This post is no longer relevant.
February 20th, 2014
There follows a post that was in the process of being edited ready for posting on SBNation.com which talked about the Spencer Hawes to Cleveland deal and how it did – or rather, didn’t – affect the Sixers’s proximity to the salary cap floor. However, Adrian Wojnarowski’s latest tweet, which states that Danny Granger is to be traded to the Sixers, makes it irrelevant now. It is hereby posted here anyway on account of the fact that, one day, it might serve as a good point of reference for the minutiae described within.
Much has been made of the Philadelphia 76ers’ payroll this year, or rather, the lack of it. It is so unique of a situation that it merits and attracts constant comment, something to which we have all been susceptible. I covered the situation a few months ago, trying above all to convey one important point: it doesn’t really matter.
Five months on and it still doesn’t, mostly. However, in keeping with every CBA provision you have ever heard about, the idea of a minimum team salary is more complicated than it first appears.
As of Wednesday morning, the Sixers had a 2013/14 team salary of $47,678,819, $11 million short of the salary cap, and slightly over $5 million short of $52,811,100, the amount equal to 90 percent of the salary cap that represents a team’s minimum payroll requirement. Media and fans alike have been wondering how Philadelphia intended to fill that void midseason, and with the reported trade of Spencer Hawes’s $6.6 million contract for Earl Clark’s $4.25 million one and two second round picks, it seems that all the Sixers have actually done is get further away from it.
However, the issue is clouded as ever by the unintentional confusion of language that so often accompanies CBA discussions in the public realm. While we never really specify them as being different because we never really need to, there is in fact a difference between “team salary” and “team payroll.”
A team salary is the amount of money charged to a team’s salary cap. This is what we almost universally deal in when we refer to salaries. When we talk about player’s “salaries,” we are talking about their cap numbers, i.e. how much they count against the cap. The term is used interchangably with the idea of actual moneys paid for the same reason no one sees fit to differentiate between “Netherlands” and “Holland,” or “United Kingdom” and “Great Britain:” we all know what is meant, and nobody wants to be that guy. In this specific instance, however, the difference might actually matter. In contrast, a team’s payroll is how much that team actually pays out in salary that year. For the most part, it correlates exactly to team salary. However, the correlation is not 100 percent. There are a few ways in which a team’s payroll can deviate from its team salary, yet the most obvious one is when players are traded midseason. Trading Hawes’s $6,600,000 salary for Clark’s $4,250,000 does not mean the Sixers are now $2,350,000 further beneath the salary floor. Due to the proration of contracts as they are paid out during the season, the amounts paid and outstanding are not that clearcut. 113 days into a 170 day season, the Sixers have already paid a big chunk of Hawes’s contract, an unspecifiable amount rendered further confusing by the presence of an advance payment clause (for an unknown amount) in Hawes’s contract. They could have paid him close to $5 million already. No such advance payment clause exists in Clark’s contract, who is therefore owed $1.4 million for the remainder of the season. Thus, from a team payroll point of view, the trade is likely close to a wash for Philadelphia.
It is not a wash in terms of cap number. However, when calculating a team’s proximity to the minimum salary threshold, it is payroll that is used, not team salary.
A further important deviation between the two can be found in the salaries of waived players, particularly those signed under the previous CBA. These often do not affect team salary in the way they affect team payroll.
Under the previous CBA, when players were waived or bought out, their remaining team salary hit was spread out proportionally over the guaranteed seasons of the terminated contract, yet how the actual money was paid out was a matter of individual negotiation. This led to some long-term agreements being devised. For example, until quite recently, the Blazers were still paying Shawn Kemp despite him not having been a Blazer since about 1973. For the purposes of calculating a team’s cap number, however, this did not matter. Under the new CBA, teams have the opportunity to modify the cap hit slightly. Using the stretch provision, the cap hits for waived players can either follow the same procedure as the old CBA or be spread out evenly, over a period of time equal to twice the amount of remaining seasons of the contract, plus one extra. This provision has been used by Memphis on Fab Melo, for example, whose $1,311,240 owed salary has been stretched to a three year annual $437,080 cap hit. In terms of payroll, however, the money owed to waived players signed under the new CBA follows this double-plus-one formula and is no longer negotiable.
It is possible, then, that the Sixers are still paying the long-since amnestied Elton Brand, if a revised payment schedule had been agreed upon his waiving. If they are – and it was not an uncommon practice to do so, particularly in deals as large as Brand’s was – his unknown amount is still being charged to the Sixers’ team payroll, pushing them much closer to the minimum payroll floor, or perhaps even over it. Attempts to confirm the exact circumstances of Brand’s payment schedule have thus far been unsuccessful, yet the chance is a real one.
Whether Brand counts or not, though, we ultimately need not worry. In the event that a team does NOT meet the minimum team salary, Article VII section 2(b) of the Collective Bargaining Agreement specifies only thus:
In the event that a Team’s Team Salary for a Salary Cap Year as of the start of the Team’s last Regular Season game of that Salary Cap Year is less than the applicable Minimum Team Salary for that Salary Cap Year, the NBA shall cause such Team to make payments equal to the shortfall (to be disbursed to the players on such Team pro rata or in accordance with such other formula as may be reasonably determined by the Players Association). The Players Association shall provide the NBA with its proposed distribution of any such shortfall within thirty (30) days after the completion of the Audit Report for such Salary Cap Year. The NBA shall cause the Team to make the required payments, less all amounts required to be withheld be any governmental authority, within ten (10) business days after receipt of the proposed distribution from the Players Association in accordance with the preceding sentence.
So basically, the penalty for not meeting the minimum team salary is……meeting the minimum team salary. Meaning that the players they already have will get a bit more money. Which serves to please both them and their agents.
Oh. Well, then. That’s not so bad.
On a basketball level, Philadelphia had no incentive to keep Hawes, a player sufficiently good so as to affect their plans to be bad, sufficiently old so as to not be a part of the future going forward (turning 26 in April, Hawes is almost pension age by the Sixers standards), and suitably expiring of a contract to require trading now for whatever can be gotten, rather than letting him walk without recompense in the summertime. Two second round picks and the useful but very sporadic Clark is seemingly the best they could do, an emphatic proof of something else discussed here a few months ago – the fact that first round picks are now held in such high regard league wide that they can hardly be pried away from teams now. Even if it was only for a short term rental – which Cleveland are surely hoping it will not be – Hawes is a 25 year old 7 foot inside/outside highly skilled breakout centre averaging 13.0 points, 8.5 rebounds and 3.3 assists per game with 40% three point shooting, yet he still could not command a first. Welcome to the new risk-averse NBA.
Indeed, of all the teams to be risk averse about such matters, Cleveland must rank quite highly. The Luol Deng trade has gone so badly that they are said to have been looking into re-trading him immediately, despite being only six weeks removed from trading a protected first rounder, two second rounders and a right to swap first round draft picks for him. The Cavaliers traded this package for Deng on the assumption (or hope) that they could extend or re-sign him, yet with that chance already looking extremely unlikely, they put him back on the market. They weren’t making that mistake again.
The problem with re-signing Deng stems from the apparent toxicity that the Cavaliers franchise is currently dealing with, and it isn’t something the addition of Spencer Hawes will rectify. Nevertheless, Cleveland lands a starting calibre centre for the cost of two second round picks, which isn’t easy to do. Second round picks are also being deemed increasingly valuable, yet if they land you players of this sort of quality, that value is trumped. More importantly than trading for him for two months of mostly meaningless play, Cleveland also trades for Hawes’s Bird rights, allowing them to pay any amount they like to re-sign him.
This being Cleveland, they will probably need to.