Quick New Orleans Pelicans Salary Cap Room Analysis: Jrue Holiday

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Published: June 28, 2013

The Draft Night Jrue Holiday trade the New Orleans Pelicans participated in will affect their vaunted Cap Space, clearly. With the Free Agency negotiations starting on July 1 and deals commencing on July 10, it is imperative to know the Cap situation going into that mess, as if the NBA Cap is ever not a mess.

Short Answer:

The team will have $5,863,093 in Cap Room and Eric Gordon, Anthony Davis, Jrue Holiday, Ryan Anderson, Robin Lopez, Jason Smith, Austin Rivers, Greivis Vasquez, Lance Thomas, Brian Roberts, Darius Miller, and Terrel Harris under contract with no other player’s Cap Holds or Bird Rights in all likelihood.

Long Answer:

First, we have to understand the deal. The trade will not commence until July 10, 2013 at the earliest. It is on this date that the NBA will actually set the Salary Cap and Tax Line based on their accounting from the 2012-2013 NBA Season.

At that time, Noel may or may not have signed his contract. If he has not, while there will be a Cap Hold $2,643,600 (scale for 2013 6th pick) on the Pelicans’ books, he will have $0 in trade. If he has signed his contract, likely for $3,171,600 (120% scale for 2013 6th pick, max allowable), that value will be on the Pelicans’ books and that will be his value in trade. The 42nd pick also has no value and likely commands only the rookie minimum ($490,180 this season). Plus, it generates no Cap Hold. The protected 2014 the 76’ers receive from the Pelicans also has no value in the trade’s financial calculation.

Jrue Holiday’s extension kicks in, giving him $9,213,484 this season, then $9,904,495, $10,595,507, $11,286,518 in the following seasons, no options. That first season is all that matters for this analysis, but we might as well include the extra info, because we are so helpful here.

These salaries do not `match’, or meet the requirements of the Traded Player Exception, which is actually could be available to the New Orleans Pelicans if they so desired. Since they do not, this means they are trading Jrue Holiday into Cap Space, and such deals so not require such matching.

Though this allows the deal, the team is forgoing use of the Non-Taxpayer Mid-Level Exception ($5,150,000) and the Biannual Exception ($2,016,000) in favor of the Room Mid-Level Exception ($2,652,000) and $5,863,093 Cap Space. Note that the total of the Space and Room Exception is more than the two Exceptions, plus Cap Space is more useful, as this unbalanced trade beautifully illustrates.

Since a single player with a guaranteed contract is being traded for a single first round draft pick or a signed player, the net effect on the the Cap Room calculated at Salary Central is to remove the pick’s Cap Hold and add in Holiday’s salary.

$12,432,977 + $2,643,600 – $9,213,484 = $5,863,093

This Cap Room can be used to sign any Free Agent or used to as room to trade a player into. If a second round pick is traded, say . . . #42(!) Pierre Jackson . . . before he is signed, then the Pelicans can take back up to $5,863,093 and still comply with the Cap rules. If they instead traded Greivis Vasquez or Robin Lopez, the could take back $8,013,281 or $10,982,854, respectively, or $12,642,862 if trading both for a single returning player (a roster charge of $490,180 applies) or $13,133,042 for two returning players. This total value will increase by $490,180 for each player returning in trade, if the team using Cap Space.

This can not be combined with exceptions to sign players. For example, a $6,000,000 player can not be signed by the Pelicans as a free agent using Cap Room and just a smidge of an exception.

The maximum Cap Room with trading salary away is $12,388,104. This requires losing Robin Lopez, Jason Smith, Lance Thomas, Brian Roberts, Darius Miller, and Terrel Harris, but factoring in any guaranteed money owed to the cut players.

The team will retain the ability to use the Traded Player Exception to go over the Cap, along with the Minimum Salary Exception.

This is a reasonable amount of flexibility given that the team’s needs just dropped with the acquisition of Holiday. Prior to the Holiday trade, the team was expected to have $12,432,977 in Cap Room, which is about what it took to acquire Lopez and Anderson last Summer. He got a player that costs about what Anderson costs. Now he can go get a Small Forward with Cap Space or doing a sign-and-trade with someone for Aminu, for example.

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