Salary Cap FAQs: Post-Trade Edition

It's been awhile since I've done a FAQs article, but with the recent activity at the trade deadline it's clear that a lot of people have some unresolved questions.  These answers are accurate as of the current Collective Bargaining Agreement, but keep in mind that all of this could easily change this summer at the players and the NBA negotiate a new CBA. 

Without further adieu, here are the FAQs.  If you have any further salary cap related questions, ask them in the comments below.

1.  I keep hearing that Perk turned down a "max" contract extension of $22 million.  If we have his Bird rights, how can that be accurate?

The thing to remember is that extensions are not the same thing as free agent signings.  For non-rookie players, the CBA limits the first year of a contract extension to 110.5% of the salary in the last year of the existing contract. Then, after that first year value is established, Perk could receive raises equal to 10.5% of that last year value every year. The extension could have been for no more than four seasons.

In other words, the most we could offer Perk in an extension was as follows:

$5,127,429.84 (10.5% raise over last year of contract)
$5,614,650.97 (raise of $487,221.13, equal to 10.5% of prior contract’s last year value)
$6,101,872.10 (raise of $487,221.13, equal to 10.5% of prior contract’s last year value)
$6,589,093.23 (raise of $487,221.13, equal to 10.5% of prior contract’s last year value)

Total: 4 years, $23,433,046.14 (which is quite a bit less than the MLE)

On the other hand, this summer we could have used "Bird rights" to sign Perk to up to a six year deal, with a starting salary of up to approximately $16.2 million in the first year, with annual raises equal to 10.5% of the first year value.  Obviously, Perk was never going to be given a contract like that, but an asking price of 5 years, $50 million wouldn't have been outrageous.

To inject some personal opinion here, it's probably unfair when people criticize Perk for "turning down a contract extension", since the offer was capped by the CBA.  It's unlikely that the team ever expected Perk to accept its extension offer, and the offer would have been used as a jumping off point should the team and Perk have wished to revisit negotiations.

2.  Is Perk still a free agent this summer?  Could he re-sign in Boston?  Does OKC have his Bird rights?

Yes, Perk is still an unrestricted free agent.  His Bird Rights transfer to OKC, meaning they can sign him for up to six years.  However, nothing binds Perk to OKC (at least under the current CBA), and he'd be free to sign with any team in the off-season, including Boston.  The most we could offer him as it stands right now is the MLE, which currently would be approximately 5 years, $35 million.

3.  I heard that both Krstic and Jeff Green are free agents.  How much can we sign them for?

Both Krstic and Jeff Green are free agents this year.  Krstic is unrestricted, and Jeff Green is a restricted free agent.  We own the Bird rights to each player, meaning we can sign each for up to a six year contract in the off-season (assuming that the current CBA remains in effect), for up to a "max" contract (starting around $13 to $16 million, with an annual raise of up to 10.5% of the first year value of the contract.)

4. Wait, what is a "restricted" free agent?  How does that differ from an unrestricted free agent?  Will we have Jeff Green back next year?

Restricted free agency applies to first round picks following the fourth year of their rookie scale contracts, or for all other veteran players who have been in the league three years or fewer.

To make a player "restricted", a team must extend that player a qualifying offer.  In the case of non-first rounders, the qualifying offer must be 125% of the player's previous salary, or the minimum salary for a player of that experience level plus $175,000, whichever is greater. 

Jeff Green's qualifying offer next year is $5,908,641.  If he chooses, Green can "accept" the qualifying offer and choose to play the Celts for that $5.9 million salary next year, and become an unrestricted free agent in the summer of 2012.

Once a free agent is restricted, the player isn't required to play for the qualifying offer; he has the right to sign a contract offer sheet with any team of his choosing.  The player's original team retains the right to match any offer sheet the player is signed to.  This is different from the case of unrestricted free agents, where the original team has no right to match an offer sheet from another team. 

Word on the street is that Green was asking for a contract of around 5 years, $50 million when in OKC.  If I had to guess, I would say that the Celtics preference is for Green to play for the qualifying offer next year, before making a final free agent decision on him in the summer of 2012.

5.  We acquired the Clippers 2012 first rounder in the Perk trade?  Where did OKC get the pick?  Are there any restrictions on the pick?

Oklahoma City traded us the Clippers 2012 first round pick they acquired for trading the rights to Eric Bledsoe to the Clippers on draft night.  This is the Clippers own pick.  The pick is "top ten protected" in 2012 through 2015, meaning that if the pick falls in the top ten selections after the lottery is held, the Clippers keep the pick and it "rolls over" until the next draft.  In 2016, the pick becomes unprotected, meaning that we get it no matter what.  Note that we do not have the option of choosing to roll the pick over; if the Clippers fall outside of the top ten, the pick becomes ours.

The Clippers also own Minnesota's #1 pick next year.  In the unlikely event that Minnesota finishes with a lesser draft pick than the Clippers in 2012, we would receive the Minnesota pick, provided it is not in the top-10.  If both Minnesota and LA are in the top-ten, then the pick would roll over to 2013, as noted above.

6.  What benefit did we get out of the trades with Cleveland and Sacramento?

While the Cleveland and Sacramento trades didn't look like big deals, they did provide a benefit to the team.  First, of course, we acquired a 2013 Twolves second rounder from Cleveland.  Perhaps of equal importance, the team saved several million in luxury tax payments.  Teams only pay luxury tax on the contracts that remain with the team at the end of the season (i.e., players on the roster, or waived players who weren't claimed by another team.) Therefore, we don't owe tax payments on Luke, Semih, or most importantly, Marquis.  This saves the team a little over $3 million.

Also of importance is that the team picked up a "trade exception" of $2.388 million.

7.  Explain the trade exception thing some more.

Basically, a trade exception is an artifical construct of the CBA, that is used to balance trades when incoming money and outgoing money aren't equal.  Here, Sacramento took on Marquis' entire contract of $2.388 million, and didn't send any salary back.  Therefore, to balance the trade on our end, we are granted a "trade exception". 

In a nutshell, we're granted a $2.388 million salary slot to trade for a new player any time within the next year.  The player we acquire must have a salary of no more than the amount of the trade exception amount (or no more than  100% of the amount + $100k if acquiring a player via trade), or in this case $2.388 million total ($2.488 million if by trade).  Exceptions can't be combined together, and they can't be used to sign a free agent, although they *can* be used to pick a player up off waivers.

8.  Are there any restrictions on the second rounder we picked up from the Cavaliers?

There are no reported restrictions on the pick.  The pick apparently is the Twolves own second rounder, acquired by the Cavs in the Ramon Sessions / Delonte West deal.  However, at least one source has stated that the Celtics got their own 2013 second rounder back, by way of the Twolves.  I don't believe we traded our 2013 second rounder to the Twolves in the KG deal, and I can't think of any other trades between the teams, but I figured it was worth mentioning.

9.  What's the deal with buyouts?  Is there a limit to how much of a player's contract he can agree to buy out?  What is the last date on which a player can be bought out and still be eligible for a team's playoff roster?  How many free agents can we sign?

At any time, a team and a player can agree to a buyout of that team's remaining salary obligation to that player.  The Celtics did this with Vin Baker, Dino Radja and Rasheed Wallace in the past, and in recent years Chris Webber, Sam Cassell, Joe Smith, Drew Gooden, Stephon Marbury, Mikki Moore (ugh) and others have all agreed to buyouts.  In a buyout situation, the team pays a player a reduced amount, and allows that player to become an unrestricted free agent (after they clear waivers).  The team executing the buyout is responsible for the agreed upon sum, with the cap hit being divided out equally among the remaining years of the contract (ie, in Vin Baker's deal, he had three years on his deal, and he agreed to a $16 million buyout.  Thus, the team carried a $5.33 million cap hit on its salary cap for three years.)  There is no limit to the amount of salary that can be bought out.

In order for a bought-out player to be eligible to play on another team's playoff roster, he must be bought out no later than March 1, 2011.  You will inevitably read reports that state that the player must sign with a new team by March 1 to be playoff eligible; this is erroneous.  The only deadline for signing is the last day of the regular season.

10.  How much can we offer bought out players?  Can other teams offer more?

Bought out players are free agents once they clear waivers.  Teams can sign them with cap room, or with any other salary cap "exception" they may have, such as the MLE, the LLE, or the minimum salary excpetion.

The most we can offer bought out players is a minimum contract, which ranges from $473,604 for rookies to $1,352,181 for players with 10+ years of experience.  Since we're 2/3rds of the way through the season, the players would receive a pro-rated share of the minimum.

Among contenders, Boston, Miami, Chicago, and the Lakers can only offer minimum contracts.  Orlando has its LLE / Bi-Annual Exception of $2,080,000 left, and San Antonio has both its LLE and $2,365,000 of its MLE left.  Dallas has its entire MLE -- $5,765,000 -- left, along with its LLE.  In other words, if bought out free agents care about money, there may be better options for them.

11.  I keep hearing Rip Hamilton's name come up.  Will he be bought out?

It's possible, but unlikely.  Hamilton is owed the remainder of his $12.5 million this year, plus has $21.5 million left in guaranteed money on his contract over the next two years.  If Detroit were to buy Hamilton out, they'd be keeping a fairly large cap hit on their books for the next two years (plus this one) for a player they couldn't play or trade.  Hamilton was offered a buyout as part of a potential trade to Cleveland, but he turned it down because he didn't want to give back a substantial amount of his guaranteed salary.

12.  Where did Chris Johnson come from?  What is a "10 Day contract"?

Chris Johnson was an unrestricted free agent who was previously playing in the D-League.  We signed him to a 10 day contract, which is a contract for 10 days or the next three games, whichever is longer.  Teams can sign players to a maximum of two 10 day contracts in a season.  Johnson signed for a pro-rated minimum salary, which is the most that we could offer him.

13.  Don't we own the rights to Stephane Lasme, Tiny Gallon, and Mario West from the D-League?  Why didn't we just "call up" one of these guys?

This is a common misconception.  Lasme, Gallon, and West played for us in training camp, and now play for our D-League affiliate in Maine.  However, we don't "own their rights".  Instead, these guys are unrestricted free agents, who are eligible to sign with any team.  If we want to sign them, we have to negotiate a contract for them, just like any other team would have to.

14.  I still don't get it.  If we needed to clear roster space so badly, why didn't we just send Luke Harangody and Avery Bradley down to the D-League? 

NBA rosters are capped at 15 players, whether those players are playing for the NBA club or one of its D-League affiliates.  Unlike the case of Lasme, et. al., we did own the rights to Luke, Bradley, etc., because these guys had been signed to NBA contracts.  Therefore, sending them down to the D-League was irrelevant to clearing roster space.

15.  Troy Murphy hasn't even been bought out yet.  Since he isn't a free agent yet, isn't it tampering for teams to discuss their future plans with him?

Yes, technically it's tampering for a team to talk to a player who is under contract to another team, like Murphy is with the Warriors.  However, teams commonly violate this rule, so it's a pretty good bet that Murphy knows about the Celtics interest, and the Celtics have at least gotten some indication that he's interested in them.

16.  Is Rasheed coming back?  If he did come back, would his previous salary be reinstated?

Rasheed has repeatedly denied that he's coming back.  However, if he were to come back, he'd be in the exact same shoes as any other free agent.  His previous salary wouldn't be reinstated, and he wouldn't owe us any money from his retirement buyout. 

17.  Where can I research these issues on my own?

Larry Coon is an invaluable resource, and is the go to guy on all questions related to the CBA.  You can also find previous additions of this FAQ   You can also check out the previous versions of this FAQ: 2007, 2008, 2009 (sorry, no 2010; life got in the way last summer).

18.  You're not going to end on 17 questions, are you?  Isn't that bad luck?  I thought the theme of this season was supposed to be "Eighteen".

Right you are.  (How long until they cut Perk out of that video?)

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