Money Talks Mailbag
by shrink on Nov 9, 2009 5:27 PM CST
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Hey guys, its good to be here! I wanted to thank the Canis Hoopus guys for the chance to be a part of their website, and you guys for being faithful readers.
I will be running a regular feature called "Money Talks Mailbag" where I will try to answer your questions about finances and the Collective Bargaining Agreement. These issues drive NBA front offices, and I hope I can give you a little different perspective on the game. You can email me at nba_economist@yahoo.com with your questions, and they may appear in an upcoming article!
Mail Bag #1
What's a cap hold?
In order to understand cap holds, you need to understand the salary cap. Unlike other sports (..grumble ..baseball), where a rich owner can often buy championships, the NBA has installed a salary cap that limits what teams over a certain payroll can do to add talent. For example, a team over the salary cap can't add players from other teams without using exceptions, and their trades needs to match salaries within 125% + $100,000. How come we have a cap hold on Ricky Rubio if he's over in Europe?
The next question quickly became "so what's your payroll?" To determine a realistic number, cap holds on player's rights needed to be added in addition to guaranteed salaries.
http://spreadsheets.google.com/pub?key=r0EIACYJtq4Wgjl-ZmYzRug&gid=19
Let's take a look at the Wolves in 2010. As you can see, we only have eight players with guaranteed contracts, and the NBA minimum is 13. If we had no other players coming in, the five spots would be assigned a cap hold equal to a player making the minimum, to determine out actual salary.
Cap holds arise from many things. Obviously, first round picks carry guaranteed salaries, and until the player signs a contract, that would be a cap hold. Exceptions carry cap holds, until they are renounced. Players' rights carry cap holds. All of these numbers are not real dollars, but allow the NBA to determine more precisely what a team's true salary is, and keep teams from using salary cap advantages simply be delaying contracts to expensive players.
Players who were picked in the first round that are over in Europe have different rules. Obviously we carry Rubio's rights, so he fits the same definition of a cap hold that I answered in the previous question. However, while he remains in Europe, there are two major differences.
1. Rubio's cap hold only lasts during the summer. This makes sense, because that's when most of the free agent movement would be going on. His cap hold disappears later, creating a truer reflection of what the Wolves salary.
2. Rubio's cap hold re-sets. Every year that we retain Rubio's rights, his cap hold stays at the level of the #5 pick of the current year. His cap hold last summer was $2,724,300. Next summer it will be $2,812,200, 100% of the rookie scale for a 2010 #5 pick, and that amount will be subtracted from our available space under the salary cap.
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Strange.
Why are rookie salary scales increasing if most everything else (luxury tax line, salary cap, contract sizes) decreasing?
Rookie Scale
Like you, I was accustomed to everything being based on the BRI calculation, but I guess it makes sense that the Player’s Association was willing to lock these salaries up in their CBA negotiations. Owners are happy to lock the young players into smaller deals, and for veterans in the league, the small deals by the younger players coming in means they take less of the pot away, so they can hope for bigger contracts. Of course, in 2005 it looked like the NBA would continue to expand, but I think we see this in the CBA because it made sense for both owners and vets bank accounts to lock up the new players to these contracts.
For anyone interested, here’s a link from the NBPA with the rookie scale for each season.
So does a cap hold basically count as a player under contract?
$4mil is a lot to take out of our cap space when we don’t have a logical way to break even on it. That would make me rethink supporting picking up Brewer’s option.
sort of
Think about one of our expirings…say Brian Cardinal. After the season, he will count against the Wolves 2010-11 cap in the amount of 150% of this year’s salary until the Wolves either renounce their (Bird) rights to him, or he signs elsewhere.
Brewer is now under K for 2010-11, but had they not picked it up, he still would have counted for the full amount against the cap until the Wolves renounced or he signed, because that’s the amount they could pay him using the Bird exception (which is the relevant amount for a player coming off his 3rd year of a rookie contract).
by Eric in Madison on Nov 9, 2009 6:22 PM CST up reply actions
What about Rubio?
If his cap hold is counting against our cap space, do we at least have one fewer roster spot cap hold? I feel like it wouldn’t be fair to charge us with both.
THIS IS GREAT
Shrink, I’ve been reading your trade proposals over at RealGM for a few years now and it’s good to see you expanding your forum. Since the product on the floor isn’t so great right now, dreaming of trades and future draft picks is the way to go.
With the recent additions of Britt & Shrink, Canis has gotten that much better! Good work, SnP and Wyn! I would say this blog’s better than BE, but that might attract some concern trolling from the Northwest. Heck, I’ll say it anyway— Best F-in’ Blog Ever.
LeBron
LeBron has said he wants to go somewhere where he can win. The Knicks are coached by Isaiah Thomas. Assuming he leaves the Cavs, can the Wolves get LeBron?
Probably not
And isn’t D’Antoni the coach in NY? Pringles is a considerably better coach than Isiah.
Correct.
Isiah is now finding a way to screw up FIU.
You were a daydreamer, a sass-mouth, and, not infrequently, a bit of a gigglepuss. Somehow I doubt twenty years of amphetamines and failure have done anything to improve that.
by Kevin Loves McHale's Navy on Nov 9, 2009 7:06 PM CST up reply actions
if shrink’s piece is called “money talks” can I start calling him havoc hailey?
btw once I start writing here you can officially call this realgm 2.0
by revprodeji on Nov 10, 2009 1:57 PM CST via mobile reply actions
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