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  Money Talks  with shrink

First, would Rudy Gay's qualifying offer carry over to us if we were to trade for him midseason?

Second, if so, would that technically count him as a member of our team over the summer, meaning we could use our cap space to sign a free agent, THEN sign Gay afterwords because we can go over the salary cap to resign our own players?

Brian

Hey Brian!  I share your interest in Rudy Gay, particularly after he and Memphis were unable to come to an agreement on a contract extension a few weeks ago.  While I am concerned about a number of his statistics, I suspect his situation in Memphis leaves him unhappy and artificially lowers his production.  If he reaches free agency, these concerns may push other teams to gamble longterm money on more reliable free agents ahead of Gay, and I suspect that a lot of the NBA's cap space will be gone by the time Gay gets a contract.  With less buyers, I think his final contract may be less than we expect, and his physical tools give him the uncommon opportunity to sign a fairly large free agent deal, and still get upside on that money.  There are a lot of scenarios for Rudy Gay, and he's an interesting player to follow.

In 2010, Rudy Gay is still a restricted free agent on his rookie scale contract, and Memphis' inability to sign him to an extension does not mean that they lose their ability to make him a qualifying offer of $4,422,784 next summer, which they will.  If he's traded to us, we retain that right as well. 

Also, whoever has him will have the right to match offers from other teams.  In my view, if things don't improve with the relationship between OJ Mayo and Rudy Gay, and Gay and the rest of the team, small-market Memphis would be unlikely to use their right to match an expensive offer.  Next season they will be paying Zach Randolph and Marko Jaric a combined $25 million, and they would struggle to pay for Gay's deal until 2011.  This may encourage them to try to trade Rudy Gay, rather than lose him for nothing.

If Minnesota acquires Rudy Gay, he will indeed carry a cap hold for 2010.  Here's the skinny:

For first rounders like Gay, if the player's salary from last year is greater than the average salary of all the league’s players, his cap hold is 2.5 times his salary. If his salary is less than the average league salary, then his hold is 3 times his salary.

For non-first round free agents, they have a cap hold equivalent to 1.5 times their last years salary if that salary is above the league average and 2 times their last year's salary if its below.

Finally, the hold cannot be larger than the player’s maximum first-year salary on their new contract.  For example, 3x the #1 pick's last year would be greater than a max deal.

For Rudy Gay, his  will likely be less than the average salary, which should come in near $5 mil.  As a first rounder, his cap hold would be $3,280,997 x 3.0 = $9,842,991.

Cap holds are in place at the beginning of free agency, and are designed specifically to prevent teams from creating artificial cap space by delaying contracts to players they have the rights to.  If we traded for Gay before the deadline, his cap hold would prevent us from using our cap space elsewhere unless he was dealt to another team.  Notice that Randy Foye would have put us in the same situation if he had not been traded.

Got Questions?  EMail shrink at nba_economist@yahoo.com and you may find yourself in a future mailbag!