The NBA has issued new projections for the 2014-15 and 2015-16 salary cap and luxury tax thresholds. The 2014-15 salary cap is now projected to be $63.2 million and the tax level is projected to be $77.0 million. The numbers for 2015-16 are now projected to be $66.5 million and $81.0 million, respectively.

The 2014-15 figures will be finalized in July, when the league conducts its audit. As part of the audit, accountants jointly appointed by the NBA and the players’ association finalize the total revenue haul during the past season and, on that basis, project the revenues for the upcoming year (that’s what the July Moratorium is for).

They then take 44.74% of that projected amount, subtract projected benefits, and divide by 30 (the number of teams in the league) to get the salary cap for the season ahead. Adjustments are then made to the cap if players received way too much (or way too little) in salaries and benefits for the then prior season relative to the finalized revenue figure; this serves as a mechanism to maintain the integrity of the agreed-to revenue spit between owners and players. The luxury tax uses a similar formula, but is based on 53.51% of projected revenues.

The salary cap and luxury tax values for the current season are $58.679 million and $71.748 million, respectively, which means the new cap projection for next season represents a 7.75% increase over this season. This is a pretty big jump — the league’s baseline assumption for year-to-year increases is 4.5%.  Read more…

If the Miami Heat haven’t exactly lived up to expectations thus far this season, it isn’t because of their spending.

Despite making some unpopular moves last summer – utilizing the amnesty provision to waive Mike Miller, declining to utilize the mid-level exception – the Heat spent more on player payroll this season than in any other season in team history.

The Heat ended the regular season with a team salary of $80.6 million – which, perhaps surprisingly, amounts to $2.8 million less than last season’s record total.

But team salary isn’t an accurate depiction of a team’s actual spending on player payroll and related costs. There are several adjustments that need to be taken into account.

First, team salary doesn’t factor in mid-season trades. For example, if a team trades a player midway through the season, his salary comes off team salary entirely, even though salary payments will have already been made. Joel Anthony and Roger Mason, Jr. were each traded during the season. Prior to their trades, they had received a combined $2.4 million in salary payments from the Heat. Conversely, the Heat received Toney Douglas in trade midway through the season. Though his $1.6 million salary appears on the Heat’s team salary, the Heat itself was only responsible for $856K of that total. Adjusting appropriately for these trades, then, takes the team’s payroll to $82.2 million.  Read more…

The dominant play of LeBron James has been one of the most compelling aspects of the NBA since his entrance into the league eleven years ago, but lately the experience of watching the world’s best basketball player has taken on an entirely new significance. Outrageously efficient performance has become so predictable for James that every appearance is now appointment viewing.

For those of us who have had the pleasure of watching James so freely master his trade, his play in recent years has been a breathtaking experience. Yet for those players unlucky enough to line up opposite James, his performance must be suffocating. Every touch brings its own terrifying potential, as James approaches his on-court goals with an authoritative certainty. He wants to get to the hoop off the dribble for an easy score, and so he does – without much concern at all for defenses, physical limitations or other factors that inevitably steer the play of basketball mortals.

Every trip down the floor serves as a reminder that LeBron James simply cannot be stopped, and when he’s executing at this high a level, he can’t even be slowed. He is perhaps the most dominant, and most selfless, player in NBA history.

In NBA history, the list of players to average at least 25 points and 6 assists while shooting at least 54% from the field in a season is as follows:

LeBron James.

That means that no other playmaker has ever had a scoring season as potent, and no premier scorer has ever had a season with such productive passing as James. And James hasn’t just done it once; he’s done it twice in a row. And he didn’t just eclipse those numbers; he shattered them!  Read more…

Before the playoffs begin, before championship aspirations are fought for, before future planning is deliberated, let’s take a moment to acknowledge something truly remarkable that has quietly transpired in the midst of a largely torturous regular season. Dwyane Wade has completed a historic shooting year.

For a second consecutive season that started with questions about whether his skills were in serious decline, Wade has transcended the doubters, and the injuries, to accomplish the spectacular.

He shot 54.5% from the field in 2013-14.

How good is that?

Well… It represents the best shooting season for any shooting guard in the past 31 years. It represents the second best shooting season for any shooting guard who averaged double-digit points of all time. It represents the third best shooting season for any starting shooting guard of all time. And it represents the fourth best shooting season for any shooting guard of all time.

That bears repeating: Dwyane Wade just produced the best shooting season for any shooting guard in the past 31 years, and the fourth best in NBA history!  Read more…

Many of the mid-season maneuverings by Pat Riley and the Miami Heat have appeared somewhat erratic, confused and questionable. But did they, accidentally or otherwise, end up in the right place? That’s for you to decide.

On Jan. 7, former All-Star center Andrew Bynum was released by the Chicago Bulls. Upon being waived, he expressed an immediate interest in joining the Heat. 

It seemed inevitable. The Heat had a definitive need at the position. They had the non-guaranteed contract of Roger Mason Jr., which could’ve been terminated at no further cost to the Heat, to release in order to free up the necessary roster spot. They had the financial wherewithal to get a deal done, having traded away Joel Anthony in a financially-motivated move that saved the Heat far more than Bynum was sure to cost. They had a player in Bynum who, when healthy and properly motivated, provides exactly what this Heat team needs.

The Heat instead chose not to waive Mason Jr., not to create the roster spot, and not to pursue Bynum. Heat officials were concerned about how adding Bynum would affect Greg Oden, who had done everything the Heat has asked, because Miami wanted to give him minutes. Heat head coach Erik Spoelstra called the decision any easy one, insinuating that Mason Jr. never even had anything to worry about.

Bynum went on to sign with the Indiana Pacers. In his first game with the Pacers, against the Boston Celtics last Tuesday, he showed a great deal of promise – grabbing an avalanche of rebounds, showing explosiveness at the rim and putting his sweet interior passing on display. His 16-minute performance in a reserve roll behind incumbent starter Roy Hibbert was better than anything Oden has produced thus far this season for the Heat. Read more…

Update (3/17): Want even more evidence that the enclosed rumor is true? The Philadelphia 76ers have just waived guard Eric Maynor so that they could try out first year small forward James Nunnally on a 10-day contract despite the fact that Maynor has a $2.1 million salary guarantee for next season. They’re clearly not concerned with taking on a multi-year contract if it nets them potential draft considerations.

It has been suggested that the Miami Heat were engaged by the Philadelphia 76ers with an interesting proposition at the Feb. 20 NBA trading deadline. It has been suggested that Sixers general manager Sam Hinkie proposed a trade to Heat general manager Pat Riley of Evan Turner, in exchange for Udonis Haslem and a future first round draft pick.

Riley reportedly rejected.

Did he do the right thing? Well, that’s for you to decide.

The Mechanics

Let’s get a couple things out of the way before we begin.

First, the rumored trade, as described, doesn’t work. It violates salary cap rules.

Taxpaying teams like the Heat can only take back up to 125% of their outgoing salaries, plus $100K, no matter how much salary the team is sending away.

Haslem makes $4.3 million this year. He can therefore only be traded for a player(s) who makes as much as $5.5 million. Turner makes $6.7 million.

When trades are rumored about, oftentimes only the vital components are leaked. The technical details are often either not yet established or not considered vital, and are therefore not leaked alongside the rest of the trade. If indeed this rumor is true, that may be what’s happened here, particularly because the solution is simple. If the Heat were to add an expiring contract to the deal – say, for example, Rashard Lewis – the trade would be legal.

Second, there’s the matter of the draft pick. The concept of including a first round draft pick is quite vague. When would that pick be conferred? What protections would be attached to it?

The Heat’s current predicament answers these questions, and quite nicely.  Read more…

Update (3/8/14): The Heat have signed DeAndre Liggins to a second 10-day contract. Once this one expires, the Heat can’t offer him another one. By league rules, the Heat would need to offer Liggins (at least) a rest-of-season contract (at any time through the end of the regular season) or nothing.

The Miami Heat have made the first use of their NBA D-League affiliate after purchasing operational control this season, with Tuesday’s questionable signing of swingman DeAndre Liggins of the Sioux Falls Skyforce to a 10-day contract.

Liggins had been playing with the Skyforce as an unaffiliated player, and was free to sign with any NBA team.

The 6-foot-6-inch, 209-pound Chicago native was originally recruited out of high school as a point guard by the University of Kentucky for the incoming class of 2008. He spent his first two years mostly coming off the bench, but in his junior year, coach John Calipari decided to start him as a shooting guard. After his junior season, he elected to enter the 2011 NBA Draft.

Liggins was selected with the 53rd overall pick by the Orlando Magic. He spent the year with the Magic on a one-year minimum salary contract, barely playing. He went on sign with the Oklahoma City Thunder for the 2012-13 season, during which time he had multiple assignments with the D-League’s Tulsa 66ers.  Read more…

The Miami Heat have dumped the contract of Roger Mason Jr. at the Feb. 20 trade deadline, in a move that saves owner Micky Arison $1.05 million and opens up a roster spot to utilize either on a current free agent or on a player to be waived over the next 10 days.

The Heat will send Mason Jr. to the Sacramento Kings, who are expected to immediately waive him. They’ll also send $786,095 in cash to complete the deal.

While that amount of cash may seem random, it actually isn’t.

Mason Jr. is a 10-year N.B.A. veteran. He is playing under a one-year contract. He is earning $1,399,507, the minimum salary for a player with his tenure. However, he is only required to be paid $884,293 of that amount, equal to the minimum salary for a two-year N.B.A. veteran. The league will reimburse the rest at the end of the season. Therefore, he really only costs the smaller amount, and only the smaller amount is included in team salary for cap and tax purposes. They do this so teams won’t shy away from signing older veterans simply because they are more expensive than younger veterans.

As for the mechanics of how the reimbursement works, he is to be paid his full prorated salary of $8,232.39 per day (equal to his $1,399,507 salary divided by the 170 days in the regular season), until the total reaches $884,293. At that point, he continues to get paid his fully prorated salary but the league reimburses the rest. With the regular season having started on Oct. 29, he earned that much by Feb. 13, 2014. Since that time, his services have essentially been free of charge for the Heat.

However, since the contract has now been traded, the reimbursement will get allocated to the respective teams based on the number of days accrued with each team. Therefore, while the Kings will be responsible for the $452,782 remaining on his contract for the 55 days left in the regular season, they will actually only owe $286,095 after accounting for the reimbursement.

The Heat essentially covered his remaining salary obligations for the Kings, and then topped it off with a $500,000 profit, which serves as the only impetus for Sacramento to make the deal.

In order to send something back, which is required in all trades, the Kings will return the Heat a 2015 second-round pick which is protected for selections 31-49 and 56-60. If the pick ultimately falls within either of its protected ranges and is therefore not conveyed, then Sacramento’s obligation to Miami will be extinguished. This essentially means that the Heat will only get the pick if it lands between pick numbers 50 and 55.

While this range may seem random, it actually isn’t.

The Kings intended to provide enough protection on the pick to ensure that it will never be received. Such trades are commonplace in the N.B.A., and are typically accomplished by trading away a second-round pick on condition that it lands within the last five of the draft. However, the Kings have previously traded the pick to the Boston Celtics with that condition. So, now, the Celtics will receive the pick if it is among the last five, the Heat will receive the pick if it is among the previous five, and the Kings will retain the pick if it is among the first twenty of the second round, as is likely.  Read more…

Update (04/06/14): The Bulls subsequently signed Jimmer Fredette to a rest-of-season contract costing $239,279 on 03/02/14, putting the team at risk of exceeding the tax level if Taj Gibson received First Team All Defense honors. To counteract this unlikely but possible scenario from allowing the Bulls to exceed the tax, they subsequently waived Erik Murphy, believing that he would be claimed on waivers, which he was, on 04/06/14, thus removing his entire $490,180 cap hit from the Bulls’ tax calculation.  The Bulls have now assured themselves of missing the tax, as was always the goal.

This post has nothing to do with the Miami Heat but I, as a salary cap person, love intricate luxury tax maneuvering. And the situation described herein is particularly entertaining to me. It should be noted that the idea for this post was not my own. It stemmed from an incorrect post I read elsewhere, for which I happily provided the correction, and then decided to write an accurate version for myself, in my own words, with my own emphasis, and using my own storyline. It’s long and it’s tedious, but the end result is utterly spectacular (well… spectacular for people who are amazed by how teams maneuver around luxury tax issues).

Most of us assumed that when the Chicago Bulls acquired the contract of the unremarkable Andrew Bynum in trade last month, it was to drop them below the luxury tax.

It was. But the process has been far more complicated than most of us, apparently including Bulls management themselves, realized.

For a long time, it appeared as if Bynum would be shipped off to Los Angeles, so that the Lakers could capitalize on his unintendedly valuable contract.

The nature of Bynum’s contract essentially meant that he was auditioning for the Cleveland Cavaliers from the date he was signed on July 19 all the way through the guarantee deadline on January 7, an audition he failed. Bynum’s deal called for a $12.25 million salary this season, of which only $6.0 million was guaranteed. Next season’s salary of $12.54 million was fully unguaranteed. Therefore, a two year contract was really just a six month commitment. But it also meant that any team which acquired his $12.25 million salary in trade could immediately thereafter terminate his contract, thus reducing his salary and resulting cap charge from $12.25 million to $6.0 million.

The Lakers have been luxury tax payers for six straight seasons. They were in position to leverage that $6.25 million delta to sneak below the tax for this season, producing huge up-front savings. And because they are unlikely to be taxpayers next year as they tear down their roster and rebuild, two consecutive years below the tax would have had an added benefit – no “repeater taxes,” which are paid by taxpaying teams that were also taxpayers in at least three of the previous four seasons, for the Lakers for the entire life of the current CBA, which will almost certainly be terminated after the 2016-17 season.

It was a potentially massive financial windfall for the Lakers at a cost of just the expiring contract of Paul Gasol (and another irrelevant throw-in to make the math work).

The Cavs had been after Gasol since this past summer, when they had extensive discussions with the Lakers, and were more than eager to make the swap. But the Lakers were demanding more for Gasol than just the massive financial savings. The Cavs refused.

That’s when the Bulls swooped in.  Read more…

The Indiana Pacers added size and depth Saturday when they signed center Andrew Bynum to a contract for the reason of the season.

The Pacers had $2.15 million left of their full-midlevel exception. However, starting January 10, it has been prorating down at a rate of 1/170 per day. As of Saturday, it was valued at $1.859 million, which was roughly equivalent to the amount by which the Pacers were below the luxury tax threshold.

They ended up using $1 million of it on Bynum, earning him $441K more than the minimum.

The move still gives the Pacers additional room below the tax to make roster moves, if necessary.

Bynum, who will join the Pacers next week, will back up All-Star Roy Hibbert along with Ian Mahinmi. Also featuring power forwards David West and Luis Scola, the Pacers will have some of the best depth in the N.B.A. at the big man positions.

The move also kept Bynum away from the rival Miami Heat, who beat the Pacers in seven games in last season’s Eastern Conference finals.

Five teams were interested in Bynum, including the Heat, but it was the Pacers who had a roster spot and the space under the luxury tax to add him now.

The Heat had the ability to match and outbid the Pacers for Bynum because they have all of their $3.183 million taxpayer mid-level exception still remaining, which has been prorated down to $2.752 million as of Saturday.

However, the Heat currently have a full roster of 15 players and a luxury-tax bill of $15.5 million, meaning signing Bynum would have been expensive.

Matching the offer from the Pacers would have cost the Heat $3.2 million, increasing total payroll obligations to nearly $108 million for the season, though that figure is still below the team’s projected payroll prior to the Joel Anthony trade.

There were methods the Heat could have employed to reduce that cost substantially.

Trading away both Roger Mason Jr. and Toney Douglas, if such trades were possible, would have created a cash flow positive scenario for the Heat, even after paying Bynum his million. It would have also opened up an additional roster spot with which to attract a wing player who specializes in long-range shooting and defense.

In the end, however, the Heat were only willing to offer Bynum the minimum, at a cost, when including the tax, of $1.1 million. It wasn’t enough.