Hornets CBA FAQ Part Two: Buyer’s Remorse, Gordon Sign then Trade, Cap Space, Nick Collison

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Published: July 4, 2012

We take another look at the parts of the CBA that affect the Hornets near-term and mid-term.

Larry Coon does a fantastic job covering the CBA, but we understand that it is a little daunting to go through the entire thing. Some misinformation is passed around by Hornets fans on some particular topics, but we can have one place where we can set it all straight. With that in mind, we have collected the most common questions from Hornets fans on the new CBA, on how it specifically affects our players and/or Demps’ options. Without further ado:

Q: Can the Hornets just match the Suns offer and then trade him wherever they want?

A: Yes and No. Mostly no. First of all, if they do match the Suns offer sheet, they can not trade him to the Phoenix Suns for the duration of the contract (4 years). However, they can match the offer sheet and then engage in trade talks with the other 28 teams in the league immediately. As always, there is a catch. Per the new CBA, Eric Gordon would have veto power on any trade for the next year. So, the idea of matching the offer sheet and sending him to Charlotte for MKG is nice and all, but Gordon would have to agree to go play for MJ. Not likely. After that year is up, the Hornets are free to trade Gordon anywhere without his consent until the final year of his deal.

So the scenario is similar to a sign-and-trade, as both the team and Eric would have to agree to the deal, at least in the first year. It’s just that Phoenix would be removed from consideration, per the CBA, if the offer sheet is signed.

Since nothing has been officially signed yet, however, Dell Demps can get on the phone with the Suns and work out a sign and trade in which the Hornets give him the same contract and move him for pieces if they prefer to have player’s whose bodies and hearts are both in the same city. Again, Dell holds all the cards, the only question is how he wants to play them.

Q: What’s the deal with matching salaries for this sign-and-trade possibility?

A: As far as match goes, this is is complicated as many teams have large free agent amounts that can easily come off the books quickly. The Suns have those of Steve Nash, Robin Lopez, and others. If we just focus on them an assume neither team is going to go into the tax, then we have three basic cases. Remember, it’s always the amount after the trade that determines if you are over the cap . . . groceries fit in your bag if they are all in after you fill it; how much room there was before is immaterial.

1) If the team adding salary ends up under the cap, then the salaries don’t have to match, as long as the team losing salary can make it work with their exceptions. It’s not clear which of us will be adding salary, so this analysis ends here.

2) Assuming the team adding salary is over the cap and the deal is moves salary to them that is $9.8 million to $19.6 million, then the other team can take on that salary plus $5m. For a Gordon max deal, this is about $18m the Hornets can take back. On the reverse side, the Phoenix sends us a smaller amount back, 150% of this amount plus $100k has to equal Gordon’s contract. Thus, we have to take at least about $8.6m

3) Assuming the team adding salary is over the cap and the deal moves salary to them that is over $19.6 million, then the other team can take on 125% that outgoing salary plus $100k. The max return starts at $24.6m

Q: If the Hornets sign Gordon to a fully guaranteed, high-dollar deal and have buyer’s remorse. If they can’t unload the contract, what are their options?

A: In this case, the Hornets have a few options.

The basic option is to just let him play out his contract. Teams have players on their team that make too much money for not enough production. The bigger the disparity, the more bitter the taste, but it’s an option that is completely in the control of the team.

An alternative is to waive him and “stretch” his contract. Previously, a waived player would still count fully against a team’s cap and would receive his compensation, perhaps reduced depending on the player’s future employment. Stretching was allowed in the new CBA. This allows the salary to be spread out over a longer period of time than in the original contract, both in terms of actual cash flow in the terms of the player’s book value.

The total of the player’s remaining salary is spread out over 2n+1 seasons, where n is the number of seasons left on the player’s contract, if the process starts before September 1 of the NBA season. If it is exercised after that, the current season is paid out normally and the remaining seasons are stretched.

For example, if they decide to waive Gordon and stretch his deal after 2 years into a new 4 year deal, the total remaining balance is paid out over 5 years, not 2. This reduces the effect of the Hornets salary to 2/5 of its original average effect. In general, the reduction will be to between 1/3 and 1/2 of the original average annual burden. Gordon would receive every penny promised, just over a longer time, and can still benefit from the waiver process.

Consider the particular case of Gordon making $12m and $13m in the last two years of his deal, and they decided to waive him and stretch the contract. Gordon would count for $5m per year for 5 years. This is the $25m owed him spread over 5 years, one more than twice the number of years left on the deal.

Related to this is a buyout. These are negotiated, so it is hard to gauge the financial effects on the team, but if he’s underperforming, it’s hard to imagine that Gordon would accept a buyout for significantly less than he was owed, as he’d be hard pressed to make the money up on another deal.

Q: How much cap room do the Hornets have?

A: None, but maybe up to $11,128,748. This may seem surprising to you, but until we know they have renounced players, they have none.

The Hornets have $29,742,240 in committed salary to players under contract. This increases to $37,315,252 when the scale for our first round draft picks (not the final contract value until they are signed) and the roster charge for having fewer than 12 players under contract is factored in. Additionally, factoring in Gordon’s $9,577,960 free agent amount, we arrive at $46,893,212 as our salary number. Once we factor in our other free agent amounts, we blow past the $58,044,000 salary cap, without even factoring in our exceptions.

The Hornets have many options before them and just a few constraints, the main one being the minimum salary of $46,435,000.

The Hornets can renounce their mid-level and bi-annual exceptions to sign a free agent for up to $11,128,748 in first year salary, with increase equal to 4.5% of this value. They can then sign Gordon, or do a sign-and-trade, for whatever amount using the Bird exception, and fill the roster out with rookies using the rookie exception.

If they just send Gordon off by not matching, we remove his free agent amount and the roster charge increases, leaving a cap figure of $20,255,144.

Taking an antipodal approach, the Hornets can not renounce their exceptions, stay over the cap, and fill out the roster using trades, the mid-level exception, and bi-annual exception, staying above the cap at each step in order to maintain access to these exceptions.

The Kaman and Landry free agent amounts can keep the Hornets over the cap even when sending Gordon out for nothing, by the way.

There are variations on these themes, but these are the two major groups of strategies: above the cap and below the cap.

The above will change if the cap changes.

Q: Can the Hornets do a “Nick Collison” deal?

A: Nick Collison’s deal with the Thunder contained a large signing bonus, then had a relatively salary going forward. This is advantageous in that is allows cap space in one year to used in a fashion in future years.

The specifics depend, of course on the player’s deal at the time, but here are the requirements and parameters in order to get this sort of deal with a declining salary.

The player cannot be on a rookie deal

The player must be at least three years into an at least four year deal.

The player must be amenable to receiving a lump sum payout, then declining payments.

The Hornets must have enough cap room this season to give a bonus that makes the total value of the contract acceptable to the player.

The Hornets will be limited in their moves through the year by using cap space in this manner and renouncing some of their exceptions.

There is exactly one player on team eligible for such a deal: Jarrett Jack. We’ll revisit this if we end up under the cap after filling out the roster.

Mike and Jason did these.

36 comments
Drew
Drew

Suns fans are hating on NO in great numbers on ESPN message boards, not many of them seem to understand the new CBA rules. Thanks guys for doing your best to educate us on this stuff

Josh
Josh

Great article. Thanks, Jason. It really cleared up a lot of misconceptions and stuff.

Darren
Darren

He just had to fall in love with a team that has absolutely ZERO assets. . . Thanks Eric Gordon, you monstrous 9 game playing bum.

HUBERT
HUBERT

wow, you are wrong about a few things. Dell doesn't have any cards to play. he has a player who does not want to be there. he has a league that knows he doesn't really want to pay gordon a max deal. he has a team in PHX that doesn't lose anything they don't currently have if NO matches. He has young potential franchise players that he needs to make sure aren't tainted by a guy in the locker room that has a grudge. He has no cards to play. also Suns are $23 M under the cap, so they can take on salary without giving back. A SNT doesn't have to match.

504ever
504ever

Jason, What is the penalty per player for not having the minimum number of players? I'd like to compare it to the likely $0.75M-$1.0M salary of the Thomases and Dysons of the world.

jjmartin
jjmartin

Ya I was wondering if the Hornets could get in on this. They are looking for a third team to join.

nola hustle
nola hustle

Gordon offered 14.5 M a year. Is that really so high for a guy capable of scoring 25 log AND plays nice d? batum offered 12 a year. Like it or not salaries continue to spiral and you can not just attain great players without taking out the checkbook. The word max seems tobdisturb people as in "he's not a max player" But focus on the $ amount and is the player worth it. In EJ's case you'd be hard pressed to justify that he's not worth 14.5 in this league.

Chuck
Chuck

Question: can the Stretch provision be used more than once? I was under the impression it was like the Amnesty clause and could only be used once on a contract signed before the new CBA took effect, but that's not correct based on how you've outlined it. So do teams have an unlimited amount at their disposal? Not that this is something we would ever want to have to use multiple times...

Steper
Steper

Hey JC, do you ever proof read what you type? A lot of bad english here man and comments that don't make a lick of sense!

David
David

The fans crying over cp3 leaving had to suffer through a 21 win season too. Rather not have another, thanks.

dalshearer
dalshearer

If he wants out let him go; He is awesome when he is on the court, but that aint a whole lot. Seems mighty risky to offer a max deal to a player with injury issues. He tells the Suns he hopes the Hornets don't match the offer, I don't know if he's just playing a game with them to get a max offer from someone, to get the most out of the Hornets; either way it's pretty shady. Let him walk, or if Dell can work out a sign a trade before he signs the offer, even better. And it makes the Austin Rivers pick that much better for all you Rivers haters.

J
J

Some of the same fans that was crying over CP3 are crying over Gordon.Let that Hoosier head go.

SP
SP

That surprised me about Gordon having some control over where he's traded this year, so basically we need him to sign off on any trade we make in the first year of his new contract? And regardless of what happens now the only way he can end up with Phoenix is by either not signing the offer sheet with them, or by Demps declining to match their offer sheet?

Jason Calmes
Jason Calmes

We try. And we try to respond to you guys. Thanks for reading.

Michael McNamara
Michael McNamara

I personally disagree. I love Kendall Marshall, and with prospect of getting Shumpert and maybe Dragic, Phx can part ways with him. Also, Dudley and Gortat have two of the best contracts in the league relative to their production. Marshall, Gortat, and a 2013 first is more than enough for me, especially when you consider the Hornets would also be saving about 4-5 million per year w/ those two vs. Gordon and can use that money elsewhere. I actually prefer that deal to any deal with Houston.

CarnbY
CarnbY

I think you overestimate how disgruntled Gordon will be if he stays with the Hornets. As long as he gets his max contract he'll more than likely be perfectly happy. PHX on the other hand will be stuck with a bunch scrubs whose deficiencies will be exposed now that Nash is gone, so good luck with that! Oh, and then there's Beasley, haha ;)

Jason Calmes
Jason Calmes

Nothing you say contradicts anything in the piece, except what you are wrong about, like free agent amounts you don't comprehend.

Jason Calmes
Jason Calmes

You have to have the min under contract. The NBA will actually financially help you do this. Also, while you don't have the min, there is a "roster charge" that accounts for missing minimum contract players in your salary figure. Ergo, you can never have "the entire cap" worth of cap space.

Mark
Mark

His production is high, but his career has been indicative of a penchant towards injury. If a player is not playing, his production is nothing; that's the biggest caveat on not signing him max contract.

Jason Calmes
Jason Calmes

It can be used for each waiver. I think it's the default.

Jason Calmes
Jason Calmes

And you have some grammar issues, too, mr glass house. Want them deleted to save you the shame?

Jason Calmes
Jason Calmes

Example? Or are you just mad? Yes, I proof read and, I make mistakes. Provide the errors you see nicely and I'll make the changes.

mazonmafia
mazonmafia

The rivers pick has nothing to do with gordon in my opinion. The rivers pick has to do with how he develops as a player. Although I didnt want us to draft him, I hope he blows my mind and is terrific! :-)

Jason Calmes
Jason Calmes

Or he can get traded to a team that trades him to Phoenix. But, yes, but `pointing' to Phoenix in an official way, he runs the risk of never playing there. If they are a tool being used, then that is fine. If there are coronary issues, then it's smart to ot sign the sheet. It's a subtle game.

macs21
macs21

The Suns have no leverage though. I don't see the Hornets letting him go for nothing. I also don't see the hornets letting him go for a bunch of players/picks they don't really want..

Darren
Darren

Great point, by asset i meant individuals they are willing to part with. If we could squeeze Gortat/Marshall out of them I would be thrilled, however, fairly certain they wanted 2 bring Gordon in to play WITH those guys not instead of.

Chuck
Chuck

So hypothetically we could stretch Lewis's cap hit over 3 years instead of taking it all this year, if we wanted to?

kj
kj

i thought it was a great article as usually and informative. Jason MM, amd joe and the rest of the staff at hornets247 are amazing. FYI they give us this all for free unlike many other sites. thank all you guys for the work you do

504ever
504ever

I was a Rivers hater. But maybe Dell knew more about the likelihood of Gordon leaving than he let on, and that is why he drafted Rivers over a C or a PG.

SP
SP

Any way we could sign and trade EJ for Javale McGee (wherever he ends up)?

Andrew Denenea
Andrew Denenea

Can we sign him to a bigger 5 year deal then trade him to pheonix?

Jason Calmes
Jason Calmes

No. It was from the old CBA. Stretch is for new contracts only. Good question. We reduce the scope to make these things possible to talk about without just repeating Coon.

Jason Calmes
Jason Calmes

Well, yes, in the same way I can nail Carrie Fisher... good idea at some point, if highly unlikely, and now no one but particularly motivated spectators would want it to happen.

Jason Calmes
Jason Calmes

If we do, the deal reverts to 4.5% 4y. And, he can't have signed the offer sheet at any point in an official way.

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