The Atlanta Hawks 2020 Off-Season has come and gone in about a week’s worth of time. Since our last cap update, Atlanta traded Dewayne Dedmon for Tony Snell and Khyri Thomas (waived), drafted Onyeka Okongwu and Skylar Mays, signed Bogdan Bogdanovic to an offer sheet, signed Rajon Rondo, signed-and-traded for Danilo Gallinari, signed Skylar Mays and Nathan Knight to a two-way contracts, had Sacramento decline to match the offer sheet for Bogdan Bogdanovic, signed Solomon Hill, and will reportedly sign Kris Dunn this Friday.

Let’s recap these recent transactions and discuss the biggest issue looming over the team — a potential John Collins extension.

Current Cap Sheet

At the moment, all but the Dunn transaction is official and technically Atlanta is over the cap by only $788,055. Since they started the off-season under the cap and have moved over the cap, they gained use of the Room MLE ($4,767,000) but aside from that can only sign players to minimum salaried contracts. We’re slotting Dunn into the Room MLE since that is the only available mechanism they have to sign him to the reported two-year, $10 million contract (which rounds up to $10 million).

If Atlanta wants to make any roster moves, everyone is tradable except for the rookies (Okongwu, Mays, and Knight) until December 3rd, the new free agent signings (Gallinari, Bogdanovic, Rondo, Dunn, and Hill) until February 6th, and Tony Snell cannot be aggregated with other salaries (still OK to match salaries with him alone) until December 9th. That doesn’t leave much in salaries to trade away because the remainder are on their rookie scale contracts or minimums even if they are talented. Atlanta will have to wait a little bit of time before they can make any major shake-ups.

Transactions and Implications

Before our last group of transactions, we were still in the 2019-20 NBA Season from a Salary Cap Perspective. Atlanta was over the cap then, but we had projected they would have $43,625,811 in cap space for the 2020-21 Season. From there, Atlanta made the Dedmon transaction to close out the 2019-20 Season and were set up with $44,035,889 in cap space going into the 2020-21 Season. I’ll go through the implications for each transaction here:

• 2020-11-20: Dewayne Dedmon traded for Tony Snell and Khyri Thomas — this move had to be made using the traded player exception which allows Atlanta to take back salary up to $5 million of Dedmon’s outgoing $13,333,333. Because the trade wasn’t completed using cap space, Tony Snell is subject to the 2 month waiting period for having his salary be aggregated with other players. With a shortened season, the 2 month waiting period is condensed and he can be aggregated with others on December 9th. Khyri had a partially guaranteed contract that was slated to guarantee on November 23rd if he was not waived before then.
• 2020-11-22: Bogdan Bogdanovic signs an offer sheet for four seasons at $18,000,000 each and includes a 15% Trade Bonus — This move had to be used with cap space and implies that prior to this move, Atlanta renounced all of their rights to current free agents. Sacramento had two full calendar days to match, which they would decline to do and Bogdan officially joined Atlanta on the 25th. Bogdan cannot be traded until February 6th.
• 2020-11-23: Rajon Rondo signs to a contract for two seasons at $7,500,000 each Season and includes bonuses currently listed as Unlikely — Rondo was signed with cap space and cannot be traded until February 6th.
• 2020-11-24: Danilo Gallinari signs a three season contract for $61,425,000 with the Oklahoma City Thunder and is immediately traded to Atlanta, with cash, for a conditional second round draft pick — While Atlanta could have signed Gallinari with their cap space, and ultimately used their cap space to absorb the contract, Oklahoma City offered cash to Atlanta in order for Oklahoma City to create a Traded Player Exception for $19.5 million. This move hard capped Atlanta and they cannot spend more than $138,928,000 in 2020-21, which Atlanta is in no danger of passing. Gallinari’s contract is only guaranteed for $5 million in his final season which can allow Atlanta to move on from him with either a $5 million cap hit in 2022-23 or elect to stretch the salary at $1,666,667 over the following three seasons. Gallinari cannot be traded until February 6th.
• 2020-11-24: Nathan Knight and Skylar Mays agree to Two-Way Contracts — These do not count against the Salary Cap although both will be paid $449,155 and Atlanta can make them Restricted Free Agents at the end of their contracts. Neither can be traded until December 3rd although their salaries are not used for matching purposes in a trade as they do not count against the cap.
• 2020-11-24: Onyeka Okungwu signs his Rookie Scale Contract — This contract can be worth up to $26,422,143 over four seasons, although the last two seasons are Team Options. He cannot be traded until December 3rd.
• 2020-11-25: Solomon Hill signs a one-year contract — No terms have been reported but since Atlanta does not have cap space and are slated to give Dunn their Room Mid Level Exception, this must be a minimum salary contract. Atlanta will pay Solomon $1,620,564 although he will earn $2,320,044 (the difference paid by the NBA). There has been no reported guarantee date for Solomon’s contract, although the league-wide guarantee date is February 24th so if he is not waived by then it will fully guarantee. He cannot be traded until February 6th.
• TBD: Kris Dunn signs for the Room Mid Level Exception of $4,767,000 with a Player Option of $5,005,350 in 2021-22. He cannot be traded until February 6th.

Looking towards 2021-22

As we look at the 2021-22 season’s cap space, we now see the expectation that Atlanta will no longer have cap space with the current projection of a 3% increase in the Salary Cap. That is a situation which assumes all of the rookie scale options are picked up and John Collins has not signed an extension but Atlanta still holds his Bird Rights (and $12 million cap hold). Under this scenario, Atlanta would have access to the Non-Taxpayer Mid Level Exception (estimated $9.5 million) and the Bi-Annual Exception (estimated $3.7 million) to make additional moves. If Atlanta decides to move on from Collins, then they would only be able to clear up to $11.4 million in cap space.

This is a point in time where it starts to make sense to engage in meaningful conversations with Collins about an extension. The reason is straight-forward, Collins’ cap hold no longer has a large benefit to the team, because Atlanta cannot clear meaningful cap space by keeping his small cap hold on the books. Atlanta will be over the cap with Collins’ cap hold at the start of the 2021 Off-Season and it would take moving some combination of Gallinari/Bogdanovic/Capela in order to make Collins’ small cap hold meaningful again.

All of this is not to say that I believe it is likely that there will be an extension between Collins and the Hawks prior to his December 21st deadline. Atlanta still has some incentive to let Collins set his market by asking him to enter Restricted Free Agency and find a deal, which would be capped at four seasons with 5% raises and can start no higher than 25% of the Salary Cap. Atlanta can actually offer Collins a contract for five seasons with 8% raises with a starting salary at 25% of the Salary Cap, but if Collins is not a highly valued player across the league then it does not make sense to overpay him and hinder your cap sheet in future years.

On the flip side, any offer that Atlanta makes in an extension to Collins is likely to take the above into consideration and will have a significant discount to it. Is it likely that Collins, who has made known he believes a maximum contract should be in play for him, would accept a discount? Or might he be inclined to bet on himself and seek a maximum contract through Restricted Free Agency?

With Atlanta blowing through their 2021 cap space, it is no longer a certainty that Collins won’t reach an extension. I am on the record that if Atlanta projected to have 2021 cap space then a Collins extension simply wouldn’t make financial sense, but now that the 2021 cap space is gone it opens the door for an extension to be reached. I would lean towards an extension happening less than 50% of the time, but I would no longer be shocked to see it.