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Could the Cleveland Cavaliers Lose Kyrie Irving Too?

March 7th, 2014 No comments

In my newfound attempt to branch out from my focus on the Miami Heat and find interesting storylines from across the NBA, I offer the following description of the case of Kyrie Irving, the star point guard of the Cleveland Cavaliers who is rumored to be unhappy with his current team. 

Cleveland Cavaliers basketball fans had their worst nightmare realized when LeBron James left the state of his birth and took his talents to the South Beach in the summer of 2010, where he has gone on to reach the NBA Finals in three consecutive seasons with the Miami Heat, winning two championships and vying for more.

The scars of James’ departure four years ago are far from healed. And yet, now, Cavs fans are being forced to deal with speculation as to the possibility of losing its new star, Kyrie Irving.

Irving’s four-year rookie-scale contract, signed in December of 2011, runs through next season. That’s more than a year away. But the Cavs will get better insight into his intentions far sooner than that.

That’s because NBA rules stipulate that an extension to a rookie-scale contract can only be executed from the day following the July moratorium preceding the player’s fourth season to the following October 31. This is a confusing concept, so let’s reiterate: an extension to a rookie-scale contract must be executed before the player even plays the final season of his rookie-scale contract.

For Irving, the window begins this coming July 10. If he hasn’t executed an extension at some point between July 10 and October 31, he would no longer be eligible for one. He’ll have to wait until the summer of 2015 to sign a new contract.

The Cavs will certainly offer Irving a maximum contract extension once they’re allowed to on July 10, and if he hasn’t signed it by the end of October, they’ll know he’s not wholly committed to his current franchise, and his fate will become a constant distraction for the Cavalier organization for the entirety of next season.

But the Cavs aren’t without significant leverage.  Read more…

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Chicago Bulls: Salary Cap Maneuvering in Action

February 7th, 2014 3 comments

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…

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