Batum, Gasol & Scenarios

Free Agency (sort of began) at midnight on Saturday night.  That’s when teams could contact free agents to discuss possible contracts and, in some cases, come to verbal agreements.  Only, the actual pen-on-paper agreement cannot be finalized until July 11, still eight days away (if you’re reading this on Tuesday.)  While we wait for that big day, and the proverbial dominos to fall, we’re left reading the latest updates about who is joining David Kahn to what Twins game and following whatever blockbuster trades break across the news wire when you least expect. 

Cutting to the chase, it’s now widely reported and understood that the Wolves have set their eyes on Blazers wing, Nicolas Batum.  The 23-year old Frenchman is a long-and-athletic wing player who can actually play the game of basketball at an above-average level.  ESPN Radio’s Doogie Wolfson reports:

On Sunday night in downtown Minneapolis, owner Glen Taylor and his wife had dinner with Portland Trail Blazers restricted free agent Nicolas Batum and his wife.

Earlier in the day, Batum had a lengthy chat with Wolves coach Rick Adelman and president of basketball operations David Kahn.

According to a source with intimate knowledge of those discussions, Batum is the Wolves’ Plan A in free agency — and he told the Wolves he has legitimate interest in coming.

If you know a little bit about restricted free agency, you realize that it isn’t as simple as the Wolves offering, and Batum accepting, a contract.  Even if Nic decides that Minnesota winters are everything they’re [not] cracked up to be, Portland still has matching rights.  For three days.  And if you’ll take a moment to review Portland’s roster and salary situation, you’ll notice that they don’t have a good reason to let Batum walk.  The Blazers’ long-term picture includes star forward LaMarcus Aldridge, guard/forward Wesley Matthews, and incoming rookies (not shown in link) Damian Lillard and Meyers Leonard.  What this means, for our purposes, is that Portland is likely to match any offer sheet, within reason, that Batum signs.  Add in that Minnesota is a division rival (I’m comfortable using the term “rival” here now that Brandon Roy is retired (and might even come out to join the Wolves!) and we actually beat Portland a couple times last year) and the price tag for an unmatched Wolves-Batum contract probably goes up some above most other teams.

The reported figure that Minnesota is offering is $50 Million over 4 seasons.  While Batum is a good player, I’m comfortable saying that this is overpaying.  I’m also comfortable saying that I would support the move.  The team has a fringe-MVP candidate just entering his prime, along with a new star point guard and emerging force at the center position.  Pieces are falling into place, Rick Adelman isn’t going to stick around forever, and the team really needs to think “WIN NOW.”  With that in mind, and also remembering that Pau Gasol hasn’t fallen off the potential-trade radar, let’s look at some scenarios and what they would mean to the financial statements over at 600 1st Avenue North.

First off, all salary figures (except for Hummel’s, which is undetermined, so I guessed) are taken from shamsports.com.  Here is the team’s current salary situation:

Player	2012/13	2013/14	2014/15	2015/16
Martell Webster	5,712,000
Darko Milicic	5,228,000
Brad Miller	5,104,000
Kevin Love	12,922,194	13,891,359	14,860,523
Derrick Williams	4,809,840	5,016,960	6,331,404
Nikola Pekovic	4,837,200
J.J. Barea	4,493,500	4,687,000	4,519,500
Wes Johnson	4,285,560	5,421,233
Luke Ridnour	4,000,000	4,320,000
Ricky Rubio	3,741,120	4,002,120	5,070,686
Wayne Ellington	2,083,042
Malcolm Lee	762,195	884,293
Chase Budinger	885,120
Robbie Hummel	500,000	700,000
Total:	59,363,771	38,922,965	30,782,113	0

I should point out a few assumptions that I’m making with that chart:

1) For the upcoming season, this is the “as things stand as I’m typing this” scenario.  The team can still (and probably will, if no big trades are reached in the coming days) exercise early termination rights on Martell Webster and Brad Miller.  The team also has its amnesty rights, which will be used on Darko Milicic’s salary if cap space could be used.  If not, they’ll probably just buy him out and allow him to count against one more year’s cap.

2) For the 2013-14 season, I assume that the team will exercise its options on Ricky Rubio, Derrick Williams and Wes Johnson.  Although 99 percent of fans would prefer the last one didn’t happen, Wesley’s 64 starts out of 66 games suggests that the team values him to some degree.  I also assume that Wayne Ellington’s $3 Million qualifying offer is not extended.  If they’re serious about spending money on free agents, they can’t afford that Kahntract.  Finally, I don’t have anything in Pekovic’s slot.  That’s because he’ll be a restricted free agent by then and probably command a lot of money.  In the scenarios below, I use an $11 Million/year figure as a guess of what he’ll command in his next contract.

Before going any further, I should point out a few more things, some of which I just learned for the first time today:

The NBA has a “soft” salary cap, meaning teams can exceed it in a few different ways.  The most common way is with “Bird Rights” which just means that teams can re-sign their own players with contracts that exceed the salary cap.  The Lakers and Knicks do this all the time.  The other common way is with exceptions (the “mid-level exception” being the most common–again, look at the Lakers/Heat/Knicks for annual examples) where teams can add one player, at a modest salary, in free agency even if they’re over the cap.

The salary cap changes based on league revenues, but a safe prediction for the next few seasons is about $60 Million.

The NBA also has a “luxury tax” for teams that exceed the cap by more than a few million dollars.  For every dollar that a team exceed the luxury tax threshold (roughly $70 Million; again, depends on league revenues but this is a safe estimate) they pay a tax.  It used to be dollar-for-dollar, and James Dolan seemed eager to do this as much as possible.  In coming seasons, the tax is going way up as a league measure aimed at preventing perpetual tax paying amongst the big-market teams.  The Wolves have not been tax payers in recent years and there is no indication that Glen Taylor, who is trying to sell the team, wants to get his team in a position where it’s locked into a taxpaying state for even one season, let alone many.

With those considerations in mind, let’s take a peak at how things change if the team signs Nicolas Batum (to the reported $50 Million) and does little else other than accommodate the move by releasing Webster and Miller.

Player	2012/13	2013/14	2014/15	2015/16
Martell Webster
Darko Milicic	5,228,000
Brad Miller
Kevin Love	12,922,194	13,891,359	14,860,523	15,829,698
Derrick Williams	4,809,840	5,016,960	6,331,404
Nikola Pekovic	4,837,200
J.J. Barea	4,493,500	4,687,000	4,519,500
Wes Johnson	4,285,560	5,421,233
Luke Ridnour	4,000,000	4,320,000
Ricky Rubio	3,741,120	4,002,120	5,070,686
Wayne Ellington	2,083,042
Malcolm Lee	762,195	884,293
Nicolas Batum	12,500,000	12,500,000	12,500,000	12,500,000
Chase Budinger	885,120
Total:	60,547,771	50,722,965	43,282,113	28,329,698

Well, we have hit the salary cap or thereabouts.  If $60.5 Million is north of the cap, this is where you can expect Darko to be amnestied.  Given the reports that the team is also hoping to land Brandon Roy and Jordan Hill, I suspect that a Nic Batum signing would certainly mean the amnesty is used on Darko right here, right now.

Pushing this ahead one season, what happens with Pekovic?  He’s a restricted free agent next summer.  Like I wrote above, I’ll assume he gets something like $44 Million over 4 years.  Here you have it:

Player	2013/14	2014/15	2015/16
Kevin Love	13,891,359	14,860,523	15,829,698
Derrick Williams	5,016,960	6,331,404
Nikola Pekovic	11,000,000	11,000,000	11,000,000
J.J. Barea	4,687,000	4,519,500
Wes Johnson	5,421,233
Luke Ridnour	4,320,000
Ricky Rubio	4,002,120	5,070,686
Malcolm Lee	884,293
Nicolas Batum	12,500,000	12,500,000	12,500,000
Chase Budinger
Total:	61,722,965	54,282,113	39,329,698

What first jumps out is the blank box for Chase Budinger.  He’ll be a restricted free agent.  We’ll have his Bird Rights, so we’ll be able to pay him as much as we need or want.  But every additional dollar creeps closer to the tax threshold at $70 Million.  Even with Chase, that’s ten players.  You have to assume at least two more.  Maybe Brandon Roy.  Maybe a rookie.  Maybe two rookies.  With this financial situation, the team will need to really operate on the cheap to stay under tax territory.  Oh, and they’re over the cap so there will be no free agency fun, save perhaps a mid-level exception if the team showed bigtime progress in 2012-13 and Taylor Corp feels like opening up the wallets even more.

One other consideration here is that the team will not pick up Wes Johnson’s next team option.  That would clear $5.4 Million off of 2013-14 and give a little bit more breathing room to deal with the cap and luxury tax.  (Hey, it might even improve the team too!)

Now let’s look really long term and think about Ricky Rubio and Derrick Williams.  God willing, Ricky’s knee will be A-OK and he’ll get back to dazzling the fans and assisting his ‘mates.  I’m going to assume a max deal for Ricky in 2015.  For D-Thrill, in the event he’s not traded and remains a 3rd Big, I’ll assume $9 Million/year for his extension.  Here you go:

Player	2015/16
Kevin Love	15,829,698
Derrick Williams	9,000,000
Nikola Pekovic	11,000,000
J.J. Barea
Wes Johnson
Luke Ridnour
Ricky Rubio	14,000,000
Malcolm Lee
Nicolas Batum	12,500,000
Chase Budinger
Total:	62,329,698

OUCH!  Five players puts us over the cap.  Only a few more puts us in the tax.  Now, this makes the assumption, however optimistic or faulty, that Kevin Love picks up his player option.  So he’s still on the books.  And in this scenario, Batum would be an expiring, so if the team is in a “Let’s give it one last title shot!” mode (it’s late, let me be delusional) perhaps they’ll really spend for one last year before letting Batum walk.  Hell, maybe they drafted his replacement in 2013 or 2014 and they can afford to.  And it’s probably likely that Derrick Williams is gone WAY before 2015.  So what I’m really trying to show here is how expensive it would be to keep a Rubio-Batum-Love-Pekovic core together for the long haul.  For this season when Rubio is extended for big money and Batum is still on the books, those four would command about $53 Million by themselves.  For a comparison, Miami’s Big 3 will earn about $61 Million combined in that season.

Before I wrap this up, I’ll take one shot at the “Pie in the Sky” scenario that nets both Batum AND Pau Gasol, AND doesn’t give up Pekovic.  That’d require the Batum signing to go through without Portland matching.  After that, the following trade would take place:

Wolves get:

Pau Gasol

Lakers get:

Derrick Williams, Luke Ridnour, Brad Miller and Martell Webster

I’m assuming, possibly incorrectly, that the Wolves can execute this trade despite adding Batum’s salary.  It might require amnestying Darko.  It might not be possible.  I’m not sure.  But I’m running with it, so run with me.  (Oh, and the Lakers do this to get younger and better position themselves for the REPEATER TAX which is coming up fast.)

Here she is:

Player	2012/13	2013/14	2014/15	2015/16
Kevin Love	12,922,194	13,891,359	14,860,523	15,829,698
Nikola Pekovic	4,837,200	11,000,000	11,000,000	11,000,000
J.J. Barea	4,493,500	4,687,000	4,519,500
Wes Johnson	4,285,560
Ricky Rubio	3,741,120	4,002,120	5,070,686	14,000,000
Wayne Ellington	2,083,042
Malcolm Lee	762,195	884,293
Nicolas Batum	12,500,000	12,500,000	12,500,000	12,500,000
Pau Gasol	19,000,000	19,285,850
Chase Budinger	885,120
Robbie Hummel	500,000	700,000
Total:	66,009,931	66,950,622	47,950,709	53,329,698

It’s workable for the first year.  The team has 11 players, including a full stable of guards/wings/bigs, and remains under the tax.  Add Brandon Roy or a different Kahntract and you’re still probably under $70 Million.  Season 2 becomes more difficult and I took the liberty of assuming Wes Johnson is a goner in that scenario.  So is Chase unless they can keep him for cheap.  They’d only have 8 players and they’d be very close to the tax.  Maybe Taylor would pay it for one year, but I doubt he wants to pay much of it.  It’s progressive by how far over you are, so staying “barely” over the tax line would be important.

The playing rotation would look something like:

Rubio/Barea

Batum/Barea

Budinger/Johnson/Hummel

Love/Gasol

Gasol/Pekovic

It’s an interesting lineup, for sure.

Anyway, that was a little Timberwolves Salary Cap 101.  I probably made some mistakes.  Still, I hope it helps paint a little bit clearer picture of the team’s financial situation and how it will be affected by a Nic Batum acquisition.  Correct my mistakes or share your opinions in the comments.