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Charolotte Observer: Salary-cap climate could work in Bobcats' favor
Everyone has hobbies. Perhaps you read John Grisham novels; Dan Rosenbaum dissects the NBA's salary cap and luxury tax.
An economics professor at UNC Greensboro, Rosenbaum runs models that predict where the cap is going, and the likelihood that the luxury tax will be invoked.
Rosenbaum believes the cap will rise little from this season's $43.84 million per team, and might drop below the current level. That, he suspects, would create opportunity for the Charlotte Bobcats, a new team with financial flexibility.
"If the salary cap actually goes down, this could be the best opportunity for bargains they get for the next four summers," Rosenbaum said.
Here's why: Many established teams already have player-payroll commitments that push them toward, and in some cases past, what the cap will be.
"And remember," Rosenbaum added, "if the cap goes down, the luxury tax is back in play."
The luxury tax is a league-imposed levy on the NBA's biggest spenders that redistributes money to the NBA's more frugal teams. Avoiding that tax is often the difference between a franchise's making and losing money in a season.
A lower cap and the potential for luxury tax in the 2004-05 season would narrow the number of suitors for free agents this summer. It would also make it tougher for certain teams to re-sign their own free agents.
Detroit could be a prime example. The Pistons hope to re-sign free agents Rasheed Wallace and Mehmet Okur, but that could be challenging.
The Pistons are committed to about $33.5 million in salaries next season. Even assuming Wallace would accept a significant pay cut from the $17 million he makes this season, he would just about consume the $10 million or so the Pistons likely have available under next season's cap.
Then how do they sign Okur, a promising 25-year-old big man? Since Okur has only two seasons in the NBA, he doesn't qualify for full "Larry Bird" rights -- the rule that would allow the Pistons to re-sign him without regard for the salary cap.
Instead, the most the Pistons could offer Okur is about $4.9 million next season -- the so-called "mid-level" cap exception. This is where it could get interesting for the Bobcats.
As a first-year expansion team, the Bobcats' salary cap will be two-thirds of that for other teams next season. So figure they'll have about $29 million to play with.
If the Bobcats were exceptionally frugal in the expansion draft -- taking just inexpensive players and restricted free agents -- they could probably top out, including their rookie draft picks, at about $22 million.
That would leave $7 million to offer to a young talent such as Okur in July. Barring a cap-friendly trade by the Pistons, there's no way they could match such an offer by the Bobcats.
That gets the Bobcats a young big guy without using up a lottery pick. That would be a coup.
I doubt the Bobcats would actually take this course. They're more likely to spread free-agent spending among several lesser players to build a base of talent.
But at minimum, the Bobcats should threaten to use such a strategy in the days before the expansion draft. That might manipulate the Pistons into paying huge compensation to the Bobcats for taking an unwanted veteran such as ex-Hornet Elden Campbell.
Campbell makes $4.4 million next season -- the last on his contract -- and has barely gotten off the bench in the playoffs. What if Detroit offered a first-round pick, plus the maximum $3 million in cash compensation, to the Bobcats to take Campbell?
At that point the Bobcats could take the extra first-rounder, release Campbell, and write off the $1.4 million difference as the cost of a first-round pick.
Expansion watch
• If Washington exposes Jerry Stackhouse to the expansion draft, expect the Bobcats to shop him hard to teams looking for scoring and willing to send the new team a first-round pick.• Milwaukee guard Erick Strickland has made it clear through various channels that if the Bucks leave him unprotected, he'd love to play for the Bobcats. The question becomes whether Strickland has the right personality to mentor younger players.
• Don't be surprised if Utah exposes Curtis Borchardt, the 18th pick in 2002, to the Bobcats. He has chronic leg injuries, and Utah doesn't want to expose point guards Carlos Arroyo and Mo Williams if it can avoid it.
Draft watch
• We should hear decisions this week by Wisconsin's Devin Harris and Duke recruit Shaun Livingston on whether either will turn pro. Both decisions could factor into what the Bobcats do with the fourth pick.
• Syracuse's Hakim Warrick made the right choice by not entering the draft. As great an athlete as he is, he's too small at 6-foot-7 to be an NBA power forward, and not a good enough shooter to be an NBA small forward. He needs to spend the summer taking 500 jump shots daily, then hit the weight room. -- WRITERS IN OTHER NBA CITIES PROVIDED SOME OF THIS MATERIAL
Everyone has hobbies. Perhaps you read John Grisham novels; Dan Rosenbaum dissects the NBA's salary cap and luxury tax.
An economics professor at UNC Greensboro, Rosenbaum runs models that predict where the cap is going, and the likelihood that the luxury tax will be invoked.
Rosenbaum believes the cap will rise little from this season's $43.84 million per team, and might drop below the current level. That, he suspects, would create opportunity for the Charlotte Bobcats, a new team with financial flexibility.
"If the salary cap actually goes down, this could be the best opportunity for bargains they get for the next four summers," Rosenbaum said.
Here's why: Many established teams already have player-payroll commitments that push them toward, and in some cases past, what the cap will be.
"And remember," Rosenbaum added, "if the cap goes down, the luxury tax is back in play."
The luxury tax is a league-imposed levy on the NBA's biggest spenders that redistributes money to the NBA's more frugal teams. Avoiding that tax is often the difference between a franchise's making and losing money in a season.
A lower cap and the potential for luxury tax in the 2004-05 season would narrow the number of suitors for free agents this summer. It would also make it tougher for certain teams to re-sign their own free agents.
Detroit could be a prime example. The Pistons hope to re-sign free agents Rasheed Wallace and Mehmet Okur, but that could be challenging.
The Pistons are committed to about $33.5 million in salaries next season. Even assuming Wallace would accept a significant pay cut from the $17 million he makes this season, he would just about consume the $10 million or so the Pistons likely have available under next season's cap.
Then how do they sign Okur, a promising 25-year-old big man? Since Okur has only two seasons in the NBA, he doesn't qualify for full "Larry Bird" rights -- the rule that would allow the Pistons to re-sign him without regard for the salary cap.
Instead, the most the Pistons could offer Okur is about $4.9 million next season -- the so-called "mid-level" cap exception. This is where it could get interesting for the Bobcats.
As a first-year expansion team, the Bobcats' salary cap will be two-thirds of that for other teams next season. So figure they'll have about $29 million to play with.
If the Bobcats were exceptionally frugal in the expansion draft -- taking just inexpensive players and restricted free agents -- they could probably top out, including their rookie draft picks, at about $22 million.
That would leave $7 million to offer to a young talent such as Okur in July. Barring a cap-friendly trade by the Pistons, there's no way they could match such an offer by the Bobcats.
That gets the Bobcats a young big guy without using up a lottery pick. That would be a coup.
I doubt the Bobcats would actually take this course. They're more likely to spread free-agent spending among several lesser players to build a base of talent.
But at minimum, the Bobcats should threaten to use such a strategy in the days before the expansion draft. That might manipulate the Pistons into paying huge compensation to the Bobcats for taking an unwanted veteran such as ex-Hornet Elden Campbell.
Campbell makes $4.4 million next season -- the last on his contract -- and has barely gotten off the bench in the playoffs. What if Detroit offered a first-round pick, plus the maximum $3 million in cash compensation, to the Bobcats to take Campbell?
At that point the Bobcats could take the extra first-rounder, release Campbell, and write off the $1.4 million difference as the cost of a first-round pick.
Expansion watch
• If Washington exposes Jerry Stackhouse to the expansion draft, expect the Bobcats to shop him hard to teams looking for scoring and willing to send the new team a first-round pick.• Milwaukee guard Erick Strickland has made it clear through various channels that if the Bucks leave him unprotected, he'd love to play for the Bobcats. The question becomes whether Strickland has the right personality to mentor younger players.
• Don't be surprised if Utah exposes Curtis Borchardt, the 18th pick in 2002, to the Bobcats. He has chronic leg injuries, and Utah doesn't want to expose point guards Carlos Arroyo and Mo Williams if it can avoid it.
Draft watch
• We should hear decisions this week by Wisconsin's Devin Harris and Duke recruit Shaun Livingston on whether either will turn pro. Both decisions could factor into what the Bobcats do with the fourth pick.
• Syracuse's Hakim Warrick made the right choice by not entering the draft. As great an athlete as he is, he's too small at 6-foot-7 to be an NBA power forward, and not a good enough shooter to be an NBA small forward. He needs to spend the summer taking 500 jump shots daily, then hit the weight room. -- WRITERS IN OTHER NBA CITIES PROVIDED SOME OF THIS MATERIAL
