Well, this is going to be what it's going to be. A lot of geeky numbers blah blah blah, so if you're bored skip it. Otherwise, stick around for what people might bother to tell you in April (assuming the Kings are in Sacramento by the end of the month that is).
So I'm going to address a few things, One is set-off, one is how the cap picture now looks after Brooks being waived and what it means moving forward, and what the summer outlook might be towards free agents.
After the jump…..
First the set-off part of this. From Larry Coon's incredible FAQ:
Guaranteed salary must be paid even if the player is released, and continues to be included in team salary after the player is waived.1 For example, if a player is waived with $10 million in guaranteed base salary remaining on his contract, then that $10 million will be included in team salary. If a player is waived part-way through a season, then the portion of team salary that is charged to the cap for that season reflects either the guarantee or the salary that was actually paid, whichever is greater. For example, if a player has a $6 million salary with $3 million guaranteed and is waived 1/3 through the season, then $3 million (reflecting the 50% that is guaranteed) continues to be included in the team salary. If instead he is waived 2/3 through the season, then $4 million (reflecting the salary actually paid) continues to be included. Players on non-guaranteed "summer contracts" are not included in team salary at all unless they make the team's regular season roster (see question number 68).
This would normally be a really big deal for the Kings come summertime. The fact that they waived Brooks now is a big problem moving ahead towards Free Agency in the summer in terms of cap space. Moving forward, however, is a different matter and I'll get to why at the end of this monstrosity. Keep in mind though, when I get to that point, this is why. You are going to be quizzed about this afterwards.
Here is why it's such a big deal:
The remainder of the contract includes any seasons following an Early Termination Option (ETO), but not a season following a player or team option. However, as mentioned in question number 57, all contracts with player options contain a clause indicating whether the player receives his salary for the option year in the event he is waived before the option is picked-up. This clause states that the benefit is "to the same extent" as if the option had been exercised. The league interprets this to mean that the team salary is charged to all seasons of the contract, including the unexercised option season. For example, when Derek Fisher was waived by the Houston Rockets during the 2011-12 season, his player option for the 2012-13 season was unexercised. His remaining guaranteed salary (he agreed to take less in a buyout arrangement) was charged to the Rockets' cap in both 2011-12 and 2012-13.
Mark Deeks also explains what happened with Derek Fisher and how it works out on Sham Sports as well if you wish to go that far ahead with things. See the bold? That's why it's important for the summer. But like I said, we're getting through set-off first. (I'm debunking the myth that it will do anything unless Brooks signs a really big contract in Houston.)
Now of course the last part is this:
If another team signs a player who has cleared waivers, the player's original team is allowed to reduce the amount of money it still owes the player (and lower their team salary) by a commensurate amount. This is called the right of set-off. This is true if the player signs with any professional team — it does not have to be an NBA team. The amount the original team gets to set off is limited to one-half the difference between the player's new salary and the minimum salary for a one-year veteran (if the player is a rookie, then the rookie minimum is used instead).
Okay, now the minimum salary for a 4 year veteran is 915,852$. However, there are several wrinkles to this. One is that Brooks is not going to play for the Houston Rockets (as it's already rumored he would sign there) for the full season so he's going to get a pro-rated share of whatever amount Brooks signs for in Houston. (Probably the veteran minimum.) Additionally, the commissioners office pays over any amount over 854,389 so that a team can sign a veteran without having to worry about the extra money that a 10 year veteran would make compared to a 4 year veteran when talking minimum salaries.
So here we go. Let's have some fun with numbers.
First off some assumptions are going to be made here. One is that Brooks is getting the salary from the Kings for the rest of the season that was guaranteed, two is that Brooks will not be getting his salary for next season, and third is that the new contract with the Rockets for Brooks will be a minimum salary.
Got that? Okay good.
Alright, Brooks is making 3,325,000 this season minus whatever set-off there is. Depending on what Brooks gave back to the Kings for the rest of this season and next, what the Kings save could be quite a bit. However for today, it does not matter. We are just talking theoretical set-off for the purposes of understanding it. A minimum salary, as I mentioned, is 915,852$ with a pro-rated share of 45/170's of the season (this is assuming Brooks signs tomorrow) coming out to 242,431$. The cap hit for Houston will actually be 226,162$ because 16,269$ is paid by the comissioners office. (Coon explains it in the link, but it's basically done to make older players just as attractive as younger players for minimum salary purposes.)
For set-off, we need to know what the minimum salary would be for a team for a one year player. At 45/170's of a season times the salary of a 1 year player at the minimum, or 762,195$–Isaiah Thomas' salary in otherwords–would be 201,575. Remember, we are taking half of the difference between the new salary that Brooks is getting with the Rockets and the 201,575$ figure. 226,162-201,575 = 24,587. Divide this by 2 and you get 12,293. You say 12.3 K? That's all? Yep, that's all. It goes higher the more money Brooks gets (which I doubt happens), but that's literally all the Kings would save this season assuming Brooks gets the minimum salary from Houston. It's a lot cheaper for teams (which is why they do negotiate buyouts so often) to simply force a player to take less salary in exchange for hitting the free agent market. In Brooks' case, the reason there was urgency is because in order for a player to be eligible for a playoff roster, he must be waived by his previous by March 1st.
Why is this important? A fan mentioned this at Sactown Royalty, and even though I was pulling a butt pulled guess about how large a salary Brooks would need to get from Houston, my point was that it needed to be high enough so the Kings wouldn't have to pay him. The number the Kings likely owe Brooks would be just a bit over 880K or 880,147$. For set-off to apply, the Kings would need the Rockets to sign Brooks to a contract totally 1,760,294 for the rest of the season. If that contract were applied over a full season, it would be the equivalent of a 4,154,293$ contract.
Yeah, set-off gets silly.
How does this effect this summer again?
Wait a minute. First the salary picture of what the team looks like first. Then the summer stuff. Patience is a virtue.
|Total w/o options||$54,250,236||$41,420,659||
1: Until the buyout is known, I'm going to assume 3.325 million rather than the buyout. When that changes I'll put it here.
So essentially, now, if you are just looking for the 2013-14 season, now what's up is a very different story. Looks like the Kings have a lot of cap room right? The Kings, with actual real ownership, could make a run at Andre Igoudala right? Wrong.
Cap holds do be a bitch. Tyreke Evans cap hold is a bitch, in particular. Oh, and there's a draft pick cap hold, too. The Kings right now hold the 4th worst record in the NBA. Thus, you have to factor a high pick in as well. A 4th overall pick at 120% of the scale (the most a pick can sign for and the cap hold for the 4th pick) would be $4,017,750. Tyreke Evans cap hold is 200% of his previous year's salary (this year's in otherwords) which would end up being $10,503,650. Assuming total salaries are paid as I've listed them (which is not very likely), the Kings won't have any real cap room when it comes to next year's Free Agent class anyway.
Yeah, it really doesn't make a single shred of difference that Aaron Brooks is gone. It's why, again, I've complained about the squandering of the Free Agent classes in 2011 and 2012 because there wasn't any other realistic time to spend that money. Raises for young players would kick in virtually eliminating cap room. Worse, there's a possibility the Kings might even pay luxury tax in 2014-15 because the Maloofs were too cheap to front load some of Marcus Thornton and Chuck Hayes contracts in the lockout shortened 2011-12 season.
So in case you're hoping that letting Aaron Brooks go would make a difference, and despite that it does clog up the cap a "little" (Brooks' salary this season is about 5.5% of the total cap for the 2012-13 season), it really makes no ostensible difference to the cap outlook when you factor in a high draft pick, Tyreke Evans cap hold (make no mistake that's going to be there and no team would be stupid enough to renounce Tyreke to get cap room) alone makes it nearly impossible for the Kings to play in the Free Agent market, and then with the draft pick's cap hold that will eat up even more room.
In otherwords, what summertime? You can amnesty John Salmons, but in my experience a market like Sacramento is better off trying to trade players on the roster for existing players on another roster with an existing player on the roster than try to go for broke in the Free Agent market. If you amnesty Salmons, you might save some money in terms of what a team might bid on Salmons in the amnesty waiver process. But, at the same time, trading Salmons for a longer salaried player is easier because a team is only on the hook for a million dollars in the 2014-15 season. In case you haven't been paying attention, teams are very fearful of the luxury tax these days. One way to take advantage is to give teams flexibility when and where it counts.
There are plenty of teams that are interested in cap relief. There are plenty of short contracts on this roster to use that expire sometime by 2015. So, if the Kings are to do something, and with this roster that's a goddamn necessity in all honesty, they need to do it through the trade market and the draft. That's the only realistic route moving forward. Despite my initial assessment of Brooks' being waived being an issue cap space wise, the reality is that it only hurts the team's potential cap space by 30% at most, and that's assuming the Kings amnesty John Salmons on top of that. Amnestying John Salmons will not achieve a Free Agent that will change this team around. Having cap space to make trades is not that big of a deal either. Teams don't really make cap space saving trades over the summer, and prefer to wait until the last moment (the trade deadline in February) to make that decision.
While waiving Aaron Brooks does not help the Kings cap situation, the committed dollars combined with a new Tyreke Evans contract and a high draft pick in the 2013 draft would wipe whatever gains you would get from that. 10 and 1/2 million on the NBA Free Agent market does not impress the likes of Andre Igoudala or Josh Smith. It doesn't even impress Tyreke Evans, and I guarantee Tyreke is getting a contract that exceeds his cap hold.
So keep hoping the Kings make a run at the Free Agent market, but, again, assuming the Kings are still in Sacramento by the time the draft rolls around, I hope there is a big time trade combined with an impact high draft pick. Because that's likely the best case scenario with a franchise that has ruined or demolished the value of all it's primary assets, sub-primary assets, and reasonable to middling assets. The sooner the Maloofs and Geoff Petrie leave the franchise, the greater the likelihood the franchise can succeed. Petrie has lost his magic, and well the Maloofs are resourceless chumps.
A nice change of pace and scenery, starting with competent adults and professionals, would be swell. Let's just hope that we get to the place where we can worry about that.
UPDATE: Aaron Brooks has signed with Houston for 2.4 million for the rest of the season, and a 2.5 million team option for the 2013-14 season. Set-off would be 1.16 million (or thereabouts) assuming the 2.4 million is not prorated. If it is prorated (and I'm assuming it is), then the number becomes a very different number. 43/170 of a season (when Brooks signed) multiplied by 2.4 million is $607,058. If you take $607,058 minus $192,790 you get $414,268. Divide this by 2 and you get 207,134 of set-off available for the Kings. Yeah, I knew set-off wouldn't be a big deal. Tole u so. I ain't sayin, jes sayin'.
But since the Maloofs are grade A Royal Scumbags, every dollar for them counts. Whether this means anything for their pocketbook or the Kings cap number, it's hard to say. That depends on quite a few things. But since 2.5 million minus $788,872 is $1,711,128, and half of that is $855,564. That's the cap relief, assuming the Rockets exercise their option, the Kings have gotten for waiving Aaron Brooks. Swell ain't it? Oh, and since you are probably the smartass thinking it, yes there is no real difference for a big free agent between 10 million and 11 million. The only way the Kings free up significant cap room for the summer is to make a trade that reduces overall salary around draft time.