Creative Ways of Buying out Foyle/long term cap-management

by ohmangoAs on Jul 11, 2007 2:18 PM PDT

Foyle's contract pays 8.9 million this year, 9.8 million next year. There is a 10.5 million team option after that.

In the event of a buyout, the sum total of the buyout is divided over the remaining years of the deal, and applied to the salary cap evenly.

The Warriors have less of a salary cap crunch in 2009-2010 then they do in 2008-09. This is because Monta and Bean's new contracts first hit in 2008-2009, and by 2009-10, Foyle is gone, and Baron is gone (pending an extension). Now undoubtedly, if the W's can squeak under the Lux Tax in 08-09 after signing Biedrins and Monta, they'll make it in 09-10. I believe using that fact can help the Warriors buy out Foyle.

The Warriors could begin by "picking up" Foyle's team option for 2010-11. Immediately after doing so, they can buy out all three years from Foyle for around 19 million.

This is a win-win. Foyle gets the full value of the next two years in the buyout. He does not get the value of the third year-the only reason the W's picked it up was so that the buyout could be spread out over THREE years, rather than two. In this solution, the cap hit from foyle would be 6.3 million for each of the next three years, rather than 9 million this year, 10 million next year. The Salary cap relief is the Warrior's benefit. Foyle should be willing to accept a buyout for full value of the two years- he knows the Warriors aren't seriously going to pick up the third year, so he wouldn't demand the buyout for the third year as well. Getting his 19 million up front is also more valuable to him than getting it over two years, because money in hand actually has more economic value than money to be paid later (because Foyle can make interest on next years' 10 million starting right away).

This shaves 4 million from the critical 2008-2009 season, helping fit the two new contracts for Beans and Monta in. It also frees 3 million this season, which gives us more options right now...

Another major idea I have is to extend Monta or Biedrins right now, and pull some of their salary into this season. For example- Monta is only making 770,000 this season. Suppose his future contract extension is going to be 5 years, 35 million. I made this up completely, it's just an example. Rather than paying his 770000 this season, and then 35 million over the next 5, they should just pay him 36 million over the next 6 seasons, starting now.

This would make Monta average 6 million a season for the next 6 seasons, starting right now. We have the cap room for that right now. Extending him later would result in 770,000 this year, but then a 7 million a year hit over the 5 years after that. In other words, incorporating Monta's next year into his extension allows the W's to spread his cap hit more. Remember, all the numbers regarding Monta's extension are made up-I don't really know what it will take to resign him. Still, I would think that Monta won't object to this because he would get money up front, without losing any value on his extension. If the warriors were really daring, they could even front-load Monta's contract, and use every bit of space we have this year. That would give us lots of flexibility later. In fact, when Baron is off the books, we could resign him for less (there's no way he should be paid what he is until he stays healthy), and go for a second star, or we can go after a bigtime superstar (hopefully better than Rashard Lewis lol) with all the space.

After all these moves, Ellis and Beans would be the long term cornerstones, with SJax, Al, and Baron around for the next two years. After two years, the Warriors would have more flexibility to keep Baron or whatever, and after three years, Foyle's Buyout would come off the books.

This was pretty long, but I think it gives one good strategy for the next three years. This strategy does leave this coming year in some limbo because we don't add another piece for next year, but it leaves the Warriors in good position for the next 5, and gives us room to make real runs at the championship with cap room over the next 5. What would you guys do? Is spreading the Foyle buyout over 3 a bad idea? Is signing Monta now and paying him more this year bad?

This FanPost is a submission from a member of the mighty Golden State of Mind community. While we're all here to throw up that W, these words do not necessarily reflect the views of the GSoM Crew. Still, chances are the preceding post is Unstoppable Baby!

Tweet Comment 21 comments | 0 recs |

Do you like this story?

Comments

I'm

not sure this works for two reasons. One, I'm not sure you can pick up the team option for the 10-11 until the actual 10-11 season. Two, you couldn't start Montas new contract this season like you suggested, he is under contract for 770k this year, you can't add money from the extension this season, it would have to start next year. I'm pretty sure I'm correct about those. Hella good diary though, really thoughtful on ways to help our cap situation, I give you props on being so creative.

by J Rich 4 MVP on Jul 11, 2007 2:45 PM PDT reply actions

Pay raises

I researched briefly and couldn't figure out the answer to whether you can pick up the option early. I do seem to remember it happening, but I have no specific cite.

Also, on the Monta issue, I believe (no guarantees) that you can just renegotiate the contract. I think it doesn't happen because most teams aren't gutsy enough to take a cheap year and pay more that year. This would only happen in the case of extensions/pay raises, and so I think you just don't hear about it all that much. The following link indicates that you can't renogotiate contracts downward, but you can do a pay raise.

http://www.nba.com/pacers/news/question_040226.html

by ohmangoAs on Jul 11, 2007 3:54 PM PDT up reply actions

Buyouts

I covered a whole bunch of this a few weeks ago in someone else's thread. Here's what I wrote then:
http://www.goldenstateofmind.com/comments/2007/7/1/12714/51693/26#26

I believe that the third year would be picked up in a buyout because there's a buyout worked out for that year anyhow. If the Warriors don't keep him (and they won't) he's still due a million in that year (IIRC), similar to the in-contract buyout that Devin Brown had this year. Because this year is already in the contract, they can use it as part of the deal.

by jae on Jul 11, 2007 5:05 PM PDT up reply actions

Nice...

Thanks for making it clear...Also, just curious, where did you find info about his option buyout price? I looked for some info on the contract, but didn't find it.

by ohmangoAs on Jul 11, 2007 5:28 PM PDT up reply actions

the last year

I saw it sometime last winter. Here's a link. It's a Vecsey article and he's not always correct, but it sounded legit.

("http://www.nypost.com/seven/12032006/sports/clippers_cant_afford_to_lowball_dunleavy_sports_peter_ve csey.htm?page=0")

If true, I don't know if they have flexibility to make it a two year buyout or if they have discretion about whether or not they prorate the buyout based on the $10 million last year or the $1 million or if they have discretion in this matter. The CBA isn't entirely clear on this as I've read it, but my contract law career ended when I never even considered going to law school, so maybe it's just something I missed in the contract.

by jae on Jul 11, 2007 6:05 PM PDT up reply actions

Props for the creativity...

However, remember that Foyle's contract is actually a commodity on the last year of his contract. I'm not entirely sure that it's wise even if possible for the W's to sacrifice future cap space to gain present relief when for the time being, we're in good cap space to keep both monta and beans. I suppose if it's for the sake of keeping Barnes, but I have to say, while on a personal level he deserves all the money he can get, I don't think he's worth a MLE. Of course also, next year's free agency is supposed to be huge, 3 mil might go a long way.

by ThermoElectro on Jul 11, 2007 3:03 PM PDT reply actions

Future...

This does sacrifice some cap space in the future, but bear in mind that it's 6 million three years from now. This move actually gets the 3 million in the highest leverage offseason for us- the one where Beans and Monta are up for contracts. That year is also the year we have most financial flexibility. Whether this is worth using some of that flexibility is an open question.

I completely agree that Barnes is not worth an MLE. I think the jack-of-all-trades is not that hard to find, and Barnes looked much better than he is in the W's system.

Also, are you sure we're currently in good cap space to sign Monta and Beans? We have 42 million committed already for that season, and Lux Tax hits at 55 million. 13 million seems like its not enough for those two...that's why buying out Foyle in the way I suggested helps us. 16 million is very close to enough, I imagine. And for those who wanted to keep JRich, imagine if his 13.3 million for that season were still on the books. We'd lose both Beans and Monta. The JRich trade was a no-brainer in my mind.

by ohmangoAs on Jul 11, 2007 4:16 PM PDT up reply actions

I love anything that gets rid of Foyle

but another poster said that having Foyle around is a good reminder to Mullin of his dumb moves and the consequences.

Looks like a plausible idea, I just hope Mullin has thought about it. You should send this to him.

by BiedrinsORBust on Jul 11, 2007 3:04 PM PDT reply actions

smart

The Foyle move has been mentioned before, not sure if it was by you or someone else.

Whether this is the best move depends on whether there are any takers for him in a trade...which is a dubious proposition at best.

by OptionZero @ Golden State Of Mind on Jul 11, 2007 3:11 PM PDT reply actions

Lol.

I dont understand why some people say that Foyle deserves all the money he is getting. Just becuase hes a great guy and politically and socially conscious doesnt mean he deserves this ridiculous sum of money.

"We STILL believe..."

by Da City1 on Jul 11, 2007 6:07 PM PDT reply actions

Deserve?

Who said anything about 'deserve?' He deserves it in that he signed a legally binding contract with the Warriors and the NBA where they told him they'd pay him. The notion that he deserves anything in a buyout only has to do with what, given the contract at hand and how it's not going away, only relates to what sum he'd accept to make the situation less bad for the Warriors.

In terms of social worth, none of these guys 'deserve' what they get. In terms of real value, we'd probably all be better off if NBA salaries were based on social consciousness, but it isn't. Pro athletes make a ridiculous sum of money for playing a game, just as pop stars make ridiculous sums for what they do. They deserve it only in the sense that it appears that the market will bear payment of these sums. And as part of that market, even a small part, we're complicit, so damn it for my small part I want a better product on the floor.

by jae on Jul 11, 2007 8:09 PM PDT up reply actions

He

deserves it because he duped Mullin into offering him the contract.

by J Rich 4 MVP on Jul 11, 2007 6:20 PM PDT reply actions

Interesting

Very creative solutions. I have a hard time with the more technical aspects of the CBA but if these are legal moves they may be a good way to keep us under the Lux tax in our trouble year. Lets hope that the front office is being as creative as you. Good diary.

by olympicmike on Jul 11, 2007 6:23 PM PDT reply actions

Just call Isiah....

Maybe he'll take him!

by Bake Da Ripper on Jul 11, 2007 9:58 PM PDT reply actions

Why dont we....

why dont we all (warrior fans) Pitch in to buy foyles contract?

by Jcab on Jul 11, 2007 10:23 PM PDT reply actions

wouldn't help

All that does is save Cohan and the owner's group. It's not like it's off the books if someone else buys him out.

Hell, if he decides to quit and never plays again and the Warriors don't pay him he still counts against the cap and lux tax for the duration of his contract.

by jae on Jul 11, 2007 11:25 PM PDT up reply actions

but we

can still pay the taxes with his contract money that he wouldnt be getting.

by stevenro59 on Jul 12, 2007 12:14 AM PDT up reply actions

why don't we fans save up 20 million or so

and put it to something that isn't completely ridiculous

by travisl212 on Jul 13, 2007 11:00 AM PDT up reply actions

Can you restructure contracts in the NBA

This I know would never happen and the NBA would not like it if there was such a loop hole.
If you can restructure contracts in the NBA like how in football they do it with the higg priced stars, to get more people under the cap.
Could you just resign Foyle in the middle of his contract to say a 20 year contract doesnt really matter the amount. Then agree on a buy out of the 19 million. So then it's a 20 year deal it could be spread over, making little impact to each year's cap.

Just thinking off the top my head, knows it stupid. But was wondering if there is a rule that blocks teams from doing this.

by Athletix Man on Jul 12, 2007 1:01 PM PDT reply actions

No

The NBA is much, much tighter about what a contract can and cannot be. There's a limit of 7 years on contracts now.

There's still ways to be creative, but they have to be outlined within the CBA. There's also some clause that more or less says that if you're doing something just to get around the cap, you can't do it even if we didn't realize the loophole beforehand. Short of a buyout, Foyle is on the books for the term of his contract and with a buyout, he's still on for the same length of time. My guess is that extending him and then buying him out would fall under the "something you did to get around the cap" and would be rejected by the league.

by jae on Jul 12, 2007 3:30 PM PDT up reply actions