A lot of columnists have been focusing on all the roster charges and holds that reduce the maximum available cap space for teams like the Heat, which will have significant room to work with to sign free agents in the offseason. However, many of these columnists – even the most experienced cap gurus – have been making big mistakes in their analyses.
When a team elects to use its cap space in the offseason, it has four primary non-cash charges to worry about: cap holds, exceptions, roster charges for carrying fewer than 12 players, and the scale amount for unsigned first round draft picks:
1. Cap Holds. Most of us understand by now, assuming you’ve been reading my posts, that when players become free agents they have cap holds attached to them which count against their current team’s cap. To release such cap holds and free up the cap space, a team only has to renounce its free agents. That’s easy enough to do. Therefore, cap holds do not reduce the calculation of maximum available cap space. (The one exception, of course, is if the team intends to re-sign one of its free agents – at which point the lesser of (i) the cap hold or (ii) the amount for which the team intends to re-sign him should be incorporated.)
2. Exceptions. If a team ever falls below the salary cap, it automatically loses any of its unutilized Mid-Level, Bi-Annual, Disabled Player and Trade Exceptions. Exceptions are meant as a means for teams to operate above the cap; if a team is below the cap, they wouldn’t be applicable. Once a team loses its exceptions, it can never get them back – even if the team eventually gets above the salary cap. Therefore, exceptions do not reduce the calculation of maximum available cap space.