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Final Roster and Salary Floors, the Downbeat #1684

The Jazz's offseason is over...let's talk about the final roster and also the growing issue of the salary cap floor

The Jazz will need to save some money for their core, but how else will they meet minimum salary requirements?
The Jazz will need to save some money for their core, but how else will they meet minimum salary requirements?
Joe Camporeale-USA TODAY Sports

With the NBA Summer League wrapping up last night in Las Vegas (congratulations to Becky Hammon and her San Antonio Spurs squad), we are now officially the furthest day away from any meaningful professional basketball activity until NBA training camps convene in the fall.  So let's take a quick look at what the summer meant for the Jazz and where the team goes from here. I'll also take a deep dive into the more frequently discussed NBA salary cap floor and why it is becoming a bigger issue.

Roster Composition. With Dennis Lindsey and the Jazz deciding to forego any major moves in free agency or the trade market, the 2015-2016 roster is now mostly set.  Barring and unlikely trade before training camp and during the preseason, the following 11 players are locks to be on the roster this season:

PG - Dante Exum, Trey Burke

Wings - Gordon Hayward, Alec Burks, Rodney Hood, Joe Ingles

Bigs - Derrick Favors, Rudy Gobert, Trevor Booker, Trey Lyles, Tibor Pleiss

That leaves 2 to 4 roster spots remaining for the regular season roster.  The players in serious competition for those spots are as follows (including their contract situations courtesy of Basketball Insiders):

Wing Christapher Johnson $981,348 $1,050,961
Big Grant Jerrett $947,276 - -
PG Raul Neto $900,000 $937,800 $1,014,746
Big Jack Cooley $845,059 $980,431
PG Bryce Cotton $845,059 $980,431
Wing Elijah Millsap $845,059 $980,431

(unguaranteed in italics)

Historically, the Jazz would almost always choose the guaranteed salaried players over a seemingly equivalent or slightly better unguaranteed player.  However, a combination of increasing revenues/salary cap rooms has made it so Lindsey does not really need to consider that.  So while in the past it'd be easy to pencil in Jerrett and Neto that may not be the case this year, though it would be a bit of a surprise if the Jazz waived Neto after bringing him over from Europe.

So how do you guys think it will all shake out?

Personally, I see the Jazz keeping Neto, Millsap and Johnson and retaining their 15th roster spot for D-league and injury call ups.  The big caveat there of course will be training camp injuries.  If we lose a big man in camp, then Cooley could stick around for a while. Alternatively, if a PG goes down then it would be Cotton who benefits.

Keep in mind that the Jazz would not have to fully guarantee any of the unguaranteed guys until January, so it could be the case that we see a few of these guys sticking around for the first few months until the team brings players in under 10 day contracts for the second half of the season. .

Salary Cap Situation. Again, courtesy of Basketball Insiders, the Jazz's salary cap situation will look like this (or close to it depending which low salaried players are cut):

Player Position 2015-16
Gordon Hayward wing $15,409,570
Derrick Favors big $12,000,000
Alec Burks wing $9,463,484
Trevor Booker big $4,775,000
Dante Exum pg $3,777,720
Tibor Pleiss big $2,900,000
Trey Burke pg $2,658,240
Trey Lyles big $2,239,800
Joe Ingles wing $2,150,000
Rodney Hood wing $1,348,440
Rudy Gobert big $1,175,880
Christapher Johnson wing $981,348
Grant Jerrett big $947,276
Raul Neto pg $900,000
Elijah Millsap wing $845,059
Total Salaries $61,571,817
Salary Cap Room $8,428,183
Room Under Salary Floor $1,428,183

At this time the Jazz are sitting comfortably under the league's $70MM salary cap for 2015-16. According to leaguewide numbers they have roughly the 3rd most Salary Cap room available.  While the Jazz have foregone signing meaningful free agents there is still room for them to make a meaningful salary dump trade in order to pick up some more assets.

For example, Cleveland is still looking to unload Brendan Haywood's $10.5MM unguaranteed contract. The ideal scenario for the Cavs would be to send him to a team in a way that will create a Traded Player Exception ("TPE") which they would be able to utilize around the trade deadline or next summer in order to acquire another player in that salary range.  Since TPEs last for a calendar year, the Cavs may want to wait as long as possible before making such a trade in order to give them the most available time to utilize the TPE in the future.

The Jazz could ship off Jerrett and some unguaranteed players and accomplish the trade, but what would the Jazz want in return?  The soonest first round pick the Cavs could pay is 2018 and even then that would be contingent on an earlier trade to Phoenix.  Or perhaps a 2nd round pick and some cash would be enough?

Salary Floor. Every year I see a lot of consternation and confusion over the NBA's "Salary Floor."  Prior to the 2011 Collective Bargaining Agreement ("CBA"), the minimum salaries each team had to reach each year was 75% of the Salary Cap.  That amount has risen each year under the 2011 to the current level, which is 90% of the Salary ($63MM) (See CBA Article VII, Section 2(b)(1)).

At this point in time, depending on the Jazz's final roster composition, the team would appear to be on schedule to end up between $500k-$1.5MM below the minimum salary requirements.

So what is the penalty if the Jazz fail to meet those payment obligations?  CBA Article VII, Section 2(b)(2) explains it as follows:

(2) In the event that a Team's Team Salary for a Salary Cap Year as of the start of the Team's Last Regular Season game of that Salary Cap Year is less than the applicable Minimum Team Salary for that Salary Cap Year, the NBA shall cause such Team to make payments equal to the shortfall (to be disbursed to the players on such Team pro rata or in accordance with such other formula as may be reasonably determined by the Players Association. The Players Association shall provide the NBA with its proposed distribution of any such shortfall within thirty (30) days after the completion of the Audit Report for such Salary Cap Year.

A few important take aways from that legal jargon:

1. The calculation of total team salaries paid happens at the end of the season. Thus, all payments to players are used to determine what salaries were in fact paid.  Accordingly, the Jazz do not have to reach the floor until April, meaning that any additional players added (i.e. trades, D-league call ups etc.) during the season will count toward the minimum salaries.

2. The penalty for failing to reach the floor equals the amount the team was under the floor.  Accordingly, the Jazz are only in line for a financial penalty of between $500k-$1.5MM as of today.

3. The financial penalty paid by the Jazz is distributed in whatever way the Players Association decides.

I've seen it presumed that the shortfall would be pro rated according to salaries by the Players Association, but it is possible that certain players could benefit more than others in this scenario.  For example, perhaps the Players Association determines that any player making greater than $2MM per year is reasonably compensated and the remainder gets divided only to the lower salaried players.  Or perhaps the Players Association creates a formula based on years of service in the NBA.

The point is it is not necessarily pro rata to each of the players in accordance with their contract size, which is widely presumed.  Instead, there is a possibility that underpaid players such as Rudy Gobert could reap a larger benefit from these payments, though the Jazz themselves do not get to decide that, the Players Association does. .

Salary Floor Going Forward. While the effect of the minimum salary requirement is going to minimal to non-existent for the Jazz this season, the same cannot be said moving forward.  Let's take another look at salary obligations, this time adding future seasons:

Player Position 2015-16 2016-17 2017-18
Gordon Hayward wing $15,409,570 $16,073,140 $16,736,710
Derrick Favors big $12,000,000 $11,050,000 $12,000,000
Alec Burks wing $9,463,484 $10,154,495 $10,845,506
Trevor Booker big $4,775,000 - -
Dante Exum pg $3,777,720 $3,940,320 $4,992,385
Tibor Pleiss big $2,900,000 $3,000,000 $3,100,000
Trey Burke pg $2,658,240 $3,386,598 $4,588,840
Trey Lyles big $2,239,800 $2,340,600 $2,441,400
Joe Ingles wing $2,150,000 $2,150,000 $2,687,500
Rodney Hood wing $1,348,440 $1,406,520 $2,386,864
Rudy Gobert big $1,175,880 $2,121,287 $3,145,869
Christapher Johnson wing $981,348 $1,050,961
Grant Jerrett big $947,276 - -
Raul Neto pg $900,000 $937,800 -
Elijah Millsap wing $845,059 $980,431 -
Total Salaries $61,571,817 $58,592,152 $62,925,074
Salary Cap Room $8,428,183 $30,407,848 $45,074,926
Room Under Salary Floor $1,428,183 $21,507,848 $34,274,926

Based on current salary projections, and with 11 players signed to guaranteed contracts in 2016-2017, the Jazz are scheduled to have almost $30MM in Salary Cap Room next offseason.  With no rookies to extend this offseason (the Jazz's 2012 first round pick wound up in Houston), the Jazz are not scheduled to add any significant salary next offseason.  While the team will likely ink its first round pick that salary will be a minimal $1-3MM addition.  Resigning Trevor Booker could use some Salary Cap Room, but that would make the Lyles selection more questionable.

Without a significant offseason addition, the Jazz would be about $20MM below the minimum salary requirements for 2016-17.  So whether the Jazz land a big free agent, or trade acquisition next year the team will have to increase its payroll by $20MM.  Ideally, one would think that team would want to use that money to add significant players to the team, but the Jazz's middle name is Financial Flexibility, so you never know if they will do so.

If the team doesn't then the current roster would stand to benefit of course, but as stated above that is all subject to the Players Association defining a formula for those distributions.  With that much money at stake (for the Jazz and for a large amount of NBA teams) we are likely to see some contentious battles between NBA player agents.  Stay tuned for the fireworks.

. Where to Spend that Money. Since it would seem to be wiser to upgrade the roster with the Financial Flexibility, where should the Jazz spend there money next year?  Bobby Marks at recently discussed the conundrum of rising in relation to 2016 spending:

The summer of 2016 is gearing up to be a very interesting one… but not for the reason most NBA fans are thinking.

There has been lots of talk and excitement about the vastly increased salary cap numbers that will come from the new TV deal. Early projections anticipate the current salary cap of $70 million to jump to $89 million for the 2016-17 season. There is the potential for 24 out of 30 teams looking to have an estimated $825 million in cap space. Many fans are wide-eyed by the idea of their favorite team having "lots of cap space" for the summer of 2016. After all, LeBron James and Kevin Durant are free agents next year.

Yet when you look closer… Beyond these two All-Stars, what is the talent level available? Will there be enough true talent for teams to spend at least $81 million?

That is the number teams need to spend to hit the minimum 90 percent of the salary cap. Will the summer of 2016 be the year of one-year contracts because of the lack of overall talent and depth?

We already know if there are 24 out of 30 teams looking to have some significant cap space that it does not bode will for the Utah Jazz.  As he goes on to postulate, it is going to be incredibly difficult for all teams in this situation to hit the minimum salary without some inventive contract structures, like massive 1 year deals to recruit players to a new team.

He also goes on to list a number of players that will deserve big money.  Since we don't know where the team needs to add at this point, playing the guessing game is a little pointless when trying to determine who the Jazz could throw money at.

The biggest concern though is in a game of high stakes musical chairs, the Jazz end up holding a pot of money and unable to use it to supplement the roster going forward.  One thing is for sure, it will be an interesting offseason as a prelude to the NBA lockout of 2017.