Solving the Lowry conundrum and keeping current core (Vasquez, Patterson)

[mcHAPPY]

Sorry to rain on your parade, but this won't work. Let's put aside the fact that Lowry would never agree to a 5 year 36M deal when he could get a 4 year of the same total value...

Your premise is based on Collison's case. It only works that way if it is an extension. If the player is a free agent, the signing bonus is limited to 15% of the total contract value (5.4M, not your 9.8M), and furthermore, is not treated as a bonus under the cap - it's cap hit is spread equally over all the years of the deal. Lowry's cap hit for the contract you describe above (even with the too big bonus) would be as follows:

6.46, 6.79, 7.14, 7.47, 7.81

Now, the Collison case works because a team with cap space can place that signing bonus onto the remaining years of the current contract rather than the extension years. This is because it actually isn't just an extension. If it were, the signing bonus would be limited to 15% of the contract value. Instead, it is deemed as a renegotiation of the existing deal, adding salary to the deal, and the extension adds years to the renegotiated deal.

So OKC had an abundance of cap space that year, and signed Collison to an "extension" of 2.76M per year, but with a signing bonus of 6.52 million. Since they had the cap space, they allocated the entirety of that bonus to their current year's salary cap (by renotiating his current deal to be for 13M instead of 6). That gave him an effective salary of 4.4M per year over the extension, even though their cap hit was 1.6M less.

Applying that case to the Raptors, you can theoretically see potential. It gives the opportunity to offer more for Lowry than his theoretical extension limit would allow, which would solve the UFA risk problem. But for it to work, the Raptors need cap space now. And they are far from that. Currently they have 68M committed. That's about 9.4M over the cap.

Now if they wanted to offer Lowry 36M over 4 years to keep him, I think to agree to a 3 year extension he'd need more than 9M per year to do so. He could probably agree to 30M over 3 years instead of 36 over 4. Maybe that's optimistic, but I'll go with it. So that's 10M per year, which the Raptors cannot offer.

That is, they cannot offer it based on his current salary. 30M over 3 years is a starting salary of 9.3M. That means he would need a salary of 8.65M this year to be eligible for an extension of that value. He currently makes 6.21M - that's a difference of 2.45M. That is the amount of cap space the Raps would need to clear up - see, they don't even need to front load a full signing bonus to be able to keep Lowry, just enough to make re-signing him possible. So, let's take that 2.45M off the total contract, meaning we need only sign him to a 3 year, 27.5 M deal, with a "signing bonus" of 2.5M now. Now if you iterate that a few times, you get an ideal contract extension starting at 8.72M (28.1M over 3 years) with a signing bonus of 1.91 M.

So if the Raps can clear 1.91M in cap space, THIS YEAR, they could do it. So they would need to shed 11.35M in salary before June 30th. Waiving Salmons won't do it as his non-guarantee is for next year, not this year. Waiving Julyan Stone now would free up 0.54M. Longer you wait, the less that frees up, but that's not much anyway. Would have to be a big deal with a team well under the cap, or a deal for a player like Bynum (little late though).

The 76ers and Bucks have loads of cap space. A couple of deals with a couple of those teams, or a few deals with less salary coming back could add up to that 11M. Trading to receive unguaranteed players like CJ Miles would be a good idea as well. Although again you have to waive them immediately to maximize your savings.

Ahhh shit.

Nice post.

Thanks.

[mcHAPPY]

Original post edited to reflect DanH post.

Something to keep in mind for Amir in 2015 though - if he is still on the roster.

[DanH]

Original post edited to reflect DanH post.

Something to keep in mind for Amir in 2015 though - if he is still on the roster.

Actually a great idea, if the goal is to make a splash in 2016. Use 2015 cap space to hand out bonuses, free up a little in future while keeping talent.

[tucas]

Sorry to rain on your parade, but this won't work. Let's put aside the fact that Lowry would never agree to a 5 year 36M deal when he could get a 4 year of the same total value...

Your premise is based on Collison's case. It only works that way if it is an extension. If the player is a free agent, the signing bonus is limited to 15% of the total contract value (5.4M, not your 9.8M), and furthermore, is not treated as a bonus under the cap - it's cap hit is spread equally over all the years of the deal. Lowry's cap hit for the contract you describe above (even with the too big bonus) would be as follows:

6.46, 6.79, 7.14, 7.47, 7.81

Now, the Collison case works because a team with cap space can place that signing bonus onto the remaining years of the current contract rather than the extension years. This is because it actually isn't just an extension. If it were, the signing bonus would be limited to 15% of the contract value. Instead, it is deemed as a renegotiation of the existing deal, adding salary to the deal, and the extension adds years to the renegotiated deal.

So OKC had an abundance of cap space that year, and signed Collison to an "extension" of 2.76M per year, but with a signing bonus of 6.52 million. Since they had the cap space, they allocated the entirety of that bonus to their current year's salary cap (by renotiating his current deal to be for 13M instead of 6). That gave him an effective salary of 4.4M per year over the extension, even though their cap hit was 1.6M less.

Applying that case to the Raptors, you can theoretically see potential. It gives the opportunity to offer more for Lowry than his theoretical extension limit would allow, which would solve the UFA risk problem. But for it to work, the Raptors need cap space now. And they are far from that. Currently they have 68M committed. That's about 9.4M over the cap.

Now if they wanted to offer Lowry 36M over 4 years to keep him, I think to agree to a 3 year extension he'd need more than 9M per year to do so. He could probably agree to 30M over 3 years instead of 36 over 4. Maybe that's optimistic, but I'll go with it. So that's 10M per year, which the Raptors cannot offer.

That is, they cannot offer it based on his current salary. 30M over 3 years is a starting salary of 9.3M. That means he would need a salary of 8.65M this year to be eligible for an extension of that value. He currently makes 6.21M - that's a difference of 2.45M. That is the amount of cap space the Raps would need to clear up - see, they don't even need to front load a full signing bonus to be able to keep Lowry, just enough to make re-signing him possible. So, let's take that 2.45M off the total contract, meaning we need only sign him to a 3 year, 27.5 M deal, with a "signing bonus" of 2.5M now. Now if you iterate that a few times, you get an ideal contract extension starting at 8.72M (28.1M over 3 years) with a signing bonus of 1.91 M.

So if the Raps can clear 1.91M in cap space, THIS YEAR, they could do it. So they would need to shed 11.35M in salary before June 30th. Waiving Salmons won't do it as his non-guarantee is for next year, not this year. Waiving Julyan Stone now would free up 0.54M. Longer you wait, the less that frees up, but that's not much anyway. Would have to be a big deal with a team well under the cap, or a deal for a player like Bynum (little late though).

The 76ers and Bucks have loads of cap space. A couple of deals with a couple of those teams, or a few deals with less salary coming back could add up to that 11M. Trading to receive unguaranteed players like CJ Miles would be a good idea as well. Although again you have to waive them immediately to maximize your savings.

Your posts are great. You could make a living with your basketball knowledge.