The “After” Math: Hayward’s Offer and the Jazz Cap Sheet

July 10th, 2014 | by Dan Clayton
(Photo by Melissa Majchrzak/NBAE via Getty Images)

(Photo by Melissa Majchrzak/NBAE via Getty Images)

Time to rework some numbers.

A Tuesday BonnellBomb1 told us that restricted free agent Gordon Hayward is getting paid by somebody, and that we need to update our spreadsheets.

By now, you know the basics. The Charlotte Horcats2 committed to a $63 million offer sheet with Hayward. Once signed tomorrow, Utah will have until 7/13 to decide whether to sign the checks themselves or let Charlotte do the honors3. Multiple outlets are reporting that Bailey’s Moving & Storage will not be needed at the Hayward home, as Utah is expected to match.

But what does this mean to the Jazz’s financial position? Here’s the new math on the dollarific details behind Hayward’s offer sheet and what it could mean to the Jazz, starting with the most obvious.

Are the Jazz going to match the offer?

Yes.4

Should the Jazz match the offer?

Yes. (Wow, we’re really cruising here.)

Why?

I’ve written and spoken already about how Hayward is probably underappreciated when you look at his skill set relative to other young wings around the league. Even in what was admittedly a rough year for him, he still put up 16-5-5. With a better cast, a more spread system and a quicker pace (meaning more possessions on both ends), it’s not a stretch to imagine him getting to 18-6-6 pretty quickly, which would put him in pretty elite company. Granted, a max offer to Hayward today is based on the hope of him filling out the top of his projected range as a prospect, but I like the chances. As Zach Lowe opined, “[T]he brains and skills are there, and they’re developing.”

And there are broader reasons to bite the bullet, too. First, it would set the whole rebuilding project back, which I think costs the Jazz more capital — literally and figuratively — than just signing on the dotted line. Plus, there’s something to be said for showing people the Jazz will pay for talent. Think about it: in the past 4 years, the Jazz have let nearly all their key players walk: Carlos Boozer, Mehmet Okur, Andrei Kirilenko, Deron Williams, Paul Millsap and Al Jefferson.

I don’t want to rehash those individual decisions, but how does it look if once again, the first time that one of the Utah’s young core approaches an opportunity to get paid or walk, the guy they’ve made the franchise face is gone? To rebuild, you eventually have to decide to, you know, build on some of the pieces. Continuing to usher talent away would send a bad message to potential free agents — not to mention the rest of Utah’s young core. Want Dante Exum to believe in what he’s building in Utah? Show him that the team is willing to reward good players and move forward.

But you came here for a cap breakdown, so let’s move on…

If the Jazz match, are they done spending?

No. Depending on exactly where the cap falls, the Jazz will have about $9 million left under the cap, with another $4M or so they could free up by waiving non-guaranteed contracts. They could use that to sign players, absorb salary in trades, or make lopsided deals where they package smaller-salaried players for an impact player another team wants to clear from their cap. Or, they could opt to operate as an over-the-cap team, retaining the free agent rights to their own guys, and then using exceptions such as the MLE to fill out the rotation.

I heard Hayward’s cap hold is just $8.6M. Can we use that lower figure to fit in some signings during the 72-hour waiting period and then match the $14.8M offer sheet?

Turns out I was wrong on this, even falsely correcting the hard-working David Locke. For the RFA’s original team, the cap hold amount until the match notice is sent is the greater of the RFA’s cap hold or his QO – in Hayward’s case, that’s his $8.6M cap hold. For the team submitting the offer sheet, the new salary amount counts right away.

So yes, the Jazz have an extra $6.2M of cap space up until they match the offer. My apologies to those I steered wrong before double checking the CBA document5.

Does the player option or trade bonus make Utah less likely to match?

I don’t think so. The trade kicker slightly dings the value of Hayward-the-trade-asset6, but I think they like Hayward-the-basketball-player enough that it’s not really about that. The player option is discouraging because it means he could be an unrestricted free agent as early as 2017, but I don’t think it changes their math. They’ll either get him for 4 years and $63M or for 3 years and $46M. Either way, I think they want him back.

Did the Jazz mess up by not extending Hayward last fall?

It certainly cost them some money, sure. But I don’t know if they “messed up,” and it’s hard to say without knowing exactly what was on the table in October. You could also make the argument that the Jazz simply wanted more of a sample size on Hayward — particularly as a team leader and core guy — before making the decision. If that’s true, then maybe they’re more comfortable investing $63M based on what they know today, versus investing mid-50s based on what they knew 9 months ago. If that was their logic and they made a conscious decision to pay for some extra evidence, it’s hard to say they made a mistake. But the extra data points definitely came at a price.

Will the contract hurt Utah’s flexibility later?

It could, but it’s important to remember that the cap and tax threshold are both expected to climb sharply in the next few years. Gordon’s 4th year salary ($16M) sounds like a lot in today’s salary construct: about a quarter of the cap. But if the cap has done what it’s supposed to by then, that may only be on fifth of the cap, or the equivalent to a 12M salary in today’s NBA economy. Either way, this shouldn’t be a huge issue as long as Hayward earns this salary by being one the top three players on a good Jazz team during this contract. Look at the salary construct of good teams: you can afford to pay eight-figure salaries to your best 3-4 guys, especially when you still have a lot of rookie-scale salaries on your roster.

But can they still extend or keep Enes Kanter, Alec Burks, Trey Burke and Dante Exum?

Two-part answer. First: yes, they can. The Jazz will have Bird Rights to all of those players, as well as the ability to secure matching rights with a qualifying offer. I’m also not sure that any of those guys outside of Exum7 will command the type of price range Hayward did. Most in the NBA are project Kanter, Burks and Burke as really good rotation players or part-time starters, but the Jazz won’t be in a position where they have to pay all six guys (plus Rudy Gobert, Rodney Hood, Jeremy Evans when his contract expires, etc.) eight-figure salaries.

Second: no fan likes to hear this, but the reality is that not every one of these players is going to be a part of Utah’s indefinite future. If the Jazz are contending any time in the next 5 years, it’s going to be because they’re figured out which 3-4 of these guys are truly the core, and then they’ve cashed in assets to surround that core with complementary impact players. I actually keep thinking we’re close to the point where “asset accumulation” turns into spending mode, and somebody gets parlayed into the right kind of impact glue guy. Wouldn’t surprised me if that trade is coming sometime in the next 12 months. Having a dozen good players is nice; to compete, though, you need 2-3 guys who are at least in the All-NBA conversation, as well as a really strong top 6-7.

Is Hayward really a “max” guy?

I’ll concede that this contract has a lot more to do with potential than where he’s at today, but Hayward really is undervalued for the unique skill set he brings to the table. Also, remember that there are many levels of “max,” so him getting $63M isn’t tantamount to saying he’s as good as LeBron James. There are certainly some things Hayward needs to improve upon, and he knows that. His defense, his rebounding and of course the perceived engagement issues from last season come to mind. But again, the tools are there.

What if the Jazz don’t match?

Then they’ll be sitting on about $38.7M in salary, more than $24M under the cap and about $18M below an amount they’re going to be forced to pay anyway. Not sure what they’d do with that $24M given the realistic free agent targets out there. They’d probably get filler guys, or maybe perform some more cap-dump trades for assets. But one thing’s for sure: they’d have a big hole to fill on the basketball floor, too.

Don’t the Jazz have to spend a certain amount anyway? What happens if they don’t?

Every team is guaranteed to spend $56.76M in salaries, one way or another. If they don’t reach that level, the NBA adjusts its players’ salaries upward proportionally. So there’s really nothing wrong with falling short — but the Jazz are going to pay at least that much no matter what happens. Even with a Hayward match, they’re not quite at the floor.

The Jazz's cap sheet, post Hayward offer sheet. Figures are estimates, compiled from a number of online sources.

The Jazz’s cap sheet, post Hayward offer sheet. Figures are estimates, compiled from a number of online sources.

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 where his hobbies include complaining about League Pass, finding good doughnut shops and dishing out assists for the Thoreau It Down team in the Word Bookstore basketball league.
Dan Clayton

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10 Comments

  1. LKA says:

    I wish everyone would read and study this before they propose a trade. Being highest paid on a team can do several things. Hopefully Gordon will show his worth. Thanks for the complete table. Looks like they will have room to extend both Kanter and Burks. I hope Burks for sure. They might let Kanter go the the RFA route though. I see Kanter as the most tradeable piece.If he can show some worth the trade deadline might be a good time to move him. I would however like to keep him.

  2. Dan says:

    Can you explain why Jefferson, Williams, and Rush count against the cap even though they are free agents and not on the team?

    • Dan Clayton says:

      Yeah, the NBA uses a “free agent hold” amount that sort of reserves each team’s right to use its Bird Rights on a guy. It’s a check in place to make sure teams that might go over to re-sign their own guys don’t “double dip.” Each free agent’s cap hold amount is based on the type of free agent he is, what type of contract he was on, and what his previous salary was. However, the Jazz have renounced the rights to RJ and Rush, so those holds are no longer there… and Marv signed with Charlotte, so him either. Right now our cap sheet is clean – just players under contract.

  3. Hazel says:

    I know that there is a good chance the roster will change a lot going forward, but I can’t help but think there is also a chance that we have the players who have as much potential to develop into what we need as anyone.

    Gobert can become that long defensive anchor who runs the floor and finishes at the rim.

    Favors can be that two-way impact player who can get buckets down low.

    Kanter can be the banger and one version of a stretch four or even more.

    Hayward can be that all-around player who makes everyone better.

    Burks can be the attacking slasher and perimeter defender

    Hood can be the high-level role player who is a knock-down shooter and good defender.

    Burk can be the heady point guard who makes the right decisions and runs the team at a high level.

    Exum can be the physical mis-match and possible franchise guy.

    That’s eight guys who I would rather have than most guys at their position in the NBA given their potential.

    In the past I have loved the big changes. Now I am ready for stability. One idea that I think is worth visiting next summer. If Kanter is not an ideal fit, we could trade him for assets and possibly resign Millsap??

  4. cw says:

    You wrote “undervalued” in relation to Hayward twice. How can he be undervalued if he got a $63 million contract that everyone agrees is overpaying? And by everyone, I mean, everyone. Even you, with your hedging. Becasue of the market and the possibility of the max contract, Hayward has been very closely examined and I think there is a pretty strong consensus about what his actual and potential value is: a third option on a good team, a second option on a bad team, a guy who, under the right circumstances is a coach pick on the all-star team once or twice. But not the foundational piece you talk about.

    Another thing–while I’m in bitch mode–you seem reluctant to come right out and say the jazz made a mistake. Of course they made a mistake. The Jazz FO’s job is to predict the future market of their soon to be free agents and act accordingly. They obviously predicted wrong which is by definition, a mistake. Hayward had plenty of buzz last October. It was easy to determine how many wings were coming out and a rough estimate of the salary cap and other teams cap space doesn’t seem that hard to come up with. Hayward’s agent certainly seemed confident of his market. So, if they were only a few million dollars apart as reported, and the Jazz really wanted hayward on the team as they kept saying over and over, it would have been way better to overpay then by a little rather than overpay now by a huge amount, along with getting stuck with a really disadvantagous contract. Two years from now, Hayward can tell the Jazz he’s going to opt out and leave after year three and then the pressure will be on to trade him. Teams trading someone in those circumstance almost always get screwed. So there’s that–I think very real–possibility to look forward to: two years of overpaying for gordon hayward, then a forced trade.

    This letting RFAs go out and find their market and having it come back to bite them is a reoccurring theme with the Jazz, even now that they have a new GM. Is this an ownership thing. Is this something the MIller’s impose on their GMs? How active are the Miller’s in personnel decisions? Or is it just a coincidence that it happened again under Lindsey?

    A lot of the frustration reflected in this comment is about having GH being such a prominent part of Jazz future. He’s a good player and a nice piece, but if he is one of your big three, then you are in trouble. had the Jazz had him under contract this would have been the perfect time to trade him: his value is unrealistically high and there are all kinds of good parts floating around out there. That’s how you build a contender. You trade over-valued pieces for under-valued pieces and keep building up you bank account until you have enough for a foundation piece. Kevin O’Connor wrote that he regretted not being more aggressive in putting better players around Stockton and Malone but it seems like the Jazz still have not learned this lesson. This screw-up can also be found in the classic mistake catalog under both Overvaluing Your Own Draft Picks and Overpaying Role Players. The jury is still out on Lindsey because the logs have yet to jam and he still has time to make some good moves, but this episode right here is exactly how teams get stuck in mediocrity.

    • cw says:

      I just did 2 minutes of research and found out that the salary cap projection last october was 62.3 million. Actual Salary cap: 63 million. So that information was right there for the Jazz FO to use in their market projections. And here’s a guy, @nsanba, that made those projections and guessed what Hayward’s agent was thinking and came up with exactly what everyone says hayward was asking. In other words, he kicked the Jazz FOs butts. If this guy had been the jazz FA, the jazz would be in much better shape. REad it and weep: http://www.jazzdimes.com/2013/10/gordon-haywards-conundrum.html

      • ccrook3 says:

        I really enjoyed your comments and I could not have agreed with you more! I was really irked when all of this was taking place. Same thing happened when Mathews became a RFA and Blazers took him from us. Undrafted SG who played a huge role and made a name for himself around the league. Jazz told him to test the market. What happened? He got what he deserved. We easily could have extended a lower offer during the season and had him back for multiple years. That kind of started the downfall for us. It pissed off Deron and we all know what took place after that. I’m tired of this, “test the market and come back to us” BS every time. FO’s should know what the market will be for an upcoming FA. I’m worried now what will happen to Burks when his contract is up. I strongly feel he will become our All-Star before Hayward… 16-5 guy who shoots below 40%, isn’t an All-Star on a lottery team, making $63 million… Give me a break. At least AK was an All-Star when we did this a while back.

  5. Pingback: Should Hayward Get a Max if He’s Not the First Option? | Salt City Hoops

  6. doug mcmasters says:

    It is Horncats. Not Horcats.

  7. Pingback: A Dissenting Opinion on Gordon Hayward’s Max Contract | Salt City Hoops

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