The Devil’s in the (Salary Cap) Details

The Jazz got creative when structuring Jordan Clarkson’s new deal. (Trent Nelson, The Salt Lake Tribune)

It’s practically Christmas in July for all the NBA nerds out there.

Transaction season means there are a lot of opportunities to uncage the inner geek and delve into the details behind player deals and team blueprints. Add in a new collective bargaining agreement (CBA) and this offseason has allowed for a whole new level of geekery. This particular nerd has spent way too much of the offseason with Google Sheets open in one browser tab, the transactions page open in another, and the full text of the CBA in a third.

But this stuff matters to more than the dweebs. The rules that govern the NBA’s summer business actually impact how your favorite team is able to assemble personnel, establish an identity, and plan for the future. The way deals get structured makes a huge difference in terms of optionality moving forward.

For folks who are less inclined to treat a 600-page document of collectively-bargained transactional rules as fun summer reading, here’s the “what you need to know” detail behind some of the Utah Jazz’s summer business — or why it matters moving forward that the Jazz chose to operate how they did for certain transactions.

Clarkson R&E

Jordan Clarkson was already set to make $14.26 million this upcoming season, a pretty good value for a 20-a-game scorer in today’s NBA economy. Then the Jazz performed the “renegotiate and extend” maneuver, using most of their remaining cap space to add $9.2M to his current salary, and then extend him based on that number.

You can look at the net effect of the Clarkson R&E in one of two ways:

It’s basically the same as if Clarkson had opted OUT and signed a new 3-year deal at $51.9 million. That’s a very reasonable figure, and right in line with what the Jazz were likely offering as an extension during the season. (As a refresher, the most the Jazz could have given Clarkson on a 3-year extension offered during the season under the previous veteran extension rules was… wait for it… $51.9 million.)

But more to the point, the structure on that $51.9M deal would have had to be a classic escalating extension in order to get to that number on a traditional extension: his new salary would have been $16M, followed by $17.3M and $18.6M. By waiting and doing the deal now, the Jazz had more flexibility to frame the year-by-year amounts in a way that could make Clarkson an extreme value contract in 2024-25 and 2025-26.

The other way to look at it is that Clarkson opted IN and then got a total of $37.6M in new money for two additional years of his services. That’s an $18.8M annual value on the new years, which is already a really good figure. (Consider that role players like Dillon Brooks and Bruce Brown got more than that per year on new deals.) But what makes that $18.8M/yr. look even better is the fact that shifting $9.2M to this year’s cap sheet allows Utah to pay him just $28.4M over the final two years of the deal.

Either way you choose to look at it, Clarkson’s cap numbers after this year ($14.1M and $14.3M) could make him one of the best non-rookie contracts in the league. If the cap jumps as much as expected to by 2025-26, Clarkson will head into the 2025 offseason at still just 33 and with a contract that is essentially for midlevel exception money. If his production is anywhere close to last season’s level, that contract is going to be a massive asset.

Leftovers

The Jazz then slid Omer Yurtseven into their last remaining cap space ($2.8M). This is meaningful because it keeps the “room midlevel” exception intact. We’ll come back to that exception later.

As for Yurtseven himself, he’s… interesting. He only played 83 minutes last season, but as a Miami rookie he put up per-36 figures of 15-and-15, and his rim protection figures (.588 opponent field goal percentage at the rim) were pretty solid. The Jazz have a lot of flexible frontcourt pieces, but only had one true center on the roster before this deal, so Yurtseven will add depth there. Kelly Olynyk probably goes to camp penciled in as the second-unit center, but if Walker Kessler were ever to miss any time, the Jazz would probably take comfort in knowing that they have a traditional center option in reserve.

And, by the way, depth is never a bad thing given that the Jazz also have the assets and matching salary to get involved in almost any trade scenario.

At any rate, the Jazz are right at the cap now, but with the Room MLE left to play with.

Room MLE options

So what can they do with $7.7M? Granted, the free agent list is a little picked over at this point, but that’s probably OK given the roster math. Utah stands at 15 standard contracts and three two-ways, meaning anybody they add now requires them to waive (or trade) someone before late October. They’re probably only doing that if there’s a clear upgrade they could nab with the $7.7M room MLE.

That dollar figure probably isn’t enough to pry remaining restricted free agents like Ayo Dosunmu, PJ Washington or (perhaps my favorite) sharpshooter Isaiah Joe, but there are some value free agents left who might warrant some portion of the exception.

The other option is to hang onto it and see what needs develop later. Any “buyer”-style trade the Jazz make from here is likely to be a multiple-for-1 deal that would leave some roster spots open. One way to use the room MLE is to take some shots on minimum-level players, but for more years than the actual minimum salary exception allows.

A deal signed using the room exception can last three seasons (unlike the minimum exception which allows for two), so if a young guy comes in and really pops, the team can opt to keep him until they would have full Bird rights. Usually teams offer a little bit of guaranteed salary up front (or give him slightly more than his minimum salary) in exchange for all kinds of team-friendly options and guarantee triggers so that there’s little long-term risk, but so that they have the option of controlling the guy’s future if he turns out to be good. That’s how OKC locked up Lu Dort, San Antonio secured Tre Jones, and so forth.

So if the Jazz don’t use the $7.7M exception all in one shot this summer, pay attention to the contract lengths of any deals they sign later on.

Trade restrictions

By virtue of the renegotiation-and-extension he just signed, Clarkson can’t be traded until January 7. Yurtseven can’t be traded until December 15 because of his new contract, and the three first-round rookies can’t be traded until August 2. (Joey Hauser technically and Johnny Juzang can’t be traded until August either, but two-way contracts rarely get traded at all.)

Everyone else on the roster can be traded, although John Collins can’t have his salary combined in a trade between now and September 7. He can technically be traded alongside other players (as long as his salary doesn’t have to be combined with others’ in order for the deal to work financially), but it seems unlikely that the Jazz would already be seeking to flip their primary veteran acquisition from this offseason.

Guarantee details

By making it through Tuesday without being waived, Luka Samanic now has $400K of his $2.1M salary guaranteed for the year. He’ll get another $200K guaranteed if he makes it to opening day without being cut. Kris Dunn will have his $2.6M salary guaranteed fully if he makes it to opening day. Per reports, roughly half of Yurtseven’s $2.8M salary is guaranteed this season. All of these player will guarantee fully if they aren’t cut in time to clear waivers by January 10.

Hauser, Juzang and Micah Potter have small guarantees associated with their two-way contracts ($75K or less), but those deals don’t count against the cap. They could be cut at any time without impacting Utah’s cap sheet.

Unsuspenseful Halloween

The Jazz have until October 31 to decide whether to exercise the third-year options on Walker Kessler and Ochai Agbaji to keep them under contract for 2024-25. But let me save you the suspense: they’ll pick those options up.

Adieu TPEs, we hardly knew ye

I’ve been asked a few times how the Jazz might use the traded player exceptions they had amassed from all their previous deals. The answer is: they won’t.

In order to operate as a cap room team and conduct the Collins acquisition and Clarkson R&E, the Jazz had to renounce those remaining TPEs. They will now start fresh with TPEs, meaning they will generate a credit any time they take less than an individual player’s salary back in return on future deals.

Extension eligible

This is the summer when Lauri Markkanen officially becomes extension-eligible. He could — operative word being “could” — sign an extension between August 28 (the second anniversary of his current contract being signed) and the last day of the offseason. Such a deal could tack on up to three new years to the end of his deal.

But… don’t plan on it. There’s very little advantage to him signing an extension now, even with the new rules that allow teams to offer a higher starting point on veteran extensions. The $25.3 million Utah could offer him as a starting point will turn out to be well below the typical rate for an All-Star player as the cap rises. By 2025-26, Markkanen’s maximum salary will be around $45 million. Starting next offseason, he could ink a new extension for an additional four years, but his starting salary would still be capped at $25.3M — likely too low a figure to lock in an All-Star in his 20s.

The Designated Veteran triggers won’t even help the Jazz get into his price range, because as Twitter user @aJAZZfan98 reminded me, Markkanen is now disqualified for that bump because he was traded after his rookie contract.

Kelly Olynyk and Talen Horton-Tucker can both sign extensions starting August or at any point during the season, but the educated guess here is that the Jazz will take the wait-and-see approach with those expiring contracts.

Collins and Collin Sexton will technically be extension eligible next offseason, though again, it might not be a highly likely outcome for either guy. The four players currently playing on 2-year contracts (Yurtseven, Dunn, Samanic, Simone Fontecchio) will not be extension eligible, and Clarkson’s contract cannot be extended further either. The five players on rookie scale contracts will be eligible in the offseason before their fourth seasons: two summers away for Kessler and Agbaji, three for Taylor Hendricks, Keyonte George and Brice Sensabaugh. 

Just for kicks

Something I like to keep track of is how the Jazz initially acquired their current guys.

• Initially acquired by trade: Collins, Clarkson, Markkanen, Olynyk, THT, Agbaji
• Drafted with traded picks / acquired draft rights by trade: George, Kessler, Sensabaugh
• Drafted with Utah’s own picks: Hendricks
• Jazz initially signed as free agents: Fontecchio, Yurtseven, Dunn, Samanic (and the two-ways). You can choose to count Sexton here since he signed as a free agent, or above since he arrived via sign-and-trade. I generally think of S&T acquisitions more like free agent additions, since after all, Sexton chose to play in Utah.