Updated: Spending Power Tracker & Utah’s Markkanen Math

Which teams can spend the most, and why is Lauri Markkanen a huge variable for Utah?

The NBA’s summer transaction window is upon us, and for some it’s nearly as interesting as the sport itself. We’re gearing up for it here by introducing all sorts of fun tools like free agent trackers and trade boards, but that only covers one half of the supply-and-demand equation. Just as important as surveying the available talent is figuring out who can actually spend money.

Let’s do that first, and then we have to talk about how the Jazz’s cap space situation could be complicated by the weird timing of negotiations with their lone All-Star.

Spending Power Tracker

This is intended to capture where the remaining money is at any point in time. This section will be updated as deals trickle out. What it reflects is the max cap space each team can create without making trades, although in some cases there are still some variables that teams don’t control.

Last updated 8/10 at 10:11 p.m. MDT.

Can still use MLE or equivalent ($10M-$12.8M)

Teams in this range can choose to operate as exception teams, which would make their max spending power (outside of their own free agents) the $12.9M midlevel. Some may also have a $4.7M biannual exception, plus certain TPEs and player rights.

Once teams use exceptions (MLE/BAE) or trade rules that are only available to teams below the apron, they are hard-capped at the apron.

• New Orleans technically has the MLE and BAE available, but they’re only $14M and change under the apron and need to fill at least three roster spots, so we’ll see if they decide to use the MLE fully.
• Based on Cleveland‘s roster today, they only have the TMLE available, but if they renounce Isaac Okoro (restricted) and waive some guys, they could technically use the full MLE with plenty of room under the first apron. Their BAE is unavailable since they used part of it last season.
• Detroit still could create something like $12M in cap space, but only until July 31 when Bobi Klintman’s rookie deal starts to count. Then it’s $10M or so, plus the Room MLE.
• Sasha Vezenkov giving back all of his $6.7M salary to go back to Europe puts the MLE back in play for Toronto, who can now use it fully and still stay under the tax altogether (they used their BAE last year so won’t have the option this season).

Have the MLE, probably won’t use it

There are a few teams that technically have the full MLE available, but are extremely unlikely to use it fully:

• Atlanta technically has around $10M of the MLE left (they used some of it on Vit Krejci), but they might be done since they’re right at the tax.
• Brooklyn has access to the MLE and BAE, but if they keep two of their three non-guaranteed guys to complete the roster, they’ll be right at the tax line, and it’s unlikely they want to pay the tax in a year they’re not expecting to be majorly competitive.
• Indiana has the MLE and BAE available, but is currently right at the tax line with 15 standard contracts. If they did want to dip into the MLE, they could only use about $8M of it and stay under the apron.
• Portland could technically use about $11M of the MLE, but they are only $3.7M under the tax line as presently constituted, so they’ll probably decide to be content with the Deni Avdija and Donovan Clingan additions.

Only smaller exceptions left (<$10M)

These are either tax teams who only have the ~$5.2M taxpayer MLE (and minimums) or they are teams who have spent their cap room or big exceptions and only have smaller ones (<$10M) left.

Teams who use the taxpayer MLE or makes a trade using cash/aggregation/S&T are hard-capped at the second apron.

• Utah‘s deals with Drew Eubanks and Svi Mykhailiuk are now showing as final, which means they have exhausted their cap space, but can still sign Kyle Filipowski and Johnny Juzang with rights, and they still have the $8M Room MLE.
• Sacramento could still use about $9M of the full MLE after the DeMar DeRozan acquisition, but they are already hard-capped at the first apron. They are also right at the tax with 14 standard contracts, so they might just decide to be done.
• San Antonio made its transactions official, such as the acquisition of Harrison Barnes and the Chris Paul signing. Those moves at up their cap space, so at this point they are down to the $8M Room MLE and minimums.
• Orlando needed to perform the Jonathan Isaac R&E first, with cap room. Then they could take care of Goga Bitadze’s signing using Early Bird rights (he had a super low cap hold). The fact that those deals are both done means that the Magic have probably spent their cap space entirely now, but they still have the Room MLE. 
• OKC‘s signings have been carried out, which means their cap space is spent — on Isaiah Hartenstein first, then on Aaron Wiggins and Isaiah Joe given their low cap holds. That means they’re back above the cap, but have the Room MLE.
• Charlotte used cap room to absorb salary while while Miles Bridges’ $15M cap hold preserved their right to re-sign him. His deal pushes them back over the cap, even after waiving some guys, but they should still have the Room MLE.
• Houston used part of the MLE to keep Aaron Holiday, but could use the remaining $7-8M of the full MLE, although it would put them over the tax (unless they waive some non-guaranteed salary).
• Washington used above-the-cap exceptions to do the Deni Avdija-for-Malcolm Brogdon swap and fit Jonas Valanciunas into a TPE. But now they they gave most of the MLE to Saddiq Bey, they don’t have a single spending tool bigger than about $6M.
• New York has the $5.2M TMLE available (assuming Chuma Okeke was signed using the minimum), but they’re also at 15 standard contracts, so they may not use it unless something irresistible comes along.
• Chicago is over the cap and used most of the MLE on Jalen Smith. The biggest exception they have left is the $4.67M BAE, but to use that and stay under the tax they’d have to waive Onurlap Bitim.
• Signing Luke Kennard has put Memphis right back at the tax line (if they waive Mamadi Diakite), which feels too serendipitous to have been an accident. In other words, they technically could use $7.3M or so of the MLE if they wanted, but it looks like they might be trying to stay out of the tax instead, at least until they know if they’re going to get back to contending with all their guys back.

Down to minimums/done spending

Teams beyond the second apron can only sign another team’s free agents using the minimum salary exception, and have extremely restrictive trade rules (such as not being able to aggregate salary or pay cash in trades). We’ll eventually also put teams here once they’ve spent their other exceptions/room.

• Boston, Milwaukee, Minnesota and Phoenix are all past the second apron and therefore only have minimum signings to add outside talent.
• Because LeBron James took about a million less than his max salary, Los Angeles is just a hair under the second apron. They’re not far enough to do anything with that room, but it does keep the possibility open of aggregating salaries in trades as the season moves along. Don’t expect them to sign anybody else in the meantime.
• The LA Clippers committed most of the MLE (Jones), and then used the BAE on Nic Batum. So it’s minimum from here on out; they’re also now just about one vet minimujm under the hard cap they triggered by using those exceptions and acquiring Kris Dunn via sign-and-trade.
• Dallas is hard capped after using most of its non-tax MLE on Naji Marshall, and since unlikely incentives count toward the apron, they’re basically there. The most they could do without first reducing salary is waive one of Dante Exum/AJ Lawson and replace said guy with a minimum.
• With Reggie Jackson and Kentavious Caldwell-Pope leaving, Denver was able to create enough room under the second apron to free up the TMLE, which they used on Dario Saric; they’re now hard-capped at the second apron, but can sign minimums until they get there.
• Miami has blown past the first apron and is too close to the second to use more than a minimum salary-equivalent portion of the TMLE, so they are effectively a “minimums only” team.
• Philadelphia appears to have completed most of its big signings, meaning that they have used their cap room (Paul George, Caleb Martin, Andre Drummond) while Tyrese Maxey’s and KJ Martin’s super low cap holds were on the books. Then they wrapped up those deals and used the Room MLE (Kelly Oubre Jr.) and now they’re down to minimums.
• Golden State technically still has the BAE left, but can’t use it fully and stay under the hard cap they created by acquiring De’Anthony Melton (MLE) and Buddy Hield (S&T). The most they can spend is another $2.5M or so, or the equivalent to minimum salary.

Jazz room depends on Markkanen math

Update: The Jazz and Markkanen agreed to a renegotiation and extension worth $220 million in new money, including $24M this season.

On the surface, the Jazz are in a position to be one of the most interesting teams of this offseason. They own as many as 15 1st-round picks in the next seven drafts, and they could create as much as $40 million in cap room.

However, most NBA pundits expect the Jazz to earmark some of that $40M to take care of Lauri Markkanen through a salary cap maneuver called a renegotiation and extension (R&E). Normally, extensions can only start at a salary up to 140% of a player’s salary in the last year of a current deal, and in Markkanen’s case, that resulting figure of $25.3M doesn’t quite match his output as an All-Star level talent. However, a team with space under the salary cap can use that room to bump a player’s salary up and then offer an extension based off of 140% of that new salary amount.

Where it gets complicated is that Utah has to conduct other business using its cap space long before they can put ink to an R&E deal with Markkanen. He is not eligible for a salary renegotiation until August 6, so Utah would have to hold in reserve whatever they need to find a deal both sides will agree to in early August. That means Utah’s functional cap space figure depends entirely on what they intend to offer their All-Star.

Markkanen R&E scenarios. The possible permutations on a Lauri R&E are almost endless, as the terms can be individually negotiated. In theory, the Jazz have enough cap space to bump Markkanen all the way up to his 2024-25 max of around $42.3 million ($24.3M over his currently budgeted salary) and then give him four new years at the max (4/$208M). But this full-bore version of the R&E just doesn’t happen in real life. It’s extremely player-friendly, but a team isn’t really getting any concessions in exchange for giving the player that long-term security. And in Utah’s case, it would leave them just $16M in cap room for this summer — likely not enough to do anything major to improve the roster. If you had a top-5 player on your roster that you could keep locked up this way, you’d probably do it, but there’s really no precedent for using R&E to give a player every nickel possible.

At the team-friendly extreme is the more common R&E version that Jordan Clarkson and Myles Turner got. Both were sub-max players whose teams basically gave them fair-market contracts, but used the cap space in the R&E season to reallocate some of that cap hit, making the latter years extremely team-friendly. Clarkson, for example, got two new years and $38M in new money, which is probably right in his wheelhouse in terms of free agent value. But $9M of that new money was applied to last season via renegotiation.

Most All-Stars command a max free agent contract, so Markkanen could likely get a 4/$200M from any team (with room) next season. Applying the Clarkson gambit to him would mean giving him $200M in new money, but shifting some agreed-upon amount to this season so his cap number moving forward is slightly more manageable. If Utah bumped him by $20M this season, they would still have roughly $20M in cap space for other pursuits, and then the new contract term would be a more team-friendly 4/$180M. Markkanen gets his max-money security now (with $20M paid up front) and doesn’t really sacrifice anything in terms of total new money. But there’s also not really an upside, and he’d be sacrificing some leverage in terms of pressuring the Jazz to earn his loyalty with the right team-building moves.

Which brings us to the middle ground option. The best predictor might be to see what Domantas Sabonis, an All-Star in a similar macro tier to Markkanen, got in an R&E last summer. Sabonis got a modest bump ($8.6M) in the renegotiated year, but it was enough so that the extended term could start right around his max (in his case, just a hair below).

The spiritual equivalent for Markkanen would be a $12-13M bump that would enabled his new deal to start in the $42M-43.5M range — pretty close to his estimated 2025-26 max. If the Jazz bumped him by $13.9M, the could offer an extension at the full 4/$200M another team could offer, and a $15.1M bump would unlock the full 4/$208M he could get from the Jazz.

In these scenarios, Markkanen gets essentially a $12 to 15 million bonus and STILL gets his full max extension (or something really close to it) for the next four years. So that’s kind of the figure I’m mentally budgeting when I look at Utah’s cap number. If a crazy opportunity opens up and they need all $40M, then they have that option, but I’d assume that the Jazz have $12M to 15M earmarked to take care of Markkanen, which still leaves them $25 million or more to play with in the free agent and trade markets. (Utah can of course create more cap room by trading to reduce their guaranteed salary.)

Quick note on timing, though: for any of this to work, Utah has to still have cap space on August 6. That means if there are signings they want to complete with the Room MLE or minimum contracts after they have exhausted their cap space, those signings might have to wait a month to be carried out. Same goes for trades that go beyond the salary cap using trade exceptions.

Now that we know Utah’s more likely cap number, let’s take a look at spending power across the NBA…