only applied after the season, so Atlanta would not see an cap benefits for 2017-18 but would in future years.

If Jamal was stretched, then each year would have its cap hit reduced to $2,298,396. If Jamal were not stretched, then the 2017-18 cap hit would be reduced by $419,654 (again, after the season so no cap space gained) and the 2018-19 cap hit would be reduced by $88,367 (which would actually be realized).

Stay tuned to Peachtree Hoops for all the latest.