Hornets CBA FAQ Part Three: Ryan Anderson Sign-and-Trade, Cap Space, Trading Picks, and Summer Contracts

Published: July 9, 2012

In the latest FAQ, we look at some questions facing Hornets fans with respect to cap space and the Eric Gordon situation . . . and summertime!

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 adieu:

Q: If a team signs Rashard Lewis, will that affect the Hornets’ salary cap figure?

A: Yes. The final year of Rashard Lewis’ contract had a $13.7m buyout, of which the Hornets took advantage. This amount counts against the Hornets’ salary cap figure for the season.

If Mr. Lewis signs with any team, not just an NBA team, his salary for that team for this season will create a “set-off” to reduce the $13.7m he counts in the Hornets’ salary cap figure. It is not a dollar-for-dollar reduction, however.

Since he was not a rookie, his salary is compared to a one-year vet. In this case, the salary is $762,195. The set-off amount is half of the amount of his salary for this season in excess of that amount. If he makes less, the set-off is $0.

For example, if he signs a deal making $1m this season, the set-off is $118,902.50.
Larger deals have a much greater effect, as the vet salary is already `chewed up’. If the deal is for $2m this season, the set off is $618,902.50.

In short, we should be rooting for our Louisiana-born friend to sign a fat deal somewhere.

UPDATE: The Miami Heat have just announced a 2-year deal with Rashard Lewis that pays him the 10+ year veterans’ minimum ($1,352,181) next season. The resulting relief for the Hornets’ salary cap figure is half of the difference between that total and the one-year veterans’ minimum given above, which comes out to $294,993.

Q: Phoenix has five first round draft picks in the next three years, but they can’t give us picks in back-to-back years, can they?

A: Yes they can. The rule that one might think applies is commonly quoted as saying that you can’t trade firsts in consecutive years, but it’s actually more subtle than that.

The real force of the rule is that a team can not make trades involving future draft picks that will leave them with the potential of not being able to use a first round draft pick in a pair of consecutive years.

In the case of the Suns,as  they have two first round picks in 2013, one in 2014, and two in 2015, we can get one in 2013 and one in 2014, for instance.

Q: When do we have to decide about our team options for the players we have on rookie deals?

A: For Davis, Rivers, and Miller, it’s not this year, so let’s ignore them for now. This is just about the only time we’ll ignore Anthony Davis, so savor the rarity.
Aminu, Henry, and Vasquez are all on rookie deals with a team option for next season, and that is their last team option. Those options can be invoked anytime after July 11th through October 31st. If the options are not picked up by then, each of those players will become unrestricted free agents and the end of this season.

Q: Are these “Summer Contracts” eating up our cap space?

A: No. Summer contracts do not count toward the cap unless the player is on the roster on the first day of the regular season. Those players go through the waiver process, so there is a risk of cutting a summer player just to keep his salary off the books, then bring him back. In fact, the players receive no salary on summer contracts, nor can they earn it. They get per diem, transportation, lodging, and disability insurance, plus the opportunity to earn a spot somewhere in professional basketball.

Q: After the Ryan Anderson sign-and-trade, what is the Hornets’ salary figure?

A: In this, we assume that Ryan Anderson’s 4y deal is for exactly $34m and has 4.5% raises. This gives him a first year salary of $7,962,529 with increases of $358,314, ignoring the change, as we do for the rest of the piece.

The Hornets have $36,204,769 in committed salary to players under contract after accounting for the pending sign-and-trade. This increases to $43,777,781 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 $53,355,741 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.

If we take on Gordon with a max contract, his cap hold is replaced by his $13,668,450 salary, yielding a cap figure of $57,446,532.

Update: The salary cap for 2012-2013 is unchanged.

Q: How did the Anderson sign-and-trade work?

A: Since the salaries do not match, there are only two ways to complete this trade when the moratorium is lifted: sign Anderson into cap space or sign him into an exception.
If the Hornets have to renounce some exceptions and Bird rights (not Gordon’s) to sign Anderson into cap space, then we will likely be signing Davis and Rivers to their 120% scale deals and vets at the minimum. This is perfectly within the Hornets’ control.

Using the Amnesty on Jack, the only player we can use it on, would help us sign another player in a position of greater need on a non-minimum deal.

If, however, the Hornets can create a trade exception to sign Anderson into, they can maintain their Bird rights and ability to use available exceptions, which may be appealing.

One way to create an appropriate trade exception would be get one in an Eric Gordon sign-and-trade, should the Hornets want to part with him. That may be against the party line, but it is not inconceivable. Jared Dudley coming over with back-to-back firsts would create the correct-sized exception to make this work. This would provide the Hornets with three consecutive drafts with pairs of first round picks, if we keep them all. Other deals with Phoenix are possible, as would deals with other teams to create the correct exception. This one is mention just to show that there is a deal that will work. If it is unacceptable, perhaps it can be modified to become so.

Additionally, the Suns need to lose a couple million dollars in salary to complete all the offseason moves that have been reported. They can create this room by using their Amnesty, but they could engage in a sign-and-trade to get Gordon and free up that room. Again, Dudley fits the bill. He is a good player and a fan favorite, but they want Gordon, so they should be willing to part with him.

Dumping Jack with one of Aminu, Henry, or Smith to another team would also work.

Getting a third team involved to feed some assets to the Hornets to entice them to part with Gordon is yet another option.


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