After last week, where we looked at a few rules from the new Collective Bargaining Agreement (that have been reported — the agreement isn’t set in stone yet), let’s take a look at what actual impact those changes will have on the Raptors’ cap situation this summer. You can compare to this article from the summer, where we looked at summer 2017 from before these rule changes are made, if you want a detailed look at the differences.
Assuming no trades are made this season, here is the salary cap situation for next summer. This assumes Lowry will opt out of his contract, which he certainly will.
DeMar DeRozan $27,739,975
Jonas Valanciunas $15,460,675
DeMarre Carroll $14,800,000
Terrence Ross $10,500,000
Cory Joseph $7,630,000
Lucas Nogueira $3,389,401
Jakob Poeltl $3,249,486
Bruno Caboclo $2,818,909
Delon Wright $1,891,980
Pascal Siakam $1,437,408
Norman Powell $1,471,382
Fred VanVleet $1,312,611
Total salary: $91,701,826
Projected salary cap: $103,000,000
Projected tax threshold: $122,000,000
That leaves about $11 million in cap room, assuming none of the Raptors’ free agents are kept. Which would be silly, so let’s look at them.
These are the cap holds for the various free agents the Raptors can try to bring back, and their first round draft picks.
Kyle Lowry $18,000,000
Patrick Patterson $11,495,000
Jared Sullinger $6,753,600
Clippers' Pick 2017 (25th) $1,516,206
Raptors' Pick 2017 (26th) $1,465,974
Lowry and Patterson both have full Bird Rights with the Raptors, so can be signed above the cap for up to 5-year deals for their maximum salary. Sullinger has only non-Bird Rights, and can get a 4-year deal with a starting salary 20 percent above his current one (the value of his cap hold above, about $6.7 million). That will likely not be nearly enough, if he plays well when he returns, so we’ll leave him aside for now.
In any case, including those cap holds puts the Raptors well above the cap — even keeping just Lowry’s means they have no cap space, so free agency is basically a wash next summer, barring any big salary clearing moves. It’s also why I’ve left off cap holds for ex-players like Nando de Colo and Jason Thompson.
The big question becomes, how much tax are the Raptors willing to pay? As noted in the last piece, Lowry is eligible for up to a $36 million starting salary. And Patterson will likely see offers in at least the $12 to $15 million range, if not higher. Add $48 million to that projected cap amount above (plus an additional $3 million for those picks) and you are looking at a total salary of $143 million. That’s a projected $21 million above the tax line, which would translate to a tax bill of an additional $49 million, leaving total team salary cost at $192 million, about $85 million more than they are paying this year. That’s... a lot.
Now, maybe Lowry takes a little less, and Patterson too, but overall the picture won’t change much. And although you’d hope that ownership would pay to go into the tax for an upgrade, paying that much tax to keep the status quo is a tall order, unless the Raptors find themselves in the unlikely position of having won a championship this season.
In all likelihood, a cost cutting move or two would have to be made, leveraging the extra depth the Raptors have in their rookie scale deals (Powell behind Ross, Wright and VanVleet behind Joseph). Remove the salary of Ross from the books, for example, and that projected team salary drops to $133 million, only $12 million over the tax. That would mean a tax bill of $19 million, and a total team salary cost of $152 million, about $40 million cheaper than the original suggestion.
Drop Joseph as well and that becomes a $6 million tax bill and a total team salary cost of $132 million, roughly $20 million in additional savings.
So, that’s something to consider moving forward with team planning — rookie scale and minimum salaries are jumping up, and that’s edging the team deep into tax territory more quickly than we’d expected. That may mean the team has to choose what role players it wants to keep, or maybe even pay a premium to find a team to take Carroll’s large salary off their hands.
But What About Millsap?
Yes, yes, we’re getting there. Rumours have been swirling about the star PF’s availability, and the Raptors seem like a great fit. But what kind of fit would it be financially? We just saw how expensive it would be just to keep the team together as is.
Well, first we have to establish an assumption of trade cost. We’ll say Ross, Joseph and Poeltl are the main salaries going out, and both 2017 first round picks. That’s about as good an offer as the Raptors will likely entertain. If that was to happen, it would remove $24 million from the cap with the removal of those salaries. We’ll assume whatever else comes back in the hypothetical Millsap trade is expiring and doesn’t factor into the summer plans.
So, that drops the initial salary from about $92 million to about $68 million. Then, in the worst case assumption (salary-wise), the Raptors give full maximum contracts to Lowry and Millsap, meaning an additional $72 million. That brings the team to $140 million with 3 more players to sign to reach the minimum roster size of 14 (an increase from 13 in the old CBA). Call it $145 million and a $56 million tax bill, for a total cost near $200 million. That’s a crazy payroll. You can see why I’ve made no mention of re-signing Patterson in this scenario.
Now, more reasonable salaries for the two free agents would help this a lot. For example, each earning $30 million in the first year instead of $36 million would mean a total cost for the team of $152 million, a nearly $50 million in savings.
So a Millsap trade is feasible from a salary cap point of view, but it would mean going deep into the tax (how deep depends on the two free agents), and would mean losing a lot of depth in the process, both in the trade and by letting players like Patterson walk, or even making another salary saving deal if need be.