Figuring out the Hornets’ Salary Figure

By:
Published: July 12, 2012

Let’s walk through once and for all, until Dell does something.

I’ve been grinding out some salary figures, but I wanted to expose my calculations to the readers for a few reasons.

The most important reason is to make sure that I’m not screwing something up. If I am, chuckle to yourself, then gently offer the correction.

A close second in importance is for our readers to get more familiar with the cap and salary rules.

Lastly, I think our readers would greatly appreciate being able to understand the moves the Hornets can and can not make at this time.

Overview

The salary cap is a dollar amount set every season by the NBA and is related to NBA revenue projections. When a salary figure exceeds this amount in certain ways, teams incur a set of restrictions to the changes they can make to their roster. There is a second, higher number called the tax line. When the salary figure exceeds this amount in certain ways, further restrictions are incurred in addition to a set of financial penalties.

We are only concerned with the Hornets’ situation here, and we focus only on the cap.

The salary figure is more than salary. It includes various `invisible’ values as well. We will cover all of these. Those values contribute to the complexity of these NBA salary discussions. The various rule changes are another major component. The sheer number of rules does not help.

Committed Salary

This is the easiest part of the cap discussion, and even it is not as easy as one would hope. The basic issue is that not all salary reports agree, and not all deals are reported in all places.

Here are the numbers I’m using: 

Ryan Anderson: $7,962,529.27

Al-Farouq Aminu: $2,947,800.00

Jason Smith: $2,500,000.00

Xavier Henry: $2,323,200.00

Greivis Vasquez: $1,191,240.00

Those rookie values are 120% of the set scale in the year they were drafted, and Smith’s deal was reported when he signed it after the lockout.

Anderson’s deal is an estimate on my part, based on an assumption that the $34m total value is 100% accurate and that there are max raises of 4.5%. Since raises are not compounded, there are 6 units of increase in the four year deal, along with four units of base salary. The first year has no increase, and the next has one increase. The third year gets another increase, so it is two increases over the first year, and the last year is three units over the first. This gives our six units. Thus, we divide the total deal value by 4+6*0.045 = 4.27 to get the starting year salary. We then calculate the increase and fill in the rest of the deal, rounding appropriately. If someone sees an actual breakdown, let me know.

This gives an estimate of the total salary of $16,924,769.27 for the five players mentioned so far.

I am leaving some unguaranteed and Summer deals out of the calculations. Also, the Eurobrow we just got the rights to in the Jack deal counts for $0 since we don’t pay him anything.

Rashard Lewis

Dude never got to play in his home state. It’s a shame.

Anyway, we bought his one year contract out for $13,700,000. This figure counts in the Hornets’ salary figure. It’s kind of invisible, but it’s a real check going to a real player, so it’s not invisible invisible; it’s just that you can’t see it . . . Tom Benson can see it . . .

Then, he signed with the Heat for 2 years at the veteran minimum for his tenure, which is $1,352,181. This allows a small relief in the above figure, reducing the charge to Hornets’ salary by half the amount in excess of a the salary for a one-year veteran, $762,195.

This translates into a $294,993 “set-off,” reducing Mr. Lewis’ contribution to $13,405,007.

This brings our total to $30,329,776.27.

Draft Picks

First round draft picks count in the salary cap as 100% rookie scale for their pick, which is determined every season by the NBA. Players can be signed within 20% of this value and are almost always signed at 120% of scale. Until that happens or there is a public knowledge of it being so, they count only at 100% of scale. Once they sign, or there is a report of what they will sign for, the 100% scale value is replaced.

Second round draft picks do not count against the salary.

100% scale for the first pick is $4,286,900; for the tenth pick, it is $1,865,300.

The corresponding 120% values are $5,144,280 and $2,238,360.

These are move invisible values. These are more invisible that Rashard Lewis’, but not completely so because they represent expenditures that the Hornets will likely make. They under-represent these expenditures in most cases, but they are chosen as fair numbers in a vacuum since the signing of those picks can be within a range of values.

So this is fair. This is like setting aside money for these likely expenditures. This line of reasoning is the basis for what is commonly called a cap hold, of which there are many types.

With the cap hold for these two players, we bring our total figure to $36,481,976.27.

Eric Gordon

Eric Gordon is the Hornets’ lone restricted free agent. He is a Bird (after Larry Bird) free agent since he played with the same team for three consecutive seasons. Since he was traded, his Bird rights transferred with him. This is important because a team can always sign their Bird free agents into cap exceptions designed for this purpose.

Cap exceptions are the means by which team are allowed to add any salary (not just net) in a transaction that ends with their salary figure exceeding the cap.

Since a team has the ability to sign such a player regardless of how they may be restricted from signing other players, a cap hold impedes the efforts of teams from using cap space to add talent and this exception to sign the Bird free agent additionally. A moment’s consideration should show the snowball effect this cap hold inhibits. In general, this is the kind of thing cap holds were invented to do.

Gordon’s cap hold of $9,577,960 brings our total to $46,059,936.27 for our eight non-Lewis players considered.

Roster Charge

Now we come to some really invisible stuff.

NBA rosters must have 13 players on them at a minimum. Thus, when a team is making a signing and has fewer than 12 people on the roster, there is always more work to do. To keep teams from abusing the exception that allows them to players at the minimum to fill out their roster, there is a roster charge in each offseason when a team has few than 12 players under contract. This charge is equal the sum of rookie minimum deals, one for each player `missing’ below twelve.

In order to calculate this number, we add in first round draft picks and restricted free agents. Thus, we have eight players counted in our roster charge calculation.

Thus, our roster charge is 4 * $473,064 = $1,894,416.00 and our salary figure is $47,954,352.27.

Cap Space

Since the salary cap is $58,044,000 for the 2012-2013 season, the Hornets currently have $10,089,647.73 in cap space.

I don’t know what the deal is with the cents, but I’m leaving it there. I have at least one estimate in this any. I’ll update future calculations when I learn more. Again, if someone know the rule, tell me. I don’t really care if no one ever shows the cents. That’s reporting. You think Stern would be let being shorted a penny slide without a witticism? Didn’t think so.

Life Under the Cap

Since the Hornets went under the cap to complete the unbalanced Ryan Anderson sign-and-trade, they had to create cap space. This was done by renouncing the rights to other players: Chris Kaman, Carl Landry, Marco Belinelli, Marcus Banks, DJ Mbenga. These last two are mere technicalities. Renouncing their rights means we agree not to sign them into a Bird exception, but we can still sign-and-trade them provided we can sign them into cap space or a different exception.

By going under the cap far enough to sign Anderson, however, we lose the right to use our Mid-Level exception, Bi-Annual exception, and any trade exceptions hanging around since we had to renounce them, as near as I can tell.

We retain the rights to Gordon, so we can use the Bird exception tied to him. We can also sign our draft picks, so their “20%” is coming to them and does not affect our cap space unless we allow it to do so. We can also sign veteran players to minimum deals for one or two years. These deals are bare minimum, no bonus, no sweetener of any kind.

The team also has the Room Mid-Level exception. This exception is designed for teams that go under the cap and lose access to the exceptions mention above. It can be used to sign any combination of free agents or accept trades into it. It is worth $2,575,000. Players can be signed to one-year or two-year deals with maximum changes of 4.5%. It can be used once each year the team is under the cap and is unaffected by signing players to two-year deals.

Loss of these exceptions makes it hard to add salary, but it increases flexibility. For instance, cap room and exceptions can not be combined to sign a free agent in excess of cap room. For example, $5m in cap room and a $5m exception can not be used to sign a $10m player. An exception can be used to sign players that `fit in’ them. So, many players can fit into one exception, but not one player into many exceptions, roughly speaking.

Cap space, however, can be used in this fashion. Since we were under the cap when we traded Jarrett Jack, we added cap space rather than getting a trade exception. By the example above, the greater amount of cap space is superior to the combination of some cap space and an exception totaling the same amount. One may consider being over the cap superior to being under for a number of reasons, but this is one advantage to operating under the cap regardless of how one assess the general state of affairs.

Putting this together, maximum utility of these resources is attained by consuming the cap room, then using exceptions.

Possibilities

There are two basic roads before us: matching the Suns’ offer sheet to Gordon or not.

If we match the offer sheet, his cap hold is replaced by his salary, which should be $13,668,750.46, increasing our salary figure to $52,045,142.73. This maximum salary is based on the 25% max deal from last season, the cap not changing, and one time increase in max salaries for this season alone. Note well, even last season a 25% max salary ($12,992,194 in the first year) was not 25% of the cap; it’s less. I’m making an assumption that the increase is just a percentage increase to all years of the deal.

Since the Hornets until some time on Saturday to match this offer sheet, they first need to consume as much of their $10,089,647.73 in cap room as possible, then sign Gordon into his Bird exception. The team can then use the Veteran Minimum exception and Room Mid-Level exception to fill in the roster if necessary. This is time-critical because of the time limit to match the deal and the option to sign Gordon into an exception.

If they do not match the offer sheet, Gordon’s cap hold is removed, the roster charge increases by one rookie minimum salary, leaving us with $19,194,003.73 in cap room. We would still have the Veteran Minimum exception and Room Mid-Level exception to fill in the roster if necessary. There would be no time pressure to use this space other than what is dictated by the player market and the need to maintain a minimum salary during the regular season. The latter can be achieved by overpaying vets, and this path seems less likely anyway, so this is not a problem over which we worry.

Further Reading

Besides assistance given to me by a number of helpful people, including readers and writers here and elsewhere and my season ticket neighbors, the best combination of depth, breadth, and accessibility in a source for NBA salary cap information is Larry Coon. He is the go to person for nearly all basketball writers and fans. His FAQ webpage has all of the above information in a more general form if you want to read further. It also has his contact information, including that for twitter.

It provided the basis of our CBA FAQ Part One, CBA FAQ Part Two, and CBA FAQ Part Three, and likely any future ones.

I’ll repost this with updates at some point if it goes over well with you readers.

Remember to let me know what I need to change.

Thanks in advance.

63 comments
Hornets686
Hornets686

Would you do this... Sign and Trade with Warriors... Carl Landry(S&T) for Andris Biedrins and the Warriors 2012 unprotected pick? Andris Biedrins gives us the big man we could use hes only 26... and we add a possible lottery pick or at least mid teens.

Scott
Scott

C'mon guys. I'm getting anxious. Who are the Hornets looking at right now? I read something about them getting involved in the Dwight Howard trade. I heard they could possibly get Omer Asik. Is this possible? Because Asik is a great defender, and he would definitely fit in with Monty's defensive scheme for sure. I would still like to see some better scorers, but the signing of Ryan Anderson should definitely help our scoring and rebounding. What the heck is going on with the Hornets? I still think we definitely need another PG and C. We're looking Schindler's List thin at those positions. Who are some possible targets?

teddy schiele
teddy schiele

Mili is the only one I would go after long term, other two are nice stop gaps

Hollis21
Hollis21

Great article, yet again. You guys put in such an amazing effort. I took a glance at a few of the other TrueHoop affiliates and they had nothing on this site. I have learned so much on the financials and the rules of this current CBA. And that is thanks to you guys. I was out with some friends last night and was like a wizard talking free agency with the guys and they were all amazed how much I knew. I suggested they come check out a few of the pieces on this site, despite not being Hornet fans. Love the work you guys put in. You give us quite a few articles but they are all quality as well. I really hope something is done for the Center position, either a signing or through trade. I feel their has to at least be a plan since we dealt Jack's deal that would have ended at the end of this season anyway. I'm expecting to see the Hornets name pop up in a move tomorrow. Keep up the great work guys!

teddy schiele
teddy schiele

I think right now the hornets have a good foundation in place. We have plenty of young assets that are coachable and talented enough to develop. Our key area of need is a back up point guard to help Grevis and challenge Rivers to get better. Monti needs to ensure decision making is at the top of the transition phase for young Rivers because although Jarred J was a fan favorite he made very bad decisions with the ball and did not fully understand tempo of NBA winning ball. Rivers needs not replace him as that guy not really big enough to be too but shoots too damn much at point. Our other need is finding out what we will do with Gordon sooner than later. We protected him from comments on his injury prone career, we deflected the fact that he seemed unhappy to be with us tweeting and watching college games instead of Hornets games, we even told the world he was our most talented asset and we were building our team around him yet when free agency started, the first team to get him wet, seduced him and he threw use under the bus. Not a good look in a relationship that now seemed one sided. Call him does he want to be here, if not move on. No thinking involved... Next need is a Small forward that can play multiple defensive sets, take pressure off of a youth roster with a nice three point shot and be able to rebound and be our scrappy perimeter guy. Lastly, Davis future is at PF and we have a viable guy in Anderson to back him up and play limited minutes and the 3 and 5 spot but we really do need a young center that is going to be able to be a consistent presence on the block on defense to allow Davis to roam and support with weak side defense.... Not a complicated or expensive roster to build and here are some free agents on the market that could do that now without any problem, and all are under 25 which means they all can be developed and groomed. Team is about chemistry and developing a roster than is mentally, physically and spiritually aware and connected to each other... I also put some free agent SGs on the list because my gut tells me Gordon does not want to be here and with a young team we need no distractions while developing.... Stiemsma, Greg C 26 2yrs RFA BOS --- --- --- Orton, Daniel C 21 2yrs UFA ORL --- --- --- Miles, C.J. F-G 25 7yrs UFA UTA --- --- --- McGee, JaVale C 24 4yrs RFA DEN --- --- --- Mayo, O.J. G 24 4yrs UFA MEM --- --- --- Lee, Courtney F-G 26 4yrs RFA HOU --- --- --- Hollins, Ryan C 27 6yrs UFA BOS --- --- --- Flynn, Jonny G 23 3yrs UFA POR --- --- --- Fesenko, Kyrylo C 25 5yrs UFA IND --- --- --- Farmar, Jordan G 25 6yrs UFA* BKN --- --- --- Brown, Shannon G 26 6yrs UFA PHX --- --- --- Alabi, Solomon C 24 2yrs RFA** TOR --- --- ---

NOLA Hustle
NOLA Hustle

my one big ? as mentione above what if we sign mcgee to offer sheet prior to matching ej? we would be under cap when we signed mcgee to offer, over if denver waits and decides not to match hypotheticals very unlikely to happen but still curious

NOLA Hustle
NOLA Hustle

what about darko? he'd be a perfect fit, hope we put a serious bid in

Jordan J.
Jordan J.

Um... Don't laugh, but the T-Wolves just amnestied Darko Milicic. Do you think he would be a good one or two year fill in at the Center position?

babyboi5
babyboi5

This is what I found on Hoopsworld.com: Bobcats After Sessions: The Charlotte Bobcats are closing in on former Laker guard Ramon Sessions. Word is the Cats could consummate a deal shortly and that Sessions along with soon to be amnestied Brendan Haywood would be the two new additions in Charlotte. If the Bobcats can finalize a deal with Sessions, the Bobcats are expected to withdraw their Qualifying Offer to restricted free agent D.J. Augustin making him an unrestricted free agent. If DJ becomes an unrestricted agent, I think we should go after him

sam winston
sam winston

Is it possible to sign javale and oj mayo if we decide to not match the PHX offer for gordon???

popmusic
popmusic

what is the contract situation of the coaching staff??/// I thought they were all on two year, expiring deals. IIMO it is as importants as the players at this point.

mazonmafia
mazonmafia

So in the next couple days we can use our roughly $5million in cap and an exception to sign javale mcgee (not sure its enough for him) and then sign eric gordon and another vet to fill out the roster? If we do this and use the cap space and exceptions, can we still sign players to minimum contracts to fill out the roster??

Kumar
Kumar

Is there any possibility we can make a push for Javale Mcgee with the cap space we have available? I am not to familiar with what type of salary figure he could demand.

Chuck
Chuck

Amazing article, Jason. Simply beautiful. Even I have no complaints :D

Paul
Paul

Jason, Since we are under the cap we can bid for any amnestied players, correct? If we were to go about in that fashion with a "bid-war," so-to-speak, is it only teh bid amount that takes up cap space or does the player's original contract also carry over for cap reasons? Or if I am missing even more with this scenario can you further explain? Thanks.

Kempleton
Kempleton

Fantastic article. It helps me do the math now. I will bookmark it! :)

edbballin504
edbballin504

Yeah I figured that, that's why I asked. I would like to know the exact length of time it takes for a player to clear the amnesty process, and either he clears the process with no bids or the winning bidder is determined.

edbballin504
edbballin504

Jason, If we tried to claim a player by putting in a bid in the amnesty process, will we know if we won the bid before the time expires to match Gordon? This is assuming a player was amnestied on yesterday (Wednesday).

504ever
504ever

Thanks, Jason. I for one love to see the details, to understand how the cap works and what Dell's cap thinking might be. Am I correct that the upshot of all of this is the Hornets currently have about $10M in cap space, which will go to $6M if we match Gordon, to sign free agents before we get to the Room Mid-Level and Veteran Minimum Exceptions? I.e. we can still match Goron and sign a decent FA Center (hopefully before we touch our Exceptions) because of the Jack salary dump trade. Also, we have Trade Exemptions we can use to acquire a Center with a salary in that $6M (without considering Exception) range?

Cornerstone
Cornerstone

Thanks Jason, great article. This is why 247 is by far the best place for accurate (or as accurate as you can get) Hornets info. It is truly amazing how thrown off people can get when they get their info elsewhere.

sean
sean

Ahhh, brings back memories of being back in maths class again. Damn you Jason, damn you!!

Snow
Snow

This site goes above and beyond for the Hornets! I'm glad I found this site

Chris
Chris

Why are the Hornets waiting to match the offer from PHX? They have continued to say they will match the offer but didn't do it soon after the Gordon signing with PHX was made official. What are they wait for?

Hornets686
Hornets686

Suns get: Eric Gordon Bucks get: Marcin Gortat Kendall Marshall 1st Round Pick from Suns Hornets get: Brandon Jennings Larry Sanders Sounds about right to me… Move Rivers to SG… Jennings would be a perfect fit with this team!

NOLA Hustle
NOLA Hustle

most definitely, big and def. oriented, exactly the guy we need to give us flex to go big, of course when we not facing real big ryan anderson aka the big threezy and ad aka the big ez will be fine

babyboi5
babyboi5

NM, I just saw on espn.com that DJ Augustin is going to the Pacers

teddy schiele
teddy schiele

sam those are the two I would target and cut my losses. I would call them both and see how committed they are to a building process. If they in, we should cut our losses. Gordon is a great player but not worth friction with a young team

Jason Calmes
Jason Calmes

1y left with team options beyond that for 1y each, I think.

macs21
macs21

We can't. You can't sign players into a combination of cap room and exceptions. You can only sign them into one or the other. But until we match Gordon's offer sheet we have close to 10 mil space we could use to make an offer to McGee

Jason Calmes
Jason Calmes

Bid amount. We can make a full bid for the whole contract or a partial bid with known minimum.

Jason Calmes
Jason Calmes

Yes. Basically you know on the third day. Today's amnesties we may be able to get 'cleanly' for depending on how bids 'interfere'... is there a cap hold for them ... i would guess... We'll see what we can learn. You guys had it. Just added my own unknowns.

Jason Calmes
Jason Calmes

We just have cap space, Gordon's Bird exception, Room exception, and vet min exceptions. The cap space will be reduced when we match... if we have any left. That's why there is a time pressure.

Analyzer
Analyzer

I think to mess with PHX...doing so as late as possible keeps them from making moves because they have to wait and see if they get Gordon and all of his max salary on their books...

Ron
Ron

But they can't, now that EG has signed the Phx offer.

Jason Calmes
Jason Calmes

Not an option. Sure you read? Try the Possibilities section.

Brad Davis
Brad Davis

Were a team to bid for the whole contract, that'd greatly increase the chances of winning the player - given the unlikelihood/inability of teams taking on that whole contract.

Cornerstone
Cornerstone

I believe if we put in a $15m bid for Haywood then we would pay $5m per year for the remaining 3 years. I believe you bid total value over the life of the contract.

macs21
macs21

@brad davis Brand only has 1 year left on his deal. So if we bid 4mil for him we would be paying him 4 million over 1 year. There is not designated 4 year salary cost for amnestied players. It's purely dependant on how many years they have left when they are amnestied. If we bid 4 mil on Scola on the other hand, we'd owe him 4 mil a year for 3 years. His deal currently has 3 years 21 mil on it. Does that make sense?

edbballin504
edbballin504

*Brand becomes a free agent next summer because his current CONTRACT only has 1 year left.

edbballin504
edbballin504

Brad, I think you are mistaken with the whole 4 year deal. Here's how it works in simple terms: A player is amnestied by his current team. A team interested in putting in a bid then looks at the player and also the contract legth. If a team likes both, they place a silent bid. The highest bid gets the player on the same contract (as far as length only, per year amount is based on how much the team bid). For example if we put in a $5 mill bid for Brand, we would pay him that amount next year and then Brand becomes a free agent next summer because his current bid only has 1 year left. On the contracty, if we put in a $5 mill bid for Haywood, we would pay him that amount each year (next year, the year after, and the year after that) because he has 3 years left on his deal. Personally, I think claiming players off the amnesty wire can be a huge deal b/c you can pick up a quality player real cheap. Therefore, I prefer a long term deal over a 1 year rental. I'd love to have Haywood here for 3 seasons at $3mill per. Thats a steal in my eyes.

Brad Davis
Brad Davis

Immediately after posting last inquiry, I see the 24/7 Twitter feed postulate offering Brand a $10 mil bid. Sooo... when a team amnesty bids, it's for the TOTAL AMOUNT of the contract over a four-year term. That's my theory and I'm a-sticking to it until shown otherwise! LOL

Brad Davis
Brad Davis

First off - thank you, Jason, for this highly in-depth cap article. Gonna use this as a reference while continuing my self-education in NBA financials. Now.. amnesty. If I'm understanding such correctly, amnesty bids are submitted based on a four-year deal. Pure hypothetical: Hornets submit bid on Brand at $4 mil, meaning that if Hornets "win" Brand, they pay him $16 mil over the life of the deal (not accounting for yearly salary increases). Sound about right? By all means correct me if mistaken. Willing to swallow some pride in order to learn. Thanks again to all of you at 24/7!

HJ
HJ

lol. I 2nd that motion

edbballin504
edbballin504

Im convinced that people do not read lol.

tmb1978
tmb1978

Nevermind, I didn't know that a sign and trade wasn't possible after he signed the offer sheet. Why can't this be more simple, I just want to see a good basketball game?!?!?

tmb1978
tmb1978

Your article is the best explanation I've seen so far. However, I'm not sure why this is not a possibility. If we trade Gordon, he doesn't count against the cap and we can take on more salary because we have the cap space from not keeping his deal and the extra cap space of about 10 mil, according to your article.

Jason Calmes
Jason Calmes

Yes. That rarely happens. Amnesty is a beefed up waiver process, and this rarely happens there. This is a chance to get a discount from the overpricing of overpriced players.

Jason Calmes
Jason Calmes

There is a minimum bid for each player. For instance, you have to pay all the unguaranteed salary. I read he had an unguaranteed year or something, or partially so. If that's the case, it'll be more complicated in the cap hit. It's simple when the player has a `normal' contract. It's more complex if not.

Jason Calmes
Jason Calmes

You bid for all or part of the player's remaining deal. There are certain minima. Highest bid wins. Ties are broken in favor of teams with the worst record. Not sure beyond that.

Jason Calmes
Jason Calmes

A trade to Phoenix is impossible because they either get.him on the offer or a trade to them by us is prevented by the act of matching. CBA rule. It is addressed further in our FAQ's. This is for other readers, not you, of course.

Trackbacks

  1. […] for New Orleans, after making a bevy of moves today the Hornets sit $10 million under the cap (as Hornets247′s Jason Calmes reports) with Gordon’s $9.6 million cap hold on their books rather than his $13.7 million starting […]

  2. […] an amount up to, but not exceeding, the amount of cap space your team currently has available. As Jason documented yesterday, the Hornets have a little over $10 million available, and can therefore be extremely active in […]

  3. […] our prior examination of the salary cap, the Hornets have traded for Brad Miller and signed Eric Gordon. Let’s talk about these, then […]