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Reviewing the Raptors’ salary cap sheet and future options

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After a day that was both more and less busy than expected, what is the cap situation for the Raptors this season and this summer? Let’s review.

NBA: Denver Nuggets at Toronto Raptors Kim Klement-USA TODAY Sports

We went into NBA Trade Deadline day thinking two key Raptors might be moved — Norman Powell and Kyle Lowry. One was, the other wasn’t (yay!), and two more fringe rotation pieces got sent out.

As we always do after a day of transactions, let’s take stock of what the Raptors’ cap sheet looks like and look ahead to the summer a bit.

The Big Trade (That Happened)

Norman Powell ($10.9 million) to Portland for Gary Trent Jr ($1.7 million) and Rodney Hood ($10.0 million)

Powell has a player option this summer which he will certainly decline to become an unrestricted free agent. He’ll be looking for a significant raise, likely well above $15 million per year and quite possibly above $20 million. Hood has another year left on his contract, but it is fully non-guaranteed until June 23rd. If the Raptors waive him by then, his salary ($10.9 million) will come off of next year’s books.

Trent Jr. will be a restricted free agent and the Raptors will have his full Bird Rights, allowing them to exceed the cap if need be to re-sign him up to his maximum salary. They may be trying to use cap space — if so, Trent Jr. is great for that, as although they can re-sign him to any amount due to his Bird Rights, his cap hold is very low ($2.1 million) because he is coming off a minimum salary contract. That means the Raptors can potentially use their cap space with only that small hold on the books, then re-sign him to go above the cap.

One interesting wrinkle though is something the NBA introduced over the last couple of CBA negotiations. If a player selected later in the draft outstrips their expected performance to become a starting quality player by the time they hit free agency, their cap hold is increased. The threshold for this is set at 41 starts or 2,000 minutes played the season prior to becoming a free agent. Those thresholds have been scaled down to 36 starts and exactly 1,756 minutes. Trent Jr. has started 23 games this season, and has played 1,262 minutes.

The Raptors would obviously like his cap hold to stay low. If he meets the threshold, his cap hold increases to that of the 21st pick in the draft who is just graduating from his rookie scale contract — $4.7 million. That’s a small but not insignificant impact on the team’s cap room, if they choose to use it. As a note, that cap hold amount is also his qualifying offer, the one year contract the Raptors need to offer him to keep the ability to match offers from other teams — it too increases from $2.1 million to $4.7 million if he meets the starter criteria.

The Raptors have played 44 games, with 28 games to go (assuming no other problems. That means Trent would need to either start in 13 of those games (possible) or average 17.6 minutes per game if he plays in every game (also possible).

Now, I don’t know how much the Raptors will care about this, they may just play him a lot and not worry about the small cap flexibility impact. Even at his higher value, the difference between his and Powell’s cap hold is in the range of $12 million. Lots of flexibility they otherwise would not have had. But something worth keeping an eye on.

As an additional note, from Portland’s perspective, they didn’t need Trent Jr. to be included for salary matching to be able to absorb Powell’s contract, just Hood. So they can structure the deal from their perspective such that they traded Hood for Powell, and just sent Trent Jr. out for no returning salary.

The reason they would do this is that when sending out a single player and taking back less salary, you can generate what is called a Traded Player Exception (TPE). This is actually just one form of a broader concept called the Traded Player Exception, which is the thing that lets teams acquire players in trade even if they are over the cap by doing things like salary matching. It means the Trailblazers are now able to make another trade where they take in a salary equal or less than Trent Jr.’s salary without having to salary match — essentially, they use Trent Jr.’s salary to salary match in a future trade. These TPEs are of limited use and often go entirely unused, but it is one more little tool for a team operating over the cap.

The Smaller Trades

Matt Thomas to Utah for a 2021 2nd round pick (via Golden State)

Terence Davis to Sacramento for a 2021 2nd round pick (via Memphis)

Two guards on a guard-heavy team that got a decent bit of rope this year (more so for Davis) and had fallen quite far out of the rotation at this point. Note that neither pick is protected, and based on current standings the picks would be 45th and 48th in the Draft, with both the Warriors and Grizzlies having some possibility of slipping a bit further down the standings.

Additional picks in a deep draft are always good to have. Second round picks don’t really impact cap room as even if teams use cap room to sign them. A team can offer three-year terms and get full Bird Rights when they hit free agency, like Trent Jr. And they take up the same cap room as an empty roster spot would. With the Raptors having sent out so many second round picks in future drafts, these two small moves did a lot to replenish the prospect pipeline. Second round picks rarely yield good players (though they sometimes do, just ask Norman Powell), so it’s good to have as many cracks at it as you can have.

Meanwhile, decisions on Thomas and Davis for this summer are now moot. Thomas had a non-guaranteed year of salary left on his contract, so he might have been waived to clear a roster spot or a sliver of cap room in any case. While Davis was primed to be a restricted free agent, with a similarly small cap hold to Trent Jr., and primed to potentially receive an offer sheet the Raptors would have had to decide whether to match. Both those (very minor) decisions are no longer an issue.

And on the same note as above, the Raptors took back no salary in these deals, meaning they generated two small TPEs for Davis and Thomas. If they operate over the cap this summer those could come in handy if they want to acquire a minimum salary player in a trade without sending out matching salary. There’s less chance they will need the TPE for that (a minimum salary player who is on a one- or two-year deal can be acquired with something called the Minimum Salary Exception) — but if they are making a trade for a player like Trent Jr. who signed a three-year deal, for example, that Minimum Salary Exception could not be used. Again, not a huge deal, but one more tool in the toolbox for the Raptors.

The Big Trade (That Didn’t Happen)

Obviously the biggest news story of the day was Kyle Lowry, seemingly against all odds, remaining a Raptor for the rest of the 2020-21 season. My position had been that the Raptors would likely look to move him to a contender if the return was acceptable. I outlined what I thought were acceptable returns from various contenders in a recent piece, and no one got close. Hence, Lowry stayed.

As for the cap implications, well, it depends. If Lowry wants to stay and re-sign, it would mean not using cap space, and operating over the cap for the season. The Raptors have Lowry’s Bird Rights, so they can offer him any amount up to his maximum salary for any term up to five years in length. Neither are realistic of course. Something in the range of $20 to 25 million per year for two years seems more reasonable. Possibly a little higher if the Raptors feel the need to outbid someone.

In any case, that would eat up all their potential cap room, and signing him after the fact is no good as his cap hold is his maximum salary, which is far greater than the amount above.

Or, Lowry walks. If he is signed and traded, the salary coming back would eat into the Raptors’ cap room, and even assuming something like $15 million comes back to salary match, their cap room quickly becomes small enough that they again would be better off keeping their mid-level exception (MLE: about $9.5 million starting salary, up to four years) to offer to free agents and operate above the cap. They would also have the bi-annual exception (BAE: $3.7 million, up to two years) to offer as they last used it two off-seasons ago on Stanley Johnson.

If Lowry simply walks though, his cap hold comes off the books, and the Raptors can see what they can do with their cap space.

So, what cap space?

Toronto’s Updated Books

Real quick, first let’s take a look at the salary situation of the Raptors right now.

Player | Salary

Siakam $30.6 million
Lowry $30.5 million
VanVleet $21.3 million
Hood $10.0 million
Baynes $7.0 million
Boucher $6.5 million
McCaw $4.0 million
Anunoby $3.9 million
Johnson $3.8 million
Flynn $2.0 million
Bembry $1.7 million
Trent Jr. $1.7 million
Watson Jr. $1.4 million

That’s $124.3 million committed to 13 players. The minimum roster size is 14, so the Raptors will need to add a player. They have plenty of room under the tax line ($132.6 million), and have only the minimum salary to offer on a one- or two-year deal via the minimum salary exception. They will likely add either from the buyout market or a high end G League player, possibly one of the 905 standouts like Gary Payton II or Alize Johnson.

They also have Jalen Harris and Yuta Watanabe on two-way contracts, which don’t count against the cap.

Okay, on to the summer.

Player | Salary

Siakam $33.0 million
VanVleet $19.7 million
Anunoby $16.1 million
Boucher $7.0 million
Flynn $2.0 million
Bembry $2.0 million
Watson Jr $1.7 million

That’s it. The above assumes that the Raptors keep DeAndre’ Bembry and Chris Boucher on instead of waiving them to clear their non-guaranteed salaries. The other non-guaranteed salaries (Baynes, Hood) are assumed to be waived.

That results in $86.1 million in committed cap to those seven players (and the empty roster spots). Add in Trent Jr.’s cap hold (the low one) and it rises to $87.3 million. Now add a 1st round draft pick — this is the tricky part. The first overall pick is $8.0 million. The 30th is $1.6 million. The Raptors probably fall somewhere in the middle, but where exactly is hard to project.

If they make a run to the 5th or 6th spot in the East, let’s say, that could be around the 20th pick ($2.1 million). If they struggle and miss the playoffs, maybe they are looking at around the 10th pick ($3.5 million). That’s the likely range. Let’s use the 10th pick for now to be conservative.

Once that draft pick is added in, Toronto’s total committed salary comes to $89.9 million in a projected $112.4 million cap. That’s $22.5 million in cap room. Not a bad amount to throw at a potential long term centre upgrade like, say, a John Collins or Jarrett Allen. Whether that’s enough to pry away an RFA like those two, or is too much in your mind to offer to those types of guys, is an open question.

The Raptors can open up more room if they really squeeze their depth again. Drop Bembry and add about $1 million to that amount. Drop Boucher and add about $6.1 million on top of that, for a total of $29.6 million. Maybe the draft pick is more like 20th, in which case it’s $31 million. But in the other direction, if the pick is 10th and the Raptors keep those guys, and Trent Jr. hits his starter criteria, then that $22.5 million shrinks to around $19.9 million.

Again, this is all if the Raptors are letting Lowry walk this summer. If he is signed and traded the return eats into the above, and as you can see in all but the most extremely optimistic case (cap-wise), the Raptors would end up with less than $10 million in cap room if they took $15 million back in the sign and trade, meaning they might as well operate over the cap and use the MLE.

If Toronto management think they are operating over the cap, maybe they guarantee those Baynes and Hood salaries, so they can be used as expiring contracts for trades in-season. They could also guarantee them earlier, so they could be used the same way at the 2021 draft. But unfortunately, the guarantee date for Hood is in June, well before any free agency moves will shake out (early August), and Baynes’ deal guarantees two days into the moratorium, meaning they’d need to figure out their plans quickly if they want to make an informed decision on him.

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In any case, the theme of the deadline this year appeared to be about maintaining flexibility moving forward. And based on the above, the Raptors sure seem to have a lot of options. I look forward to seeing it play out.

All salary information per basketballinsiders.com.