UPDATED: Jazz’s Spending Ability Depends on Decisions

June 25th, 2015 | by Dan Clayton
What the Jazz do with Booker & others affects their cap space. (ESPN/Getty Images)

What the Jazz do with Booker & others affects their cap space. (ESPN/Getty Images)

Updated: Since the Jazz kept their #12 pick and don’t sound like they’ll be shopping Trey Lyles, the following pre-draft article has been updated. Now, the maximum the Jazz could clear just by waiving non-guaranteed players and renouncing free agent rights is around $16,627,611. Read on for more adjustments to the article, which originally appeared on Wednesday.

Exactly how much cap room do the Jazz have for a draft-day splash or a July pitch to some free agent stud? Well, it depends.

The answer is actually pretty conditional, but here’s a quick guide to how different decisions will impact Utah’s spending ability.

Technically speaking, the Jazz actually don’t have cap room for deals made up until 6/30. June trades are done on the current year’s cap, and Utah ended up using just about all of its ’14-15 space. They can make deals, but they would have to fall into trade guidelines for over-cap teams. For example, in a trade where they send out $9.8 million or less in salary, they can take back up to 150 percent of the outgoing salary plus $100,000. The rules change from there as the dollar figures go up, but you get the picture.

However, there’s an easy way around those strictures if the Jazz want to strike a hot iron before June is over.

Teams sometimes to agree to terms in June (such as on draft night), but then make the trade official after the July moratorium. This does lead to some short term awkwardness — “Aaah, whose hat do I put on?” — but it’s a way for teams to use their July 1 cap situation as a late-June asset.

So the July 1 cap situation matters much more, though even that has a “well, technically…” version and a real life version. Let’s start with “well technically…”

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Scenario 1 – Jazz 7/1 cap sheet based on current roster & holds.

Officially, since the Jazz’s committed salary1, free agent amounts and other holds2 add up to more than the projected cap of $67.1 million, they could operate as an over-the-cap team. But it’s extremely unlikely that they will.

The best example of why that’s the case is Jeremy Evans. At this point, it’s safe to say that Evans’ market rate is probably lower than his cap hold of $3.4 million, so why limit your spending ability to just the midlevel and other exceptions just to preserve the right to pay Evans more than you ever would? Just renouncing Evans alone would cause the MLE and BAE holds to evaporate and open up over $9 million in space. At that point, even if you wanted to keep Jeremy, you could pay him market value out of your cap room and still hold onto more space than what MLE teams can offer3.

Evans is one example, but there are several scenarios whereby the Jazz can quickly carve out space should an opportunity arise.

To illustrate that, let’s work backwards from max cap space. The following table shows the most cap room Utah could create without trading players. But be aware — creating that much cap space requires the Jazz to jettison everything that’s not bolted down, waive everybody without a full guarantee, and give up rights to sign free agents. The reward for doing all of those things could be over $16.6 million in spending money.

Scenario 2 - The most space the Jazz can create (without salary dump trades). Not a realistic scenario, but use this to work backward based on what players you think they'll want to keep rights to.

Scenario 2 – The most space the Jazz can create (without trading Trey Lyles or players on guaranteed contracts). Not a realistic scenario, but use this to work backward based on what players you think they’ll want to keep rights to.

At the risk of stoking a flame ignited by Spence Checketts, that’s close to Paul Millsap money 4. They might not want to sever ties with all of those athletes, but they could, and it’s at least important to recognize that as an extreme scenario. I’m sure the Jazz like a lot of those fellows, but they’re not going to pass on an opportunity to sign someone deeply impactful out of allegiance to a collection of end-of-bench players.

Still, it’s unlikely the Jazz do everything that would be required to open up that much space unless an impact signing or trade opportunity is right in front of them5. And if that impact transaction never falls in their lap, then they have options with the Evans and Elijah Millsap types.

As a quick intellectual exercise, let’s start from that max room scenario and work backwards. This will give a sense of what each guy’s rights will “cost” the Jazz in terms of July 1 spending power — even though they don’t really cost money yet6.

A la carte: start from "max space" and then adjust based on the decisions you think Utah should make regarding FAs/non-gtd.

A la carte: start from “max space” and then adjust based on the decisions you think Utah should make regarding FAs/non-gtd.

Importantly, you’ll notice that each guy’s cap cost is offset by the fact that keeping his contract/rights intact erases one of the four minimum cap holds we had to account for in the max space scenario. That is only true if you choose three or fewer of those options, but that has to change the way you view certain players’ “costs” as it relates to a hypothetical July shopping spree. For example, if it’s one of only four options they choose off this list, then keeping rights to match Joe Ingles’ offers doesn’t cost them $1 million of flexibility; it only costs them the difference between SmoMo’s qualifying offer and the $525,000 they’d have had to set aside anyway. Similarly, keeping a Cotton/Millsap/Cooley type ($320,000 cap impact) becomes a low-cost proposition, if those are guys they truly want to keep in the fold anyway.

And again, the Jazz don’t have to decide by June 30. They can keep everything intact and then renounce and waive as they need to. With a couple of notable exceptions:

  • If they make the $1 million QO to Jingles, he does have the option of simply accepting it and then the Jazz are fully on the hook to pay him. That wouldn’t be a horrible outcome given how important he was to last year’s Jazz, but it would take that little bit of flexibility7 off the table if he hurried and gobbled up the QO.
  • Booker becomes fully guaranteed on July 12, so they don’t have all summer to decide whether they need to free up that chunk of change.

So you pick: use that table as a bit of an a la carte menu. It’s a good exercise to see the financial impact of keeping the guys you like in play. Here are come examples:

  • If the Jazz kept all the non-guaranteed contracts for the time being, but let the rights to Ingles and Evans go8, that would lop just over $7.8 million off their “max space” scenario and they’d open free agency with $10,161,365, and could still clear more later.
  • Let’s say they keep ’14-15 rotation players Booker, Ingles and Millsap, but say goodbye (at least temporarily) to the rest: it takes $6.18 million off the max space number, leaving them with $11,787,772.

What this doesn’t cover is the way trades play in. I’m using the term “max space” as shorthand, but the Jazz could take back even more salary if they rolled Booker or somebody like Grant Jerrett into a deal. Or if, as rumored on draft day, they include Trey Burke in a deal, that would increase their cap room by $2.66M.

Trades are also a reason to not waive anybody until you need to, because some of those non-guaranteed deals could come in handy in a conversation with another team, now or after their cap money is spent. If the Jazz make transactions that take them right up to the cap level, they can still make trades past that point using the over-cap trade rules. At that point, packaging just the four low-cost non-guaranteed deals could allow the Jazz to bring back $5.37 million without sending any guaranteed salary to the other team. So they’ll keep those options open as long as they can, unless an opportunity arises to spend major cash on an impact player.

That’s a ton of information, but the reality is we’re just scratching the surface on scenarios and such. We’ll be conducting a live chat of cap/trade/FA questions early next week before free agency begins. But in the meantime, enjoy playing GM with these tools.

Dan Clayton

Dan Clayton

Dan covered Utah Jazz basketball for more than 10 years, including as a radio analyst for the team’s Spanish-language broadcasts from 2010 to 2014. He now lives and works in New York City, but contributes regularly to Salt City Hoops and BBALLBreakdown.
Dan Clayton

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3 Comments

  1. LKA says:

    Thank you Larry Coon could not have done better.The Jazz are pretty smart as to how they adjust their contracts. After the draft they will Know where they stand. I sede on a article where Jingles or Evans were not very high on the scale as far as their worth in the market. Does a QO for Jingles lock him in for one more year?? I would like to see them bring Evans back on at least a two year deal on a mimium contract.It will be a interesting night to say the least. Let’s get to it..

    • Dan Clayton says:

      Good questions, LKA, and thanks for the kind words. A QO to Joe doesn’t necessarily lock him in. It just gives the Jazz the right to match. But there is a CHANCE he was just accept the one-year tender offer, in which case Utah would be on the hook for his 1.0M (rounded) salary.

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