Knicks Salary Cap Situation and How it Impacts Offseason Moves

Guest post written by Tony Lombardo (@TweetKnick)

This is a hopefully brief look at the Knicks salary situation going into this offseason and what kinds of moves they can and can not make to improve the team. First, let’s look at the players already on the roster for next year:

Player Salary Salary Type Years Remaining
Amar’e Stoudemire $21,679,893 Guaranteed Contract 2
Carmelo Anthony $21,490,000 Guaranteed Contract 1 + 1 year player option
Tyson Chandler $14,100,538 Guaranteed Contract 2
Raymond Felton $4,180,000 Guaranteed Contract 2 + 1 year player option
Steve Novak $3,750,001 Guaranteed Contract 3
Marcus Camby $3,383,773 Guaranteed Contract 2
Jason Kidd $3,090,000 Guaranteed Contract 2
Iman Shumpert $1,797,600 Guaranteed Contract 2 + 1 year team option
First Round Draft Pick $997,300 Guaranteed Contract 3 + 1 year team option
Total $74,469,105 Guaranteed Contracts

The Knicks have $74,469,105 committed to eight players plus their first round draft pick on guaranteed contracts for next year. Barring trade or retirement, these are numbers we can lock in. We’ll get to how trades or retirements could impact the team in a bit. First, let’s look at other relevant salary numbers for the off-season.

Player Dollar Amount Salary Type Max offer/exception type
J.R. Smith $2,932,742 Player Option ~$5,510,000/Early Bird
Pablo Prigioni $988,872 Qualifying Offer $988,872/Non-Bird
Chris Copeland $988,872 Qualifying Offer $988,872/Non-Bird

J.R. Smith has a player option for next year that he will almost certainly decline. Since he has now been on the team for two years, the Knicks will hold his Early-Bird rights. This means they can exceed the salary cap to offer him a contract starting at 104.5% of the average salary in the 2012-2013 NBA season, for between two and four years. The estimated average salary for 2012-2013 was $5.276 million, so 104.5% of that would be $5,513,420, though that number is subject to change slightly. At this point JR has indicated that he wants to sign the four year version of this deal.

Chris Copeland and Pablo Prigioni, as veteran players with three or fewer years in the league, can both be made restricted free agents if the Knicks submit a qualifying offer of their minimum salary plus $200,000, which is equal to $988,872 each. That $988,872 figure also represents to most the Knicks can offer either without using one of their salary cap exceptions, which we will detail later. Making each a restricted free agent means we have the right to match any contract offer given to them, provided we are able to under our own salary cap related restrictions. This means that if another team offered either a salary of $988,872, we would be able to match it and retain the player. If a team offered them more, we would be able to match it and retain the player provided we can make it work under the salary cap, which likely would mean using our mini-midlevel exception.

I would guess that Pablo Prigioni will likely take the $988,872 if he decides to stay in the NBA. There is speculation that his wife wants the two to return to Europe, so we will have to wait to see what Prigioni decides to do next year. Chris Copeland could receive a higher offer from another team, at which point the Knicks would likely have to decide whether to let him go or use their mini mid-level exception to retain him.

2013-14 Salary Cap Picture

There are three major numbers teams have to pay attention to in terms of their salary level for next year: The salary cap, the luxury tax level, and the apron. In 2013-13, these three numbers were as follows:

Salary Cap Luxury Tax Apron
$58,044,000 $70,307,000 $74,307,000

These numbers will be a little different for 2013-14. Likely they will be a little higher. These numbers are based on the BRI, Basketball Related Income. The salary cap calculation takes 44.74% of projected BRI, subtracts projected benefits, and divides by the number of teams in the league. The luxury tax does the same thing, but at 53.51%. The apron is set at $4,000,000 above the luxury tax line.

We will not have precise figures for any of these three levels until the NBA and Players Union meet in July to agree on a projection for next season. Until then, we will estimate a 4.5% increase for all three numbers, since if no agreement can be made, the league uses the previous year’s BRI increased by 4.5%. That would tentatively put these three values at the following levels for next year:

Salary Cap Luxury Tax Apron
$60,655,980 $73,470,815 $77,470,815

Most likely, these numbers will be somewhere between these two sets of figures. For what it’s worth, the forecasted BRI for next year, which was calculated when the CBA was negotiated, was $4.481 billion, compared to $4.308 billion last year, an increase of 4%. That number is certainly subject to change when the two sides meet in July though. Based on the amount of money they already have committed, the Knicks are guaranteed to be above the salary cap and above the luxury tax line. They most likely will be above the apron as well, but not so much so that they couldn’t get under it if they attempted to make cost cutting moves.

How the Knicks can and can not acquire players

The Knicks currently have nine players on their roster for next year, including their first round draft pick. An NBA team must have between 13 and 15 players on their roster. It’s generally safe to assume the Knicks will end up with 15. They can potentially resign J.R. Smith, Chris Copeland, and Pablo Prigioni as outlined above. Here’s how they can add additional players:

Resign their own unrestricted free agents: The Knicks can resign any of the other players on their team last year, most notably Kenyon Martin, can be resigned using the non-bird exception. This allows the Knicks to pay them 120% of their previous salary or 120% of the league minimum salary, whichever is higher. For Kenyon, this figure would be $1,679,408. Other qualified players like James WhiteQuentin Richardson, and Earl Barron are unlikely to be resigned.

The Mini Mid-level Exception: The NBA has two forms of mid-level exception. This is a once a year exception to the salary cap that a team can use to sign one or more players. The full mid-level exception is available to teams that would be under the apron after using it, and is for $5,150,000 in the first year. Using this exception imposes a hard cap on the team for the remainder of the year at the apron. Since the Knicks are already right about at the level of the apron before using any exceptions, resigning players, or filling out their roster, this will almost certainly not be available. The mini mid-level exception or tax payers mid level exception is available to teams above the apron. This will give the Knicks a $3,183,000 exception to use to sign one or more players. It will almost certainly be used on one player, as splitting it between two players barely gets you above the minimum salary level anyway. Similarly, the Knicks will not be able to use the bi-annual exception of $2,016,000, which also hard caps the team at the apron.

So in conclusion the Knicks will not have the $5,150,000 full mid level exception or $2,016,000 bi-annual exception, but will have the $3,183,000 mini mid-level exception to use.

Sign and Trades: Starting this year, sign and trades are only available to teams below the apron after the trade is completed. In addition, completing a sign and trade hard caps the team at the apron, the same as using the full mid-level exception. The Knicks, in theory, could complete a sign and trade, but it would mean several things. They would certainly have to let J.R. Smith go, as resigning him will definitely leave us above the apron. Even then, the Knicks would likely have to send out more salary in the trade than they receive in return, and would likely be limited to only minimum salary players for the rest of the roster. They likely would not have the space to use even the mini mid-level exception under this scenario. The Knicks could also potentially create more salary room by drafting a player who they can stash in Europe for a year, rather than one whom would join their roster immediately, if they seriously wanted to try to maneuver for a sign and trade.

In other words, due to all the restrictions it brings, the Knicks would only look to complete a sign and trade if it was to acquire a player that they felt was worth severely handicapping how they construct the rest of their roster and losing J.R. Smith. And even then, the other team would have to agree to take on whatever players the Knicks would look to trade.

Buying draft picks: The Knicks will not have the option to buy draft picks this year. Under the current CBA, a team is only allowed to send out $3,000,000 cash a year. The Knicks already did that this year during the Marcus Camby trade last summer. This amount does not reset until July 1. Therefore the Knicks will have that $3,000,000 to potentially sweeten a trade during the offseason, but will not be able to use it during the draft.

Trades: The Knicks are free to trade any of their players under contract, so long as the salary they receive is no more than 125% of the outgoing salary, plus $100,000. And as already mentioned, after July 1 the Knicks can include up to $3,000,000 cash in a deal as well. The Knicks can not sign or resign a player and then trade him in the same offseason, though they can acquire a player via trade and then trade him to another team in the same offseason.

Minimum salary players: Beyond that, the Knicks will be limited to signing minimum salary players to fill out the rest of the roster. This salary ranges from $490,180 for rookies to $1,399,507 for 10+ year veterans. This is how the Knicks acquired players such as Steve Novak, Jeremy Lin, Chris Copeland, Pablo Prigioni, Kenyon Martin, Rasheed Wallace, and so on over the past couple of years.

Can we renegotiate a contract to provide more space below the apron: No, we can not. Contracts can only be renegotiated by teams under the salary cap, and even then, only to give the player more money.

Can we amnesty a player to create more salary room: No, we can not. The Knicks already used their amnesty provision on Chauncey Billups, in order to sign Tyson Chandler.

What does this mean for…

Marcus Camby and Jason Kidd’s future: Both Jason Kidd and Marcus Camby have guaranteed contracts for the next two years with the Knicks. It is possible that one or both could decide to retire before the next two years have concluded, though retiring during this offseason would mean walking away from $6,180,000 for Kidd and $7,560,981 for Camby. I would guess that neither is likely, but if either were to retire, the amount of their contract is wiped clean from the Knicks salary picture. This would not help us much in terms of signing free agents, though it might help if the Knicks are determined to try to squeeze in under the apron level for a sign and trade. Otherwise, it would likely have little effect other than meaning we have another player to sign this offseason.

Chris Paul: Chris Paul will be an unrestricted free agent this summer. He is likely to resign with the Clippers, but he’s a player Knicks fans have been clamoring for ever since he toasted to teaming up with Carmelo Anthony and Amar’e Stoudemire in New York at Carmelo’s wedding. The Knicks can not sign him outright, since they are over the salary cap, unless he was willing to sign for the $3,183,000 mini mid-level exception, which he won’t be. The only way the Knicks could acquire him is via sign and trade. In order for that to happen, the Knicks would have to remain under the apron level for the entire year. This would mean not resigning J.R. Smith, perhaps looking to draft a player we can stash in Europe or even potentially trading away our draft pick, and limiting ourselves to only minimum salary free agents. Even then, it is likely we’d have to send out a little more money than we’d receive in the sign and trade, depending on exactly where the apron level ends up being.

Assuming Chris Paul signs a maximum level contract, his salary figure would be $18,668,430. In order to offset that, the Knicks would have to either trade Amar’e Stoudemire, Carmelo Anthony, or some combination of Tyson Chandler, Raymond Felton, and another low salary player like Iman Shumpert. The Clippers would certainly not be interested in Amar’e Stoudemire, who has not been healthy in years and has one of the league’s worst contracts. The Knicks would almost certainly not be looking to trade Carmelo Anthony. So, realistically, the Knicks would be looking at likely trading Tyson Chandler, Raymond Felton, and Iman Shumpert in a sign and trade for Chris Paul. Even then, the Clippers would have to agree to such a deal, which they likely wouldn’t, and the Knicks would have very little in the way of resources to replace those players, especially Tyson Chandler who would leave them without a true center on the roster other than Marcus Camby.

What all this adds up to is a situation in which it’s almost impossible for the Knicks to acquire Chris Paul. And with all signs pointing to the idea that Chris Paul is expected to resign and is not pushing for a move elsewhere, it’s probably best for Knicks fans to give up on this.

Like the Meloship of the Ring on Facebook