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Reviewing Atlanta’s Salary Cap situation for 2020-21

Atlanta Hawks General Manager Press Conference Photo by Scott Cunningham/NBAE via Getty Images

The NBA and NBPA recently agreed to an amendment to their current Collective Bargaining Agreement (CBA) to make adjustments to the Salary Cap and Luxury Tax for the next four Seasons as a way to correct for the Coronavirus pandemic that has shut down in-person activities across the country. The NBA, and by extension its players, have already taken a hefty financial hit from the 2019-20 Season. The NBA lost out on 156 Regular Season games and not having fans for roughly a third of the Season which led to about a 10% decrease in the NBA’s raw revenues. With the expectation that the upcoming 2020-21 will have a significant portion of its games played with limited to no fans, there needed to be an adjustment to how the NBA set its Salary Cap in order to account for an expected decrease in revenues. We’ve already discussed the mechanisms behind Basketball Related Income (BRI) and Salary Cap as well as what we expected for future Salary Caps back in May, so read that if you want a deeper understanding.

We now know that the BRI for 2019-20 was $6.865 billion which is down from the original projection from the NBA of $8.034 billion at the beginning of this year. This is actually the lowest BRI amount since the 2016-17 Season which was $6.574 billion. Because of these significant and unanticipated losses, the NBA and NBPA agreed to artificially set the Salary Cap at $109.14 million for the upcoming 2020-21 Season and put into place a minimum of 3% increase and maximum of 10% increase over the following 3 Seasons (through 2023-24 Season). We can see the expected maximum and minimum value of the Salary Cap into the future, assuming the NBA rounds up for the minimum to the nearest $1,000 while rounds down for the maximum:

Future NBA Salary Caps

Season Minimum Salary Cap Minimum Luxury Tax Maximum Salary Cap Maximum Luxury Tax
Season Minimum Salary Cap Minimum Luxury Tax Maximum Salary Cap Maximum Luxury Tax
2019-20 $109,140,000 $132,627,000 $109,140,000 $132,627,000
2020-21 $109,140,000 $132,627,000 $109,140,000 $132,627,000
2021-22 $112,415,000 $136,606,000 $120,054,000 $145,889,000
2022-23 $115,788,000 $140,705,000 $132,059,000 $160,477,000
2023-24 $119,262,000 $144,927,000 $145,264,000 $176,524,000

This also implies that we know what the Maximum Salary would be for each year. To recap, a player’s years of service determine if their Maximum Salary is 25% of the cap (0 to 6 years); 30% of the cap (7 to 9); or 35% of the cap (10+). Of particular importance in Atlanta will be John Collins in the 2021 off-season where he could have a Maximum Salary between $28,103,750 and $30,013,500, which we’ll go more in-depth on later in this article.

It is unclear if we will see those years play out under the same CBA as both the Owners and Players will have the option to terminate the CBA over the following three Seasons. While we cannot be certain what will happen in the future, we’ll review the upcoming Season for the Hawks from a Salary Cap perspective and assume the current agreement lasts through 2023-24.

Current Salary Cap Sheet

Unfortunately for the public, but fortunately for our friend and former Peachtree Hoops staffer, Jeff Siegel of Early Bird Rights has signed with Klutch Sports Group and his salary cap sheets are no longer available. This means I have to dust off my Excel skills in order to keep track of transactions for the Atlanta Hawks and I am not as skilled in visually formatting Excel sheets.

Our current cap sheets are a step down from before, but we still have all the relevant information for the team. Atlanta is looking at $63,717,569 in total guaranteed Salary for this upcoming Season.

Atlanta Hawks Cap Sheet as of 2020-11-15

Player 2020-21 2021-22 2022-23 2023-24 Notes Cap Hold QO
Player 2020-21 2021-22 2022-23 2023-24 Notes Cap Hold QO
Clint Capela $16,000,000 $17,103,448 $18,206,897 Unlikely bonuses $27,310,346
Dewayne Dedmon $13,333,333 $13,333,333 Only $1M gtd 21-22, unlikely bonuses $20,000,000
De'Andre Hunter $7,422,000 $7,775,400 $9,835,881 Rookie Scale, 21-22 and 22-23 Team Options $29,507,643 $12,973,527
Trae Young $6,571,800 $8,326,471 Rookie Scale, 21-22 Team Option $24,979,413 $11,040,901
Pick #6 $5,813,640 $6,104,280 $6,395,160 $8,109,063 Rookie Scale, 22-23 and 23-24 Team Options $24,327,189 $10,817,490
Cam Reddish $4,458,000 $4,670,160 $5,954,454 Rookie Scale, 21-22 and 22-23 Team Options $17,863,362 $8,109,966
John Collins $4,137,302 Rookie Scale, extension eligible 2020 off-season $12,411,906 $5,899,793
Kevin Huerter $2,761,920 $4,253,357 Rookie Scale, 21-22 Team Option $12,760,071 $6,065,287
Brandon Goodwin $1,701,593 Only $100K gtd 20-21, estimated cap hold $1,669,193 $2,126,991
Bruno Fernando $1,517,981 $1,782,621 estimated cap hold $1,752,653 $2,228,276
Total $63,717,569 $63,349,070
Total (Guaranteed) $62,115,976 $51,015,737
Total (w/cap holds) $117,202,355 $75,760,976
Salary Cap $109,140,000 $112,415,000 $115,788,000 $119,262,000
Luxury Tax $132,627,000 $136,606,000 $140,705,000 $144,927,000
Expected Cap Space $43,625,811 $45,286,293
Maximum Cap Space $44,229,094 $58,623,465

The expectation entering the 2020 “Off-Season”, which begins on November 22nd, is that the Hawks will have $43,625,811 in cap space. This is assuming that the team will not waive Brandon Goodwin who is currently guaranteed $100,000 on his contract but could be waived to avoid paying his full $1,701,593 Salary. If Brandon Goodwin is waived then the team would incur a roster charge for having fewer than 12 contracts on their cap sheet so they would only increase their cap space up to $44,229,094 which is to say that Goodwin would not be waived for cap purposes but instead because the team simply does not view him as someone who could contribute for the team.

The expectation is also that the team will not tender Qualifying Offers to DeAndre’ Bembry ($3,752,339), Skal Labissiere ($3,484,883), nor Damian Jones ($3,457,586). This does not mean that the team cannot re-sign these players, but Atlanta would lose the ability to match any contract offers those players receive (i.e. they would be Unrestricted Free Agents). The reason why I do not assume Atlanta will tender Qualifying Offers is because their cap holds are actually quite large (Bembry - $7,811,946; Labissiere - $7,016,541; Jones - $6,915,171) which takes away from cap space and because only Labissiere showed up to the Delete Eight mini-camp. Renouncing their rights on these players will free up cap space for the Hawks to make a large signing or bring in a high salaried player via trade.

Atlanta is primed to make a large trade/signing this off-season with the roughly $43.625 million in cap space. If/when the team uses all of their cap space, they will also have the ability to sign players to their Room Mid-Level Exception valued at $4,767,000 or to minimum salaried contracts. Glen Willis recently wrote about the types of players that Atlanta may be interested in for filling out their roster which I encourage everyone to read. However, I do not believe it is a certainty that Atlanta will be taking on large salaries that will be guaranteed in the next off-season and this entirely hinges upon a potential Collins extension and the last bit of Atlanta’s potential cap space.

John Collins and the 2021 Off-Season

Collins will be eligible to sign an extension this off-season. We’ve already discussed this in-depth in our last 2020 Off-Season primer back in March but I’ll rehash the main points here:

  1. Collins has a cap hold of $12,411,906 for the 2021 Off-Season.
  2. Extension can be for up to four additional Seasons but must be signed before the start of NBA Season (December 21st). However, if Collins becomes a free agent in 2021 he can sign a contract of up to 5 Seasons with Atlanta.
  3. Collins has a cap hold of $12,411,906 for the 2021 Off-Season.
  4. Can sign for up to 25% of Salary Cap (starts between $28,103,750 and $30,013,500) with raises of up to 8% a Season (maximum value between $125,904,800 and $134,460,480 over 4 Seasons) in an extension. If Atlanta and/or John waits until the 2021 Off-Season, the maximum total values can be between $163,001,750 and $174,078,300 over 5 Seasons.
  5. Collins has a cap hold of $12,411,906 for the 2021 Off-Season.
  6. Non-Atlanta teams can only offer 5% raises to Collins, which would put the maximum value of his Max between $120,846,125 and $129,058,050 over 4 Seasons.
  7. Collins has a cap hold of $12,411,906 for the 2021 Off-Season.

To reiterate, Collins has a cap hold of $12,411,906 for the 2021 Off-Season. What this means is that if Atlanta does not agree to a contract extension with Collins, he will count at $12,411,906 on Atlanta’s cap sheet when the 2021 Off-Season begins. As long as Atlanta keeps his cap hold on their cap sheet, Atlanta can spend whatever cap space they have in the 2021 Off-Season and then re-sign Collins to any contract with a starting value of up to $28,103,750 and $30,013,500 depending on the Salary Cap.

At this current moment, I have the expectation of Atlanta to have a minimum of $45,286,293 in cap space for the 2021 Off-Season. This assumes that Atlanta waives (but not stretch) the contract of Dewayne Dedmon that is only guaranteed for $1,000,000, keeps Collins cap hold on the books, does not include any potential guaranteed salary signed/traded for in the 2020 Off-Season, and omits the value of their 2021 Draft Pick. Clearly the amount of cap space could increase if the Salary Cap rises by more than 3% or Atlanta sheds some Salary. On the other side, there could be a fall in cap space if Atlanta signs for or trades for guaranteed Salary that extends into the 2021-22 Season and beyond.

All of this is to say that the 2021 Off-Season is likely to be the last time the Hawks will have significant cap space for a while if they’re moving into the competitive spotlight. The 2021 Off-Season is when Atlanta will be able to offer Trae Young an extension (almost surely a Designated Rookie Scale Extension) as well as negotiate an extension with Kevin Huerter. That is also the time when Collins would have a significantly larger Salary and the team will have, at some point, used up the cap space that they currently have in 2020. All of this hinges on Collins paltry cap hold in 2021.

Other Oddities

Another topic to look for in the 2020 Off-Season is what the Hawks do with their 2021-22 Team Options on Trae Young, Kevin Huerter, DeAndre’ Hunter, and Cam Reddish. Typically, a team has until Oct. 31 to pick these options up, but that date has long passed because of the pause on NBA transactions due to the Coronavirus Pandemic. Instead, it appears that the NBA will adjust the deadline for picking these options up for sometime in late December when the NBA Season begins. I’ve likely just wasted 50 or so words explaining a non-issue, because the Hawks will be picking up these options so long as none of the four players have a career ending injury or get suspended for some egregious offense.