2017 NBA Free Agency

Breaking Down the Knicks’ 2017–18 Salary Cap Picture

As free agency approaches, let’s look at how much cap space is available for the Knicks to spend this summer.

Photo: Jim McIsaac/Getty Images

July 1 is just around the corner, so it’s time to break out the calculators and publicly available Collective Bargaining Agreement (CBA) language to figure out the Knicks’ salary cap situation.

Before we do that, it’s important to note that this summer represents an important shift in expectations on the Knicks’ spending plans. No Knicks fan expects the team to reel in a big fish this July—both because the team probably couldn’t attract top free agents even if they were trying, and because the team is clearly in rebuild mode.

If Knicks fans feel bad about a low-spend summer, then let us not forget the success of recent free agent signings:

The main discussion surrounding the Knicks is about which superstar player won’t be playing for them next season—namely, Carmelo Anthony. But we will get into the details of that later (promise).

Let’s start by looking at the Knicks current long-term cap position. There are nine guaranteed contracts on the books, including Frank Ntilikina’s 8th overall rookie scale contract, and also including Ron Baker, who is a restricted free agent. I am going to exclude the non-guaranteed contracts of Marshall Plumlee (guaranteed July 20), Maurice Ndour (guaranteed June 30), and Chasson Randle since they do not count against the cap:

via Basketball Insiders

Ignore the 2017–18 numbers for a second, and take a moment to compose yourself, again, from the long-term cap cost of the Noah contract. Now, as bad as that Noah deal appears, if we assume ‘Melo is gone by 2018–19, the Knicks will have plenty of cap space to operate within the coming years. The cap spike over the past two summers had a league-wide effect, with many teams paying an inflated cost for free agents signed during that period. The Knicks main concern going forward should be on rebuilding their image around the league so that star players will want to sign with them in the future, rather than on the amount of cap space that they lost from the Noah deal. They have plenty of future dollars to offer to players who, quite frankly, would probably turn them down at this point.

For the upcoming free agency period, the 2017–18 roster is most important. The Knicks have four free agent cap holds — players the team are eligible to re-sign using certain rights (such as Bird Rights):

via The Vertical

If we want to build a picture of the maximum cap space available to the Knicks on July 1, we can start by assuming they will renounce all of their cap holds (please for the love of God, Derrick Rose) and worry about signing players like Ron Baker and Justin Holiday back to the team on regular free agent contracts. We can also assume they decide not to guarantee Maurice Ndour’s contract on June 30.

Based on a projected salary cap of $99 million, and keeping ‘Melo on the roster, the Knicks would have roughly $17.5 million in available cap space this summer:

Salary figures from spotrac.com

With nine guaranteed contracts, the CBA requires three minimum salaries to be added to the salary cap calculation to fill out a roster of 12 players before teams are allowed to sign new players. Also, Frank Ntilikina’s rookie scale contract (8th overall pick) is slotted at $2,917,600, but his cap hold (before the Knicks actually sign him) is 120 percent of that amount ($3,501,120) since rookie contracts can finalize between 80–120 percent of the rookie scale. For the long-term cap picture earlier in this article, I used 100% of his rookie scale contract to average it out over multiple years.

A little more than $17 million worth of cap space allows the Knicks to add some veteran pieces but not enough to sign a max player (perhaps a good thing). Max salaries are calculated based on years of experience. A player with 0–6 years of experience can earn up to 25 percent of the cap, 7–9 years of experience up to 30 percent of the cap, and 10+ year veterans qualify for 35 percent of the cap:

Salary figures based on 2017–18 cap projections

As free agent rumors swirl this time of year, the table above should help fans level-set the max contracts different players are eligible to receive. Another important note is on Bird Rights; put simply, players are eligible to re-sign with the team who owns their Bird Rights (a player who has played three seasons for that team without being waived or traded) for five years at an annual increase rate of 8 percent, versus with a new team for only four years at an annual increase rate of 5 percent.

The top 0–6 year free agents are restricted free agents. Any offer made by the Knicks could be matched by that player’s respective team. A max offer for any of these players would require about $24,750,000 in cap space:

  • Otto Porter (restricted)
  • Nerlens Noel (restricted)
  • Kentavious Caldwell-Pope (restricted)

The top 7–9 year free agents include Gordon Hayward, Blake Griffin, and Jrue Holiday. These players are eligible for five year, $174 million deals if they re-sign with their current teams, or four year, $128 million deals with a new team. To sign one of these players, a team would need Year 1 cap space of $29.7 million.

Finally are the 10+ year veterans, such as Paul Millsap, Kyle Lowry, and Chris Paul. These players are eligible for 35 percent of the cap, maximizing their value to five years and $203 million by staying put, versus four years and $149 million if they choose to find a new home. Year 1 salary of 10+ veterans is $34.65 million.

Photo: Getty Images

‘Melo Options

(Editor’s Note: An earlier version of this section was published prior to the firing of Phil Jackson. The piece has been amended to reflect the updated situation.)

I promised I would get into the Carmelo Anthony situation, so here we go. The Knicks’ salary cap picture is blurry right now as the team decides what to do with ‘Melo.

Will Carmelo Anthony be a Knick in 2017–18? Probably not in all honesty. After battling through a strained relationship during Phil Jackson’s tenure in New York, a divorce between ‘Melo and the organization is likely. How the divorce proceedings are handled will impact the Knicks’ salary cap situation.

A trade is still possible, even if the list of potential destinations is getting smaller. Frank Isola recently reported that ‘Melo was “toying with the idea of orchestrating a move to either Philadelphia or Washington, which would keep him close to New York,” but the Brooklyn-born forward is now set on staying in New York.

If the Knicks and ‘Melo are able to reach an agreement on a trade destination, the timing of such a trade is critical to his trade kicker.

As Ian Begley reported:

If Carmelo is traded before June 30, his 15 percent trade kicker ($8.1 million) can be spread out evenly between the 2016–17 and 2017–18 seasons. Under the rules of the current collective bargaining agreement, Anthony can waive only a portion of his trade kicker that would make a potential deal work under the salary cap (more on that below). If he’s traded after July 1, Anthony can waive the entire no-trade clause.
If he is traded before July 1 and wants to collect the entire trade kicker, it is spread out over two seasons. If he is traded after July 1, the entire trade kicker is allocated for 2017–18. However, if Anthony agrees in writing to become a free agent in 2019, thereby eliminating his player option that season, the trade kicker can be spread over the 2018–19 season as well.

While at the helm, gave himself the impossible task of trading an aging star on an expensive contract by including a no-trade clause when he signed him, with a trade kicker on top. Not only did Phil need to find a team that satisfied ‘Melo, but he needed to arrange an exchange of players to make the salaries work. Adding the trade kicker, this would mean taking back as much as $34 million in salary from a capped out team (i.e. the Cavs).

With reports circulating that James Dolan ended up firing Phil primarily for his insistence on buying out ‘Melo, it seems safe to say the likelihood of a buyout is lower than it was just 24 hours ago. But let’s talk about it anyways.

Anthony could accept a reduced salary from the Knicks to gain free agent status to sign wherever he wants. The NBA “offset” rule prevents players from double-dipping their pay, so any new deal signed by Anthony would be offset from the Knicks debt by 50 percent the amount above league minimum ($2,328,652 with Anthony’s years of experience). However, since Carmelo would look to join a title-contending team, he probably would sign for the league minimum, giving the Knicks minimal debt relief.

The Knicks could gain cap flexibility from waiving Anthony by using the NBA’s stretch provision. There are two options for how they can spread out Anthony’s cap burden:

  1. They can use the stretch provision to evenly spread the remaining balance of his contract over five years (double the remaining term + 1 year). Instead of owing him $26.2 million next season and $27.9 million in 2018–19, they could reduce the cap hit to $10.8 million over five years.
  2. They can front-load the amount they stretch by eating his 2017–18 salary ($26.2 million) and stretch out the final year over three seasons (at a cap cost of $9.3 million per season).

While it appears costly to stretch out ‘Melo’s contract over the longer term, it can also act as a cap life preserver, saving a block of cap space so the team doesn’t drown themselves in worse contracts down the road. It also opens up cap space in the near-term:

Salary figures from spotrac.com

The Knicks could have as much as $32.2 million in cap space this summer by stretching out ‘Melo’s contract over five years (a benefit they pay the cost for in years 3–5). That would give them enough space to sign a 7–9 year free agent, or to chase a restricted free agent (0–6 year player) and still have money leftover to add additional pieces.

Looking at the maximum available cap space the Knicks could have by stretching out Anthony’s contract, allows us to build a more realistic salary picture. Considering Jeff Hornacek’s affinity toward Ron Baker, it’s a safe bet to say he will return to the team next season. Adding his qualifying offer to the salary table and assuming the Knicks decide to guarantee the contracts of Plumlee, Ndour, and Randle, we come to the following table:

Salary figures from spotrac.com

Under this scenario, the Knicks maintain some cohesion in keeping their non-guaranteed contracts, while also preserving plenty of cap space to sign potential free agents. Based on summer league results, we could see some of the bottom roster players replaced by this year’s second round draft picks (Damyean Dotson, Ognjen Jaramaz) or undrafted signed players, such as the Summer League roster guys like Nigel Hayes and Canyon Barry. Any mix will be within the same cost range, from $0.8 million to $1.3 million.

There are a lot of variables to consider in painting an accurate picture of the Knicks salary cap position. As a fan, you should walk away from this piece with the understanding that cap space is the least of the Knicks concerns. There are ways they can get creative in stretching out Carmelo’s contract to open up more cap space in the near-term, but without an attractive environment to offer to free agents, nobody is coming to New York.

Jeffrey Bellone, columnist

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