Archive

Posts Tagged ‘Roster Charges’

Understanding the Charges

January 15th, 2010 No comments
Tweet about this on TwitterShare on FacebookEmail this to someone

After a wild ride through a doomsday scenario that would have made it impossible for the Heat to achieve its goal of acquiring thee maximum contract free agents this summer, things have somewhat stabilized.

The economy is slowly bottoming. Salary cap projections for next season are slowly rising.

The cap is still, by all accounts, expected to fall from this season’s $57.7 million level. But agents who have been briefed on updated financial figures now are using $54 million as their operating number, a stark improvement from previous league-issued projections as low as $50.6 million.

Unfortunately, the upcoming drop in the salary cap will not take the maximum salary amounts for the league’s most coveted free agents with it.

Max salaries are determined as a percentage (either 25, 30, or 35 depending upon a player’s tenure) of the cap (1). Therefore, when the cap declines, so too do all the maximum salary calculations. But there’s a fail safe. A free agent’s maximum salary in the first year of a new contract is never less than 105% of his salary in the last year of his previous contract. In this declining salary cap environment, the fail safe will apply to each of Dwyane Wade, LeBron James, Chris Bosh, and Amare Stoudemire.

The latter player is currently earning slightly more than the former three. So if the goal is to acquire the former three within the confines of the cap, we can already definitively know how much it will cost. Each player will command a salary of up to his $16,508,968 maximum. Add three together, and you get $49,706,724.

So for every dollar the cap declines, that’s one less dollar the Heat will be able to apply to the $49,706,724 goal.

There are plenty of teams positioning themselves to sign two maximum contract free agents, and plenty of them in desirable perhaps equally desirable markets – teams like the Knicks and Nets in New York, the Clippers in Los Angeles, and the Bulls in Chicago. What most differentiates the Heat from the pack is its potential to sign three.

The Heat only has on its books for next season Beasley’s $4,262,436 salary, Cook’s $2,169,857 salary, and Jones’ partially-guaranteed salary which can be reduced to $1,856,000 if he is waived. That’s a total of $8,288,293, producing a net difference of $45,717,707 at an assumed $54 million cap level.

Trade away Michael Beasley and it increases to $49,974,143.

So that’s it. Trade away Beasley and the Heat are sure to have enough cap space to sign three maximum contract free agents, right? Wrong.  Read more…