Free Agency and Offseason Primer: The State of the Thunder

NBAE/Getty

NBAE/Getty

With the start of free agency (teams can begin negotiating with players on July 1 and can formally sign players on July 9), every Thunder fan should now come to grips with the reality that the Thunder will not likely be very active.  The reason? The Thunder already have 12 players under contract for next season (including almost every rotation player) and a massive payroll, leaving little room or need to wheel and deal.

But, even though you need less than 140 characters to state that the Thunder won’t be active, sometimes a longer explanation is helpful.

Who do the Thunder have under contract?

So let’s start with the players under contract.  As said, the Thunder have 12 players under contract for next season: Kevin Durant, Russell Westbrook, Serge Ibaka, Dion Waiters, Nick Collison, Steve Novak, Anthony Morrow, D.J. Augustin, Steven Adams, Perry Jones III, Mitch McGary, and Andre Roberson.

As a result of those 12 contracts, the Thunder have $75,226,356 in salary committed next season.  Per Jonathan Givony at Draft Express, the salary cap for the 2015-16 season is expected to be $67,100,000, putting the Thunder $8,126,356 over the cap.

On top of that, the Thunder drafted Cameron Payne with their first round pick.  Per Jason Belzer at Forbes, Payne is in line to receive a four-year contract worth a total of, at most, $9,600,735 (with team options for the third and fourth year).  Payne’s cap number for 2015-16 would be $2,021,520, putting the Thunder $10,147,876 over the cap.

(Dakari Johnson, the Thunder’s second round pick, is not likely to receive a contract with the team, and will likely spend next season with the Oklahoma City Blue.)

What about Enes Kanter and Kyle Singler?

The Thunder have two important free agents: Enes Kanter and Kyle Singler.  Both are restricted free agents, meaning the Thunder have the right to match any contract offer that Kanter or Singler may agree to with another team.  (It should also be noted that as free agents, Kanter and Singler are responsible for what is known as a “cap hold,” which forces the Thunder to set aside a portion of their cap space so that they can’t exploit free agency rules, but since the Thunder are well over the cap, the “cap holds” for Kanter and Singler are meaningless.)

This is where the luxury tax threshold comes into play.  While the NBA has a “salary cap,” it’s a soft cap and teams can exceed the cap in certain limited circumstances.  One primary way to do so is to re-sign your own players so long as you have their “Bird Rights.”  The Thunder have the Bird Rights to both Kanter and Singler, giving them the right to exceed the cap to re-sign them.  However, if a team’s salary gets too high, it triggers a “luxury tax.”  For 2015-16 that threshold is expected to be $81,600,000.

With a total salary commitment of approximately $77,247,876, the Thunder will trigger the luxury tax if the salaries for Kanter and/or Singler exceed a total of $4,352,124.  This will certainly happen if Kanter is re-signed.

It’s already been reported that the Thunder will re-sign Singler to a three-year deal, and the Thunder have made no secret of the fact they want to re-sign Kanter.  I would expect both to be with the Thunder next season; Singler on a three-year deal worth a total of $12 million, and Kanter on a four-year deal worth $56 million (just educated guesses).

Can the Thunder sign anyone else?

Well, that depends.  If the Thunder retain everyone under contract, sign Payne, and re-sign both Kanter and Singler, the Thunder would have 15 players signed, which is the maximum roster size.

Not only are the Thunder limited by roster size, but they will also be limited due to their high team salary.

As said, it’s been reported that the Thunder will re-sign Singler.  If the Thunder don’t re-sign Kanter, they will have two “exceptions” available to sign free agents.  The first is the “bi-annual exception” which cannot be used in consecutive years.  Since the Thunder didn’t use the BAE last year, they have $2,139,000 in salary they can take on under this exception.  The second is the “mid-level exception.”  This is available every year and would give the Thunder an additional $5,464,000 to use to sign free agents.  (These amounts cannot be aggregated, though they can be split among players.

So, the Thunder could sign 1 player to a salary less than $2.1 million, and another 3 players to salaries that don’t exceed in the aggregate $5.4 million, assuming they had the roster spots.)  To be clear, though, it is highly unlikely the Thunder could use both of these exceptions since the use of them cannot send the Thunder over the “apron,” which is the number that is $4 million above the luxury tax threshold.  Singler’s salary will likely put the Thunder right at or above the luxury tax threshold, so any free agents acquired using the BAE or MLE cannot cause the Thunder to have over $85,600,000 in total salary.

Now, if Kanter is re-signed, things get more difficult.  Kanter’s new salary will almost certainly send the Thunder above the “apron.”  Teams at that level are only permitted to use the taxpayer MLE, which is smaller than the non-taxpayer MLE (it’s only $3,376,000).

It’s been widely reported that the Thunder are trying to trade Jones and Novak.  If the Thunder are successful at trading one or both of those players, it would, at a minimum, open up a roster spot that could be used to sign a player using the taxpayer MLE.

How about trades?

Again, the Thunder would like to trade Jones and Novak.  Doing so would open up roster spots (very important), and could, if the Thunder find a trade partner(s) that is below the cap, shed salary and maybe acquire yet another traded player exception.

Ah, yes.  Traded player exceptions.  For starters, teams that are over the cap can’t acquire a new player via trade unless the salary of the player being traded closely matches the salary of the incoming player.  TPEs allow a team to acquire a player via trade without matching salaries.  However, TPEs cannot be used to fabricate matched salaries.  So if Team A has a TPE worth $2 million and wants to acquire Player X who has a salary of $4 million, Team A cannot “package” its TPE with a $2 million salaried player to “match” Player X’s salary of $4 million.  Also, a team can not combine multiple TPEs in a single trade.

The Thunder have four TPEs: (a) a $1,250,000 exception that expires on August 26, 2015, (b) a $915,243 exception that expires on January 5, 2016, (c) a $861,405 exception that expires on February 19, 2016, and (d) a $2,750,000 exception that expires on June 30, 2016.  As a result, let’s say the Thunder have an open roster spot and there’s a player they like that has a salary of $1,200,000.  If they don’t want to trade another player (and the other team is willing to make this trade), they can acquire this player without a matching salary using the $1,250,000 TPE.  (For the record, trades can never be “for nothing.”  To facilitate a trade like this, the Thunder could trade a second round pick or the rights to some formerly drafted second round player).

What about Dion?

No article by me would be complete without mentioning Waiters.  Players on their rookie contracts are eligible for extensions in the summer before their fourth year.  Waiters is about to enter his fourth year, so he is technically eligible for an extension that would begin in the 2016 season.  It is most likely that the Thunder do not offer Waiters an extension.  If so, Waiters would then be a restricted free agent next summer.

Josh Huestis, what’s his deal?

The Thunder purportedly agreed to “stash” Huestis, one of the Thunder’s 2014 first round picks, in the D-League.  What’s unknown is whether he was promised a roster spot this year.  If so, in order to keep that promise, it becomes imperative that the Thunder find a way to clear another roster spot.  Ideally they’d like to trade Jones and/or Novak.  If not, the Thunder may be forced to release one of those players.  If released, the Thunder would be on the hook for all of his salary (or a portion of his salary if the player was picked up off of waivers).

Obviously, a trade is ideal, especially if the Thunder can find a trade partner where the Thunder don’t have to add salary.  They could do this by finding a team under the cap who can acquire the salary without having to match so that the Thunder can just get back the “rights” to someone.  The Thunder could also try to find a non-guaranteed contract to match so they could release whoever is acquired (which is what they did with the Lamb/Luke Ridnour swap).  Lastly, the Thunder could find a team with a TPE big enough to absorb Jones or Novak.

Wait, I heard the Thunder signed Michael Qualls.  How did they do that?

There are reports that the Thunder signed former Arkansas player Michael Qualls.  Teams over the cap can sign players to minimum contracts.  It is almost certain that Qualls signed a minimum contract.  It is also likely that the contract is not “guaranteed,” meaning the Thunder can waive Qualls without his salary counting against the cap.  This permits the Thunder to bring Qualls in to training camp, have him work with the team but release him and let the Blue sign him so that he can develop with the Thunder.  Johnson will likely get a similar deal.

Also, the deadline to cut your roster to 15 is not until the start of the season, so the Thunder could (and will) add players on minimum contracts to participate in training camp.  Absent weird circumstances and an unexpected open roster spot, none of the training camp invites will join the team for this upcoming season.

So, big picture, what’s the deal?

After spending 1,500+ words describing the Thunder’s situation, it’s most likely that the Thunder’s roster looks very similar to last year’s team.  The only differences will be the subtraction of Jeremy Lamb (traded to Charlotte) and likely Jones and/or Novak, with the addition of Payne, possibly Huestis, and maybe a veteran free agent under the taxpayer MLE or on a minimum contract.

The Thunder will almost certainly be well above the luxury tax.  I would get into the luxury tax, but I’m tired now.

Author