Explain One CBA: Warriors Free Agency, Salary Cap and Kevin Freakin Durant

Okay, I’m not an NBA capologist. What I know I basically learned from reading Larry Coon’s authoritative FAQ on the NBA Collective Bargaining Agreement. I pulled the Warriors contract numbers from Spotrac.

I wanted to set out the facts on free agency and the salary cap as I understand them, and let others who know more help me correct this piece. This discussion will work out some details around two likely outcomes: clearing cap space and rebuilding around Kevin Durant, or signing Harrison Barnes and Festus Ezeli and adding other players.

Today, the Warriors Are Over the Salary Cap

When a team’s total salaries are below the salary cap, it can spend money on whichever free agents it likes (up a maximum level that depends on the player’s seniority and other factors). When it is above the cap, a team may not sign players except by using using various, well, exceptions, detailed later.

The salary cap is calculated in a complicated way that increases with total league revenue, the Basketball Related Income (BRI). The W’s massive playoff ticket prices seem to have pushed the BRI and hence salary cap higher than expected. It has been estimated at about $94M, but an official number will be announced on July 7th just after midnight.

The Warriors as of this minute have the following players under contract, with the following cap impacts:

• Klay Thompson, $16,663,575
• Draymond Green, $15,330,435
• Andrew Bogut, $12,681,081 (includes some incentives)
• Stephen Curry, $12,112,359
• Andre Iguodala, $11,131,368
• Shaun Livingston, $5,782,450 (option just taken by GSW, 6/29)
• Kevon Looney, $1,182,840
• Damian Jones, $976,300
• Patrick McCaw, $543,471
• Jason Thompson, $945,126 (stretched salary)

This adds up to $77,349,005. So the W’s are under the cap, right? NO. The problem is that the Warriors have a bunch of departing free agents. Wouldn’t it be clever if the Warriors delayed re-signing their free agents and signed a bunch of new players and then afterwards used league exceptions to sign back some of their current free agents?

To discourage this kind of cleverness, every free agent counts towards the cap, an amount that is called a cap hold. This hold persists until the team renounces its rights to the free agent.

The hold is usually the player’s last salary, multiplied by a factor depending on the player’s seniority. For instance, Barnes’s hold is 250% of his last salary, which is $3,873,398.

Here are the current cap holds:

• Harrison Barnes, $9,683,495
• Marreese Speights, $7,248,500
• Festus Ezeli, $5,021,870
• Leandro Barbosa, $3,250,000
• Jermaine O'Neal, $2,400,000
• Ian Clark, $1,215,696 (renounced 6/29)
• James McAdoo, $1,180,431 (renounced 6/29)
• Brandon Rush, $980,431
• Ognjen Kuzmic, $980,431
• Anderson Varejao, $980,431

Yeah, apparently even those guys out of the league count until you renounce them.

So those cap holds add up to $30,545,158, which already puts the W’s at $107+M, way over the cap.

Scenario 1: Kevin Freakin’ Durant Unicorn

Kevin Durant is an Unrestricted Free Agent. He can sign with any team he wants and no one can stop him. I looked at the reasons he and GSW might want him to sign with GSW in a previous installment: Kevin Durant’s Prisoner’s Dilemma and the Warriors.

The only way the Warriors can sign KD is to be able to sign him outright as a free agent. (Technically, the Thunder could work out some kind of sign and trade so as to not lose KD for nothing, but that will only happen if GSW can threaten to sign KD outright as a worse alternative.) This is tricky because as long as the Warriors are over the salary cap, they can only offer KD salaries using exceptions (described below) which are far far below his market value.

The only way to get under the salary cap is some combination of renouncing free agents and trading players for assets of lower salary cap impact.

If the W’s renounced all their free agents above, that would drop their total salaries to the $77.3M figure above. If the salary cap is $94M, that would be $16.7M of cap room. This is not enough to pay Kevin Durant, who can receive a maximum salary of 30% of the alternate salary cap (42.14% / 44.74% * cap if you must know). With our assumed $94M cap, I calculate his max as $26.56M for year 1. So the W’s would need to clear another $10M.

The only Dubs who make that much money are Steph, Klay and Dray, who are untouchable, and Iguodala and Bogut. Andre is good buddies with Durant and a pillar of the team culture, and Andrew Bogut is brilliant, cranky, and unhealthy, so bye bye Bogut.

If the W’s managed to trade Bogut for no salary in return (say for a draft pick), that would leave the W’s at $29.3M in cap room. That’s enough to pay Durant his max with $2.7M left over for another player $600K to spare.

(Correction: as racsan points out, you have to count a rookie minimum for each unused slot up through 12. Makes sense. In this case, with 8 players signed, that means player slots 9-12 count as the rookie minimum $543,471. Four of those = $2,173,884, leaving $600K under the cap.)

What would the new roster look like? As soon as the W’s go under the salary cap, they lose all their exceptions except for the Room Mid-Level Exception, $2,898,000. A team may always add players at the league minimum salary (which depends on the player’s seniority). That leaves the roster looking like this:

1. Klay Thompson
2. Draymond Green
3. Stephen Curry
4. Andre Iguodala
5. Shaun Livingston
6. Kevon Looney
7. Patrick McCaw
8. Damian Jones
9. KEVIN FREAKING DURANT
10. Mr. Rest of Salary Cap ($2.7M) Mr. Minimum 10
11. Mr. Room Exception ($2.9M)
12. Mr. Minimum 12
13. Mr. Minimum 13

And as a depth chart:

1. Curry / Livingston
2. Klay / McCaw / Min Shooter
3. Andre / Room Min Wing
4. KEVIN FREAKIN DURANT / Looney / Rest of Cap Big Room Exception Big
5. Draymond / Damian Jones / Min Big

Serious commitment to Small Ball with this lineup, but also not quite Five Studs and Eight Minimums, either.

Now there is a further article that someone else can write projecting how Durant can make more money by signing either a 1 year + 1 year player option with GSW, or by signing a 3 yr contract to trigger the GSW Bird rights, etc etc. That will require projecting salaries out several years and I invite someone not me to do it.

Scenario 2: The Return of Harrison Freakin’ Barnes and Ezeli

Here is the most likely scenario if KD does NOT sign with GSW; the Warriors get the band back together and re-sign Barnes and Ezeli.

Harrison Barnes and Festus Ezeli are Restricted Free Agents. That means that since the Barnes a Qualifying Offer of $5,194,227 for next year, the Dubs have the right to match any offer he gets in free agency. The maximum that Barnes and Ezeli can be offered is 25% of the alternate salary cap, which I calculate as $94M x 25% x 42.14% / 44.74% = $22.134 M

Here is the team cap figure next year if GSW uses all their exceptions and re-signs Barnes and Ezeli at the max(!).

1. Klay Thompson, Bird, $16,663,575
2. Draymond Green, Bird, $15,330,435
3. Andrew Bogut, Bird, $12,681,081
4. Stephen Curry, Bird, $12,112,359
5. Andre Iguodala, Bird, $11,131,368
6. Shaun Livingston, MLE, $5,782,450
7. Kevon Looney, Rookie, $1,182,840
8. Patrick McCaw, Minimum, $543,471
9. Damian Jones, Rookie , $976,300
10. Harrison Barnes, MAX BABY, $22,134,332
11. Festus Ezeli, DOUBLE MAX BABY, $22,134,332
12. Player 12, Taxpayer Mid-Level, $3,477,000
13. Player 13, Bi-Annual Exception, $2,203,000
14. Player 14, Trade Exception (D Lee), $5,387,825
15. Player 15, Trade Exception (G Wallace), $3,197,170
16. Jason Thompson, (stretch), $945,126

This would be a financial nightmare because in addition to the salary cap, there is also a luxury tax. I’ve seen estimates of the tax line at $113M, and the worst case above puts the W’s $22M over. The W’s plan to pay the tax when it’s time to re-sign Steph Curry, and there is an increasing penalty for repeat tax teams, so the W’s have a strong incentive to NOT pay tax this next year.

You might say, hey it’s not my money. But being above the "apron" of $4M over the tax limits a team’s ability to add players beyond the cost (no bi-annual exception, smaller mid-level exception, shorter contracts and starting salaries, recieve less salary in trades, no sign-and-trades, no Arenas provision).

So, let’s look at a more conservative budget where we use the exceptions except for the trade exceptions (which are hard to use anyway). Let’s also assume Ezeli doesn’t get max’ed but, say, $18M.

1. Klay Thompson, Bird, $16,663,575
2. Draymond Green, Bird, $15,330,435
3. Andrew Bogut, Bird, $12,681,081
4. Stephen Curry, Bird, $12,112,359
5. Andre Iguodala, Bird, $11,131,368
6. Shaun Livingston, MLE, $5,782,450
7. Kevon Looney, Rookie, $1,182,840
8. Patrick McCaw, Minimum, $543,471
9. Damian Jones, Rookie , $976,300
10. Harrison Barnes, MAX BABY, $22,134,332
11. Festus Ezeli, match offer sheet, $18,000,000
12. Player 12, Taxpayer Mid-Level, $3,477,000
13. Player 13, Bi-Annual Exception, $2,203,000
14. Jason Thompson, (stretch), $945,126

This adds up to $123M, which is about $10M over the luxury tax. So the W’s would then be one Andrew Bogut away from staying under the tax, despite seriously shelling out for Barnes and Ezeli.

So you can see why it is very likely that Bogut will be moved in a salary dump if the W’s can possibly do it. If successful, that would leave this depth chart:

1. Curry / Livingston
2. Klay / McCaw / Bi-Annual wing
3. Barnes / Iguodala
4. Draymond / Looney / Minimum Big
5. Ezeli / Jones / Mid Big

I can’t say the center position looks that much more solid than in the Durant scenario.

(Update: CurryUpOffense reminds me that the team can not use the Bi-Annual if they are above the apron. See The Holy FAQ.  The W's will almost surely be above the apron if they sign back Barnes and Ezeli, so in that case, Player 13 above will need to be a minimum player.)

Scenario 3. Sign-and-Trades for Barnes and/or Ezeli

This is known as Apricot’s fantasy land. This is in the scenario where the W's do NOT get KD, because if they do, they will have to renounce the rights to Barnes (and the right to match offers).

Say Barnes decides he really wants to go to the Sixers, who offer him the max, and the W’s do not want to match the offer. So if the W’s and Barnes and the Sixers agree, the W’s can sign Barnes and immediately trade him to the Sixers for, say, Nerlens Noel! Sure, why not?

Here are some things that make sign-and-trades unlikely.

• They need to happen BEFORE Barnes signs an offer sheet.
• Barnes won’t want his new team to get weakened.
• His new team would rather sign Barnes outright unless they are dumping some horrible contract.
• There is no advantage to the player, as they cannot use the original team’s Bird rights to get more money.

So why would a team ever sign-and-trade?

• The receiving team may not have the cap space to outright sign the player.
• The sending team may want to get something instead of losing he free agent for nothing but cap space.
• A restricted free agent like Barnes might not want GSW to match the offer sheet, so he may try to facilitate a sign-and-trade to convince GSW to let him go.

None of these situations really applies here, since Barnes wants to come back. It might come into play with Kevin Durant, but again, why would the Warriors want to do this, unless there is no way for them to get under the salary cap. But then OKC wouldn’t want to help GSW take KD away.

Key Dates

Friday July 1, 12:01am EST. Free agents may now start officially negotiating with teams. In reality, teams and players have been feeling out relationships through indirect conversation for a while now.

July 1, 4pm EST. Warriors meet with KD in the Hamptons. Kerr, Steph and Klay reportedly will go.

July 3. Last Durant meeting. Unknown amount of time follows before his decision, but he reportedly wants to make the decision before leaving on 7/9 for a trip.

The July Moratorium, 7/1-7/6. This is the period where negotiations may happen but no final decisions can be made. This period is officially to give the league time to calculate the Basketball Related Income and hence the exact salary cap and luxury tax line. However, unofficial announcements of signings happen all the time and 99% of the deals are completed after the moratorium. The 1% that don’t are just damned funny (unless you’re the jilted team). For instance, last year gave us narratives of DeAndre Jordan reneging on his promise to sign with the Mavs and having various Clippers commuting to Texas by plane, horse and banana boat to kidnap DAJ and lock him securely out of contact until the midnight deadline with Dallas owner Mark Cuban driving the streets of Dallas helplessly. I never laughed so hard at Twitter updates.

July 7, 12:01am EST. Players may officially sign. BRI, salary cap and luxury tax line are announced.

Notably, this is the official first moment that Harrison Barnes can sign an offer sheet from another team. The Warriors will have three days to either match Barnes’s offer or to let him go.

July 9. Rumored KD self-imposed deadline on decision.

July 10, 12:01 am EST. The earliest deadline Barnes could give the W’s to match an offer sheet.

Final Thoughts

This will be the most interesting off-season in Warriors history. There were other fraught ones, like the one when they were negotiating Curry’s extension or figuring out what was going to happen with Baron Davis or Run TMC or Sprewell the Hugger. But basically, up until the new regime, you could be sure the W’s would screw up the off-season.

Now that the W’s are run by a light-years-ahead bunch, you know there’s a good chance something positive will happen, and this is the first offseason in the Light Years era that has such wildly differing possibilities. Either way, it’s going to be an interesting time.

My wild guesses:

• 90% chance Bogut is traded for less salary, no matter which scenario
• 20% chance that KD comes to W’s
• if KD doesn’t come, 90% chance W’s re-sign Barnes and Ezeli

You can see my precise calculations for all these numbers at https://docs.google.com/spreadsheets/d/1F36BYlUGy2WCInQVl4kezgFj8TBTiQWDd3P0_dpBxqM/edit?usp=sharing Feel free to download it and make your own calculations.

Respectful corrections very welcome.