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Los Angeles Clippers: Salary Cap Maneuvering In Action

Update #2 (01/16):

The NBA answered my question: They would’ve allowed the Clippers to exceed the hard cap by virtue of Jared Dudley’s unlikely bonus. That means, after the Clippers triggered the hard cap by signing Spencer Hawes (MLE) and Jordan Farmar (BAE), they could’ve signed one more minimum salary player, along with Glen Davis, to slip under the hard cap with a 13-player roster.

The Clippers instead effectively traded away their 2017 first round pick and incurred a $950K dead-money salary cap charge for five years to get rid of Dudley’s contract. The Clippers then used the resultant cap space to sign four players: Chris Douglas-Roberts, Epke Udoh, Hedo Turkoglu and Jared Cunningham (and Joe Ingles, who was later waived).

The question then became: Would you have rather had (i) those four players OR (ii) Dudley + one of those four players + the 2017 first round pick back + no $950K dead-money charge for the next five years? This is the question I posed as the conclusion to my first update. 

Since that time, the Clippers traded away $300K in cash to get rid of Jared Cunningham and then traded 2013 first round draft pick Reggie Bullock, Chris Douglas-Roberts and a 2017 second round draft pick for the expiring contract of soon-to-be unrestricted free agent Austin Rivers (son of coach Doc Rivers). 

So… After being hard-capped, the Clippers essentially traded Bullock + Dudley + a 2017 first round pick + a 2017 second round pick + $300K in cash AND incurred a $950K dead-money salary cap charge for five years in exchange for Rivers, Turkoglu and Udoh.

The Clippers could have instead kept Bullock, Dudley, its 2017 first round pick, its 2017 second round pick and its $300K in cash; kept either of Turkolgu or Udoh (but not Rivers); and avoided the $950K charge for the next five years; and still remained below the hard cap. 

The two players who caused the hard cap issues? Hawes: Hasn’t worked out thus far. Farmer: Bought out (giving back $950K of the $3.2 million remaining on his contract for this and next season), with next year’s remaining cap hit stretched over three three seasons at a cost against the salary cap of $510,922 per season.  

***

Update (08/29) It would probably be helpful if you read the original post before the update:

The Clippers followed the logic presented in this post and created additional room below the hard cap by means of a trade. But how they went about it can certainly be questioned. The trade was rather costly, and their actions thereafter were rather surprising.

The Clippers traded Jared Dudley and a protected 2017 first round pick to the Milwaukee Bucks in exchange for Carlos Delfino, Miroslav Raduljica and a protected 2015 second round pick.

The 2017 first round pick the Clippers sent to the Bucks is lottery protected through 2019, otherwise it becomes a pair of second round picks in 2020 and 2021. With the Clippers all but certain to make the playoffs in 2017, the pick will surely be conveyed to the Bucks in 2017.

The 2015 second round pick the Clippers received was actually the Clippers’ own pick, which was previously traded to the Bucks if it falls within the 31-50 range, to the LA Lakers if it falls within the 51-55 range, and to the Denver Nuggets if it falls within in the 56-60 range. Now it stays with the Clippers if it falls within the 31-50 range. But with the Clippers all but certain to be a top 10 team this year, it will surely go to the Lakers or Nuggets, rendering its return worthless.

The trade therefore effectively becomes Jared Dudley and the Clippers’ 2017 first round pick to the Milwaukee Bucks in exchange for Carlos Delfino and Miroslav Raduljica. 

The combined salaries of Delfino and Raduljica ($4.75M) were actually more than Dudley’s salary ($4.25M), but the trade produced a couple of hidden benefits. First, it added a 13th player, enabling the Clippers to meet their minimum roster requirements, at a net cost of no more than $500K. Second, it freed the Clippers from having to deal with up to $250K of potential bonus money to Dudley. In other words, as a result of the trade, the Clippers met the 13-player minimum roster requirement with a team salary of $80.2 million and with no imminent hard cap issues. 

The Clippers could have elected to stop right there, and enter the regular season with their then-current roster. They were even in a position to add a 14th player on or after December 17. 

Instead, however, they chose to take further action. They waived Delfino and Raduljica – both of whom had two years remaining on their contracts but a completely non-guaranteed second year (effectively making them expiring contracts) – and utilized the stretch provision to re-attribute their remaining $4.75M in combined salary obligations over a five-year period, resulting in an enduring cap hit to their waived players of $950K that will last through the 2018-19 NBA season.  

The Clippers are now left with 11 players under contract, and a team salary of $76.38M. That leaves them $4.45M below the hard cap, room enough to add up to as many as four players (which would bring the roster up to the 15-player regular season max), with plenty to spare for mid-season trade and/or signing scenarios.  

The Clippers will likely add at least three players in the days and weeks ahead, bring the roster to 14 players. They have been rumored to have interest in Chris Douglas-Roberts, Hedo Turkoglu and Ekpe Udoh. They will also be in position to add up to six more for training camp – all on non-guaranteed contracts, and all competing for the potential 15th and final roster spot.

So, to summarize the Clippers’ activities over the past three days: In order to free up an additional $3.30M of room below the hard cap and replace Dudley with up to four new minimum-salaried players, the Clippers: (i) traded away their 2017 first round draft pick and (ii) incurred a $950K salary cap charge for the next five years.

***

A series of questions can now be raised about the actions of Clipper management at every step along the way.

Question #1

Did the Clippers contact the NBA to determine what penalty, if any, it might impose if the Clippers were to exceed the hard cap by virtue Dudley earning his unlikely bonus?

If it is determined that the NBA would impose no penalty, none of this was necessary. The Clippers could have simply retained Dudley; signed any one of Douglas-Roberts, Turkoglu or Udoh; and entered the regular season with a 13-player roster. They could have retained their 2017 first round draft pick and not incurred a $950K dead-money cap charge for the next five years.

If it is determined that the NBA would impose a penalty, then this entire issue would be solved if the Clippers were to sign their 13th player three days into the regular season (as opposed to during the summer), thus saving the necessary $16,015 to remain below the hard cap even if Dudley were to earn his unlikely bonus. The Clippers could have simply retained Dudley; entered the regular season with 12 players on the roster, and signed any one of Douglas-Roberts, Turkoglu or Udoh three days later. They could have retained their 2017 first round draft pick and not incurred a $950K dead-money cap charge for the next five years.

Waiting three days into the regular season to sign the 13th player sucks. It means he can’t participate in training camp (to participate in training camp requires a contract; even if the Clippers were to offer him a non-guaranteed contract and waive him prior to the start of the regular season with hopes of re-signing him three days later, another team could destroy the plan by claiming his contract off waivers). It also leads to questions as to the aptitude of the Clipper salary cap experts. We’re talking about a mere $16,015. That’s inconsequentially small. It’s so small, in fact, that if the Clippers’ salary cap expert were on top of things, he (or she) could have been able to extract it from just about anywhere. For example, it could have been extracted from the MLE contract given to Spencer Hawes, or the BAE contract given to Jordan Farmar, or the rookie-scale contract given to Chris Wilcox. The first two players could have refused; Wilcox had no choice. Wilcox is earning the maximum 120% of his applicable rookie-scale amount. Making him swallow a $16,015 discount would have only reduced it to a still very large 118%, after which the Clippers could have restored the full 120% for next season and beyond. It’s not unprecedented to force a first round pick take a very small discount. The Chicago Bulls did it with Marquis Teague in 2012, when they were facing their own hard cap issues.

Question #2

Was waiving and stretching the cap hits of Raduljica and Delfino a wise decision?

The decision to waive and stretch Raduljica makes you wonder why the Clippers took him on as part of the Dudley trade in the first place. Raduljica only had $1.5M in guaranteed money remaining on his contract. It’s not as if the Bucks had any apparent need for the cap space that getting rid of him gave them. The Clippers, however, did have a need for that cap space. And stretching Radjuljica’s salary to recover most of it has produced a rather ugly $300K dead-money cap charge for the next five years (though it will qualify for set-off). So why was he included in the trade at all? The Clippers still had remaining the full allotment of their $3.3M in cash for available for trade on the season. How much of it might you have given to the Bucks not to have to take on Raduljica’s $1.5M salary at all, and thus eliminate the need for the $300K dead-money charge for the next five years? 

The decision to stretch Delfino also makes you wonder. Consider the alternative: Waiving and stretching Raduljica alone would still have created $1.84M of room below the hard cap, room enough for two additional players, bringing the roster to as many as 14 (including Delfino). Was adding a potential 15th player (meaning the Clippers could have added two of Douglas-Roberts, Turkoglu, and Udoh, but not the third) really so important that it justified a $650K dead-money charge for the next five years? Was the third really so important (and really so much better than the potential upside that a when-healthy Delfino provided)? Is it all that hard to imagine Delfino – who has a $3.25M contract that would have just $1.1 million remaining to be paid at the trade deadline, with a completely non-guaranteed second year at the same amount – as a potential asset for trade? 

In essence, the Clippers acquired two players who effectively had expiring contracts and instead stretched their cap hits over five years. 

Question #3

Was the Dudley trade even necessary at all, let alone the actions taken thereafter? Did doing all of this make the Clippers better or worse?

If you were deciding for the Clippers, which would you rather have?

  • What you have now: (i) room for up to four minimum-salaried players who can be signed at any time, (ii) enough flexibility with which to reasonably maneuver below the hard cap throughout the regular season, (iii) a cap-clogging $950K charge that will remain on the books for the next five years, and (iv) no 2017 first round pick, or
  • What you had before the trade: (i) your favorite of those four players, (ii) Jared Dudley, (iii) your 2017 first round pick, and (iv) no cap-clogging $950K charge for the next five years

Before answering, consider this: That 2017 first round pick may have considerably more value than you realize. Yes, the Clippers will likely be an excellent team that year, and it will therefore likely be a pick at the bottom of the round (the next CJ Wilcox, perhaps). But it has just as much, if not significantly more, value in trade. As a result of the Dudley deal, thanks to the Ted Stepien rule, the Clippers are now restricted from trading any first round draft picks until the year 2019 (and, even then, only conditionally). How far out is 2019? It is a full two years after the last of every current Clipper player contract expires. Do you really want to start trading first round draft picks that far into the future?

Of course, none of us can know which players might be available in trade in the years to come. But that’s not the point. The point is that we know that trade scenarios will likely emerge. We know that the Clippers will likely need draft picks to facilitate those trades. And they are now left without any. Think about how many times you’ve identified a player you wanted in trade over the past couple of years, and said to yourself to just throw in a first round pick to make it work. That’s no longer an option.

Maybe you’d still choose to do the trade, because doing it frees the Clippers not only from Dudley’s salary for this season but also from his $4.25M salary for the 2015-16 season as well, a salary which is now gone, replaced by a $950K charge. But why is that helpful? Why is it so important to you? Do you truly know what you are trying to accomplish in doing so? Perhaps you are concerned about a potential hard cap again for next season. Bear in mind that the Clippers will only face a hard cap next year if they utilize the larger mid-level exception (or receive an outside free agent by means of a sign-and-trade transaction). If the Clippers instead utilize the smaller mid-level exception, there is no hard cap. The Clippers could spend as much as they want. Do you really have a good enough grasp on whether you even want the Clippers to use the larger mid-level exception, given all the restrictions it would impose, or how trading Dudley would facilitate that? Do even the Clippers themselves, at this point? So why make a trade to protect a future scenario which at this point may not even be considered likely to occur? And, even if it were, isn’t it always much less expensive to salary-dump a contract when it has one season remaining rather than two? So why not dump Dudley’s contract next summer instead, if need be? It gives you time to see if it’s even necessary, as well as to see if Dudley can turn his career around, and become the man he was just two years ago in Phoenix – the man the Clippers liked enough to name their opening day starter last year. He is still, after all, just 29 years old.

 ***

I am admittedly ignorant when it comes to matters of L.A., so I leave it to you to determine for yourselves whether you think the Clippers, given the alternatives at every point along the way, managed their salary cap situation as you would have wanted.

The Clippers have effectively traded away their 2017 first round draft pick and incurred a $950K cap charge for the next five years, all to get rid of Jared Dudley and replace him with all four, rather than just one, of Chris Douglas-Roberts, Hedo Turkoglu, Ekpe Udoh and one other player.

I, for one, questions their decisions.

I think surrendering the 2017 draft pick will prove costly. Not necessarily because the Clippers must now forgo selecting what could become a valuable player in that draft but rather because it so dramatically reduces the likelihood of potential trade scenarios in the years ahead. 

I think enduring a $950K dead-money cap charge will prove costly. Not necessarily because in the progressive luxury tax world that can get quite expensive, but rather because it will reduce the team’s flexibility if ever there is a time over the next five years when the Clippers are caught between utilizing the smaller vs. the larger mid-level exceptions, or aim to utilize cap space. Bear in mind that the Clippers agreed to endure a charge that stretches into the 2018-19 NBA season. There isn’t a single player on the Clippers’ roster who has a contract which stretches out that far.

I think Dudley will prove to be a better player next season than Douglas-Roberts, Turkoglu, Udoh and whomever is the fourth player the Clippers will eventually add. And, even if Dudley doesn’t prove to be the better player, I don’t think that all four of Douglas-Roberts, Turkoglu, Udoh and the fourth will be so much better than Dudley and any one of those four so as to justify the Clippers trading away a 2017 first round draft pick and incurring a $950K charge for the next five years.

I therefore disagree with how the Clippers have chosen to manage the end of their roster. What do you think?

——– ORIGINAL POST ——–

The concept behind the NBA’s salary cap is actually quite simple: It’s a soft cap. Teams can spend freely within the confines of it. But, in order to exceed the cap, teams must utilize exceptions.

The rules that underlie this basic concept, however, can be quite complex – so complex, in fact, that when the league adds new rules in any new CBA, they sometimes conflict with other rules and, as a result, create unintended consequences that need to be subsequently rectified.

The latest CBA contains one such new rule: the implementation of an “apron” that is slotted $4 million above the tax line, which for the upcoming season is set at $76.829 million. That puts the “apron” at $80.829 million. Teams are prohibited from exceeding the apron if they engage in certain transactions. On that list: using the full midlevel exception, using the bi-annual exception, and accepting another team’s free agent by means of a sign-and-trade.

If a team engages in such activity, the apron becomes a hammer – a hard cap which cannot be exceeded under any circumstance. Merely approach it, and it becomes increasingly difficult to make trades that bring in more salary than they send out, or even sign minimum-salary players when injuries strike. It is a constant menace floating in the distance.

The Los Angeles Clippers are well aware of the restrictions imposed by the apron. They became hard-capped at the apron after using the full mid-level exception on Spencer Hawes and the bi-annual exception on Jordan Farmar, each on July 10 of this year. As a result, they need to operate within the confines of the apron for the rest of the 2014-15 NBA season.

They’re getting dangerously close. The Clippers currently have just 12 players under contract, and are carrying a team salary of $79.680 million – leaving them just $1.149 million below.

And they’re not done spending yet. Teams must carry a minimum of 13 players throughout the regular season. The Clippers will therefore need to add at least one more player. As long as that player makes less than $1.149 million, the Clippers shouldn’t trip the apron. There are plenty of players searching for jobs, and willing to accept a minimum salary contract that pays less. It shouldn’t be a problem.

So, great… Mission accomplished… The Clippers have avoided exceeding the apron!!!

No so fast.

***

The league takes the apron very seriously – so seriously, in fact, that it defines a team’s “team salary” differently for the purposes of the apron calculation than for everything else, so as to avoid even the slightest possibility that a team could ever exceed it.

For purposes of the apron, the league calculates a team’s “team salary” as the sum of all of its salaries (“salary” is a defined term in the CBA, referred to colloquially as “cap hit”) for players currently under contract, plus the sum of all salaries payable to players who have been waived (excluding via the amnesty provision), plus the sum of all roster charges (equal to the rookie minimum salary for players fewer than 12, including players under contract, free agents included in team salary, players given offer sheets, and first round draft picks),(1) and then, to the result, makes the following adjustments(2):

  1. All performance bonuses for contracts and extensions signed under the current CBA are included.
  2. The amount of any required tenders for the team’s draft picks is included.
  3. For rookies and players with one year of experience who have signed a free agent contract (i.e., not draft picks) whose salary is less than the two-year minimum salary, the minimum salary for a two-year veteran is used in place of their actual salary.

How will each of these adjustments impact the Clippers?

1. Performance Bonuses

The Clippers currently only have one player on the roster who has a performance bonus.

Jared Dudley’s contract calls for a base salary of $4.25 million. In addition, it contains up to $250,000 in bonuses, to be earned in full if his team is to make it to the Conference Finals, which could bring his total payout up to $4.50 million.

Since none of that bonus money is currently incorporated within Dudley’s salary (i.e., cap hit), the appropriate adjustment would be to add it all in – increasing team salary for the purposes of the apron by $250,000.

Or is it? The rule states that “all performance bonuses are included for contracts and extensions signed under the current CBA. Dudley’s current salary is the result of a five-year extension signed in November 2010. The current CBA didn’t take effect until 2011.

So, therefore, no adjustments for performance bonuses need to be made.

2. Required Tenders for Draft Picks

The Clippers currently have no unsigned first round draft picks. They do, however, have rights to one unsigned second round pick – Cenk Akyol, a 27-year-old guard who was selected with the No. 59 pick in the 2005 NBA draft. The Clippers acquired Akyol’s draft rights in a trade with the Atlanta Hawks last season.

Akyol is currently a free agent, having played for Galatasaray Liv Hospital of the Turkish Basketball League for the last two years. If the Clippers wish to retain his draft rights, they will need to issue him a “required tender.”(3)

A required tender is an offer of a contract that, with respect to a second round draft pick, has a stated term of one season and calls for at least the minimum player salary. The contract offer can be fully non-guaranteed. It must be issued at some point between August 22 and September 4.

The contract offer, even while he’s contemplating whether or not to accept it, will subtract $507,336 from team salary for purposes of the apron calculation. It will need to remain outstanding until October 15. It cannot be withdrawn prior to that date without the player’s written consent.

Training camp starts on September 29. So the question becomes: Do the Clippers really want to use their last bit of usable cap space until mid-way through training camp to offer a contract to a player who might not even be in the country, let alone accept it? Probably not. It’s difficult to believe Akyol is in the mix for a roster spot.

It stands to reason, then, that the hard cap may force the Clippers to not even issue the tender to Aykol and, as a result, lose his draft rights.

If so, no adjustments for required tenders will need to be made.

3. Rookie and Sophomore Free Agent Signings

The Clippers do not currently have any players under contract signed as free agents with less than two years of experience.

So, for now, no adjustments for minimum salary contracts need to be made.

***

L.A.’s team salary calculation, then, does not presently need to be modified for any of the adjustments described above. That puts us right back to where we started – the Clippers have a total of 12 players under contract, and a team salary for purposes of the apron of $79.680 million, leaving just $1.149 million of room below the hard cap with which to add their 13th player.

The only tool the Clippers have left in their arsenal (ignoring potential trade scenarios) is the minimum player salary exception.

We know from above that a minimum salary contract to a rookie or sophomore free agent will cost $915,243 against the apron, the minimum salary for a two-year veteran.

Also needing consideration here is that when a player has been in the NBA for three or more seasons, and is playing under a one-year, 10-day or rest-of-season contract at the minimum salary, the league reimburses the team for part of his salary – any amount above the minimum salary level for a two-year veteran. Only the minimum salary for a two-year veteran is included in team salary, not the player’s full salary.

In tandem, these rules make free agents signed to one-year minimum salary contracts all count the same for purposes of the apron – no matter if they’re rookies, sophomores, or even 20-year veterans. Each would count $915,243 against the apron.

Since the Clippers need to add one more player to reach the regular season minimum of 13, and since they have $1.149 million of room below the apron, and since adding a player to a one-year minimum salary contract can cost no more than $915,243, simple mathematics dictate that the Clippers shouldn’t have a problem remaining below the apron.

So, great… Mission accomplished… The Clippers have avoided exceeding the apron!!!

No so fast.

***

Let’s take a quick peak into the future, and project what might happen in the weeks and months to come.

The Clippers will, at some point, need to add a 13th player. Doing so, however, could present an unforeseen problem.

The Clippers currently have just $1.149 million of room below the hard cap. The 13th player would subtract an additional $915,243. That leaves just $108,985 to spare.

What happens if the Clippers make it to the Western Conference Finals? That would mean Jared Dudley will have earned his full performance bonus, which would add an additional $250,000 to team salary (as described above), and vault the Clippers above the apron!

This scenario exposes a flaw in how the league has chosen to implement the hard cap.(4) Because the NBA has chosen to exclude performance bonuses in contracts signed under the previous CBA from the adjustment calculations described above (and they presumably did this intentionally), it becomes possible to exceed the hard cap on the basis of such excluded bonuses being earned.

Maybe the league has acknowledged this issue and will allow a hard-capped team under these circumstances to exceed the apron. Or maybe not.

Whether or not the league forces them to do so, there is a way for the Clippers to avoid this issue entirely. It involves the intersection of two different rules which the Clippers could leverage to their benefit:

1. The NBA requires that all of its teams maintain a roster of between 13 and 15 players during the regular season – that much we all know. What we may not know is that the league actually allows its teams to drop down to 12 players for up to two weeks at a time.(5)

2. If a free agent is signed to a minimum salary contract after the start of the season (i.e., to a 10-day or rest-of-season contract), his salary is prorated down to reflect the number of days remaining in the regular season. There are 170 days in an NBA season from beginning to end.

The Clippers can leverage these two rules by starting the regular season with just 12 players, and by adding a 13th player within the two-week window that follows. For example, if the Clippers were to sign a player to a free agent contract three days into the regular season, his salary would count $899,092 ($915,243 x 3/170) against the hard cap. When combined with a potential $250,000 addition from the Dudley bonus, you get a $1.149 million total. That would leave the Clippers with 13 players on the roster, and with a team salary that is $136 below the hard cap!

So, great! Mission accomplished. The Clippers can avoid the hard cap under every possible circumstance simply by delaying the signing of their 13th player until no sooner than three days into the regular season!

That may be true, but here’s where things start to get tricky.

The Clippers still have training camp to think about. No player may attend the training camp of any team unless he is a party to a player contract then in effect. Are the Clippers really only going to bring 12 players to training camp? The maximum allowed by the league is 20.

NBA rules provide the Clippers a reprieve in this regard, in the form of the “summer contract.”

A summer contract can be signed from the first day after July Moratorium to the last day before the regular season. To qualify as a summer contract, no compensation of any kind can be earned or paid prior to the start of the regular season. The salary cannot be guaranteed or insured.

Summer contracts are typically used for training camp invitees, because the player’s salary is not included in team salary until the first day of the regular season. In other words, it is a “make-good” contract — the player must make the team’s opening day roster in order to receive his salary and for his contract to be included in team salary.

Since summer contracts do not count against the team’s cap until the start of the regular season, teams can effectively sign players to summer contracts when they do not have room for the contract, and delay creating the necessary room until the start of the regular season.

The Clippers could potentially leverage these rules by utilizing summer contracts to sign up to eight additional players, waive all eight prior to the start of the regular season, and then re-sign one of the eight as soon as three days into the regular season.

But there’s a catch: if a player – any player, including a player signed to a summer contract – becomes injured as a direct result of playing basketball for his team, even if the player is released, his salary becomes guaranteed until he is ready to play again or until the end of that season, whichever comes first.

It’s an obscure possibility which is unlikely to occur. But it does happen, and it can produce unintended consequences.

In 2012, while playing under the terms of a summer contract for the New York Knicks, J.R. Smith’s little brother, Chris Smith, tore the patellar tendon in his left knee during training camp. As a result, his $473,604 salary became guaranteed, and it cost the Knicks an additional $854,389 in luxury taxes as well. Although he was immediately waived, the younger Smith wound up costing the Knicks more than $1.3 million.

In 2008, Jason Richards joined the Miami Heat for training camp, but he tore the ACL in his left knee and missed the entire year. Because Richards missed the whole year, the Heat had to pay his whole year’s salary. Richards’ unwanted presence of $442,114 on their cap figure actually put the Heat into luxury tax territory and, as a result, the Heat were forced to dump Shaun Livingston in trade to drop back down below.

This is the risk teams take when they sign players for training camp. For the Clippers, however, the risk is even more pronounced.

If a Clipper player on a summer contract were to sustain a season-ending injury during training camp, his $915,243 cap charge for purposes of the apron would become permanent for the rest of the season. Add to that the $250,000 Dudley bonus and the Clippers will have exceeded the apron if they make the Western Conference Finals!

If two players sustain season-ending injuries during training camp, the $915,243 charge times two will have forced the Clippers to exceed the apron right then and there!

These types of unlikely scenarios expose another flaw in the implementation of the hard cap at the apron, in that it can be exceeded in the event a player on a summer contract is injured during training camp.(4)

It may seem rather unfair that the NBA treats injured players in this manner. Your average training camp invitee typically has very little chance to make his team’s regular season roster. He is there to do a job, and that’s really it. It may seem rather harsh, then, that if he sustains an injury, not only will he get the first class medical care that all NBA players receive, but he will also have his contract fully guaranteed for up to an entire year.

To address this concern, a new rule was added to the latest CBA. Summer contracts can now include an Exhibit 9 addendum (entitled “One Season, Non-Guaranteed Training Camp Contracts”), which limits the team’s liability in the event a player on a summer contract becomes injured during training camp. If a player with an Exhibit 9 becomes injured and unable to play basketball prior to the team’s first regular season game and the injury is a direct result of playing basketball for the team, then the team is only obligated to pay the player $6,000 if it chooses to waive him. No cushy salary. No payment of medical bills.

But teams cannot utilize Exhibit 9 unless they already have at least 14 players on their rosters, not including summer contracts. The Clippers have only 12 players, and can’t add more than one additional player without exceeding the apron. So the most they can get to (excluding potential trade scenarios) is 13. Therefore, Exhibit 9 will not be available. If the Clippers want to bring more than 12 players to training camp, not one will have an Exhibit 9 contract.

***

The Clippers find themselves in a very interesting predicament, one that involves scenarios that are not clearly defined by the NBA. It remains to be seen how things will be handled by both the league and team.

The league may conclude that if a team exceeds the apron by virtue of a performance bonus in a contract executed prior to current CBA then, in effect, the team has not exceeded the apron at all. The Clippers could certainly make an argument that this is how the rule should be interpreted. The argument could potentially look something like this: If “team salary” is to be adjusted to include unlikely bonuses for contracts and extensions signed under the current CBA as the rule states, then, by extension, it is not to be adjusted to include unlikely bonuses for contracts and extensions signed under the previous CBA, and by further extension, it is only logical that it not be adjusted if said unlikely bonuses are ultimately earned. If this is the ultimate interpretation, the Clippers may not have a problem at all.

The league may instead conclude that any teams which exceed the apron for reasons not initially contemplated are required to immediately get back under it. But, for the Clippers, most of the options for doing so are not entirely in their control.

There are six primary ways a team can reduce its team salary:

  1. Trade down in salary: But any trade requires two willing parties.
  2. Waive players via the amnesty provision: But the Clippers already used their single-use amnesty provision on Ryan Gomes in 2012-13.
  3. Waive players with less than fully guaranteed contracts: But the Clippers don’t have any such players on their roster.
  4. Waive players in conjunction with a buyout: But no player needs to agree to a buyout – and, frankly, why would they? This is the Clippers, of sunny Los Angeles, that we’re talking about.
  5. Waive players so valuable that they will be claimed while on waivers: But this is a risky maneuver. If the player doesn’t get claimed on waivers, his salary would still count for the Clippers in full and, because the Clippers would have one fewer player under contract, they’d need to add yet another player and increase team salary even further.
  6. Waive players and stretch their cap hit(6): League rules allow teams to “stretch out” the remaining salary cap charge of any waived player who was originally signed under the current CBA over twice the number of years remaining on his contract, plus one. But it’s never a preferred option, in part because it causes an enduring cap hit that lasts at least two additional seasons beyond the expiration of the player’s contract. And August 31 is the final day that stretching a player’s cap hit can impact the current season anyway, so, starting September 1, even if the Clippers are to waive and stretch the cap hit of a player currently under contract, the current season cap hit will remain intact, and only any remaining years on the contract will stretched over twice the number of years remaining plus one.

By the end of this month, the Clippers will have no direct control over their ability to go down in salary. But they will need to go up in salary to add a 13th player.

By the time it is determined whether or not Dudley has received his full bonus, which is determined based on how far his team advances through the playoffs and which when combined with the salary of the 13th player could take the Clippers over the apron, it will be far too late for the Clippers to do anything about it. Will the NBA force the Clippers to take consideration of such a possibility now? Will the Clippers themselves want to take consideration of such a possibility now?

Given the limitations imposed by the hard cap, don’t be surprised if you see the Clippers fight hard to complete a trade to move down in salary prior to the end of the month, possibly by ridding themselves of Jared Dudley’s contract. But it wouldn’t be advisable unless absolutely necessary. Despite the lost season, Dudley is still a pretty good player.

Notes:

It should be noted that while I (would like to think that I) have a solid grasp on salary cap rules, and that while I (would like to think that I) have a solid grasp on matters as relate to the Miami Heat, I fully acknowledge that I do not have nearly the same level of insight into matters as relate to other NBA teams. It is quite possible that some or all of those who read this have access to much better information as to the Clippers’ actual intentions. This post speaks only to the cap-related constraints they will face as they look to achieve those intentions. 

It should also be noted that this situation is far more convoluted than I’ve described in this post. I started writing it thinking I’d include the full complexity, quickly noticed just how long and tedious it was becoming, and decided to simplify (yes, this is the simplified version!). Suffice it to say that the Clippers have far more to be mindful of, and that there are more creative methods they can use to keep their team salary to a minimum (including some ways which I described in my post about the Chicago Bulls from last season).

It should also be noted that this is a situation that may not ultimately cause the Clippers a problem at all, and even if it does, they’d have until the end of the season to resolve it (though they can’t exceed the apron at any point during the season). They don’t need to react hastily right now.  

(1) There are additional items that are included as well, including the full season salary of any players the team acquires in midseason trades, any salary still being paid to retired players, a cap hold for salaries offered in offer sheets to restricted free agents, and the salaries for completed contracts. None of these, at present, apply to the Clippers. 

(2) There are additional adjustments that are included as well, including amounts that could be included in team salary as the result of certain grievances and, for the team’s restricted free agents, the amount of any outstanding qualifying offer or first refusal exercise notice (both including unlikely bonuses), whichever is greater. Neither of these, at present, apply to the Clippers. 

(3) I think this is the situation for Akyol. I do not know for certain whether he has already signed a new contract somewhere, whether he intends to in the near future, whether he intends to take a shot at playing in the NBA, or whatever else, all of which could affect this analysis. I am not at all familiar with the status of foreign basketball players. If the Clippers were to extend a required tender to Akyol, and Akyol were to accept, he would cost $507,336, the league minimum for a rookie player, against the apron. 

(4) There are several ways a team which is hard-capped at the apron can actually exceed it, including: (i) because of an unlikely bonus in a contract signed prior to the current CBA, (ii) as a result of an injury to a player on a summer contract, (iii) as a result of the way in which roster charges are treated, (iv) if a player excluded from team salary because of long-term injury “proves the doctors wrong,” among other possibilities.

(5) Teams are actually allowed to reduce down to 11 players during the regular season for up to two weeks at a time. But with 12 players under guaranteed contract, that won’t help the Clippers (excluding potential trade scenarios).

(6) Every Clipper player is eligible to be stretched except for Jared Dudley. The stretch provision only applies to contracts signed or extended under the current CBA. Dudley signed his extension under the previous CBA.

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  1. August 14th, 2014 at 14:20 | #1

    Great job. You may not be a Clippers expert, per se, but you nailed this.

    A couple of things I would add —

    It’s worth noting that Maalik Wayns injured in meniscus in pre-season last year while playing for the Clippers. Wayns was activated before his contract became fully guaranteed and therefore did not wind up costing the Clippers his full season salary, which was important in that the team was also hard-capped last season. Had Wayns not recovered, they might not have had room for the likes of Danny Granger (I’m actually not sure, as the trades of Antawn Jamison and Byron Mullens created some breathing room). At any rate, the “training camp” injury scenario is quite real and one that almost bit the Clippers last season.

    The other scenario that has always had more wondering about the hard cap would be a rash of injuries. It’s highly unlikely of course, but if six players were injured and unable to play, the Clippers would be down to seven healthy bodies. Teams are required to dress eight, raising the prospect of having an injured player in uniform on the bench for show. The NBA has the leeway to issue injury exceptions — but would they do so where the ‘hard cap’ is concerned? Again, this is not likely because it involves so many injuries. However, it probably dictates how the Clippers will go into the season. Just two injuries (for instance to Chris Paul and Jordan Farmar) could put the team in a terrible bind at one position. It seems as if they’ll have to carry an unguaranteed player in the 13th slot, providing the flexibility to drop that player and add one at a different position in case of injuries.

    • August 16th, 2014 at 20:31 | #2

      @Steve Perrin

      Thank you!

      The Clippers never really threatened the apron last season :). They started the regular season with an apron-adjusted team salary of $73.4M for the 14 players under contract. It rose to $74.1M when Stephen Jackson was signed on 12/13 (still $1.7M below the apron, and enough room for all subsequent acquisitions even if Wayns’ injury were to have been season-ending), then fell under $74M when Wayns was waived on 1/5 (his 12/1 guarantee date was previously renegotiated) and never got that high again. They finished the year at $72.7M (which was just above the tax level, well shy of the apron). This year’s situation is far more fascinating!

      My apologies, but I am not quite sure what you mean by “injury exception.” Some refer to the NBA granting a team the ability to add a 16th player in the event of hardship as an injury exception, but that wouldn’t apply to the Clippers. Others refer to the disabled player exception as an injury exception. A team can apply for a DPE from July 1 to January 15 no matter where its team salary is relative to the apron (e.g., Indiana just received a DPE which, if utilized, would press them right up against the apron… though, in practical reality, they won’t even exceed the tax level), which would be granted if the player in question were determined to be unable to play through June 15. However, the NBA would not let the team use the DPE (or any other exception) if doing so would take its team salary above the apron. I suppose there are extreme circumstances which would need to be evaluated on a case-by-case basis (e.g., if 9 players are injured from a 13-player roster).

  2. August 26th, 2014 at 19:22 | #3

    That’s all I’m really saying… those “extreme circumstances” — we don’t know if the hard cap is so hard that a team would be forced to play with four healthy players. Now, that’s not likely to ever happen, but it’s an interesting thought exercise, I guess.

    The Clippers actually came close to getting under the luxury tax with the Jamison and Mullens deals last year — they could have moved Willie Green and done it, perhaps. (Mark Deeks at ShamSports says they should have, I’m not sure I agree.) Presumably the luxury tax, and even the repeater tax, is not something that Steve Ballmer fears much. We’ll see.

    Curious what you think about the Dudley for Delfino and Raduljica deal as it relates to this situation…

  3. August 26th, 2014 at 19:44 | #4

    @Steve Perrin
    The Clippers wound up just $883,544 above the tax last year, resulting in a tax payment of $1,325,316. Whether they should have maneuvered to drop below, I leave to you :).

    I think I still have their step-by-step team salary calculations from last season (for both the tax and hard cap). If you’d like, I would be glad to send it to you.

    I tweeted out some quick thoughts on the trade earlier in the day if you’d like to read those. But those were higher-level in nature and didn’t really incorporate all aspects of the trade with the degree of detail with which I am comfortable. I will try to provide a better answer to your question by tomorrow if that’s ok. I’m watching some TV now, and my Marlins start after that :).

  1. August 14th, 2014 at 13:26 | #1
  2. August 27th, 2014 at 12:29 | #2


six × = 36