Pistons Payroll 2006 : Part 2

Discussion in 'Pistons and Basketball Articles' started by roscoe36, Jun 19, 2006.

  1. roscoe36

    roscoe36 All-Star Administrator

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    Part II of my 2006 Detroit Pistons Payroll analysis is based upon three possible scenarios revolving around the free agent status of Ben Wallace. You can find Part I here.

    SCENARIO ONE:

    [​IMG]

    KEYS

    1. In this salary picture, I have Ben Wallace signing a 4 year deal as the highest paid Piston of all time. Starting at $12 million dollars per season, the annual raises are the max 10.5% allowed for a Bird Rights free agent. Those raises are $1.26 million per year.

    2. Chauncey Billups and Antonio McDyess have player options in 2007/8. While Billups seems less likely to risk injury or pass up and early 4+ million dollar raise for that season by taking his option, it's my speculation that an aging, non-starter like McDyess will happily take his extension and the corresponding 4th year that will kick in on his current deal.

    3. While the Free Agent class is weak this offseason, there are several small players available. Hence, I have extrapolated that Tony Delk takes his player option with the Pistons for a second year, despite the fact Flip Saunders will barely play him, rather than risk not getting any offers in free agency.

    4. Carlos Delfino and Jason Maxiell are still on their first round rookie deals. Delfino signed his contract before the 2004 season, before the newest CBA was negotiated. Thus, only his last year is an option which the Pistons must take if they would like to have the right to make him a RFA at the end of this deal by tendering a qualifying offer..

    Jason Maxiell's rookie contract was signed under the 2005 CBA, which made a change to the way options work for rookies. Years 3 and 4 are now team options (as opposed to Year 4 only), and both must be taken to claim RFA rights at the end of this deal by tendering a qualifying offer.

    5. Alex Acker and Amir Johnson were late 2nd round picks in last year's draft. Typically such players either go without a contract or sign minimum salary offers. After the draft, both players were signed to minimum contracts ($398,762) but different terms.

    Alex Acker received a non-guaranteed deal similar to the offer given to Smush Parker in 2004/5. The contract became guaranteed on January 10th 2006 which is the "cut date" for such non-guaranteed deals. Alex is now an UFA. However the Pistons can and may offer him a qualified offer (QO) to make Acker a RFA if they feel other teams may pursue him.

    The salary for a QO is typically 125% of the last contract's final year value or the minumum +$175,000 whichever is greater. As there is a minimum salary for a 1 year veteran (and it is greater than a 125% raise), Acker's offer reflected on my chart is the minimum +$175,000.

    Amir Johnson is signed to a 2 year deal with the second season (2006/7) at the team's option. We're going to assume that the Pistons take the option and Amir is paid the minimum salary for a one year veteran.

    Added: I've also taken the liberty of showing a potential long term contract for Amir Johnson when his rookie contract expires. The deal is based upon the Pistons using the Early Bird Exception to give AJ a 4 year deal starting at 175% of his last season's contract. The Pistons can offer up to the "average salary" however it is my belief that Johnson will remain hidden at the end of the bench and the NBDL for a second year to keep potential suitors uninterested in him and his renewal rate low.

    This deal features 8% (maximum) raises, and will end when Amir turns 24 years old.

    6. The Pistons are over the salary cap (assumed at approx $51 million) and as such can only use exceptions and minimum contracts to add or retain players.

    The two key exceptions are the Mid-Level and Bi-Annual exceptions. We'll assume the Mid Level will start at around $5 million in the first year (based on "average" league salary) and the Bi-Annual starts at $1.747 million. Both exceptions can have 8% raises in future years with the Mid Level allowing for 5 maximum 5 year deals, and the Bi-Annual a maximum of two years in length.

    Both exceptions can be split between multiple players as it was with the MLE between Maurice Evans and Dale Davis last offseason. Contract lengths for players under a split exception do not have to be the same length. And lastly, both exceptions cannot be combined for one player

    7. Looking ahead, the Pistons have no first round picks this season, and may use their second round selection (60th, last pick) on a player they have no intention of signing, or that they allow to play in another league such as the NBDL or any of the European leagues. If a draft pick signs with a team in another league, the NBA team holds that player's rights for one year after the contract outside the NBA ends.

    I have estimated the Orlando first round pick at approx, #15 with a salary of $1.5 million to start, and the Pistons first round pick at #25 with a salary of $1.1 million.

    8. As you can see in the scenario I have presented, luxury tax will be paid by the Pistons organization if
    • All team FAs except Cato and Hunter are re-signed.
    • All Exceptions are used
    • Ben Wallace is given a contract starting at $12 million with maximum 10.5% raises (which I consider a fair amount for a 4 year deal)
    General Notes:
    In this scenario, we will field a roster of 15 (the maximum) providing that the MLE and Bi-Annual are used to add 2 players (either with one exception split in half or each exception bringing one player). Looking forward, barring a trade and Ben or Chauncey leaving in free agency, the Pistons will again have 15 roster spots filled with the two incoming draft picks.

    Scenario Two:

    [​IMG]

    KEYS

    1. In scenario two, Ben Wallace signs a 5 year deal as the second highest paid Piston. Starting at $10 million dollars per season, the annual raises are the max 10.5% allowed for a Bird Rights free agent. Those raises are $1.05 million per year.

    2. Luxury Tax decreases over the first 3 years of the previous scenario when Ben is signed to a longer and slightly cheaper deal. Savings of almost $6.7 million over those 3 years.

    What should be obvious is that signing Ben to any size contract over $4 million per year will put the Pistons in a tax situation. There is a lot of committed salary, and few minimum contract players. The only tools (barring a salary dumping trade) the Pistons have to mitigate tax is to not spend in FA and/or not re-sign Ben. Either situation will weaken the talent base of the roster.

    Scenario Three:

    [​IMG]

    KEYS


    1. Lastly I have presented the (generally speaking) dreaded BEN WALLACE LEAVES situation. As you can see, I have left his salary slot marked empty, to show the gap that will be in the roster, and cannot be filled without the MLE or Bi-Annual exceptions listed further down. This gap will only be able to be filled by splitting an exception over two players, signing the upcoming draft's second round pick or adding a minimum salary player.

    In Part One of this article, I explained that certain exceptions apply to "own" free agents. When those exceptions are not taken, there is no compensation due to replace the player.

    2. Without Wallace on the roster, the Pistons continue on the path of fiscal responsibility, skirting the luxury tax threshold by approx. $4 million dollars. Note that in 2007/8 under this scenario the Pistons creep closer to a possible tax scenario, which could come into effect should Wallace not be signed, and the Pistons execute a trade that adds salary.

    Conclusions

    The Pistons don't have many options for playoff caliber Centers in free agency. Signing Ben now is not only important, it is (in my opinion) necessary. Folks are quick to look at age and "degrading skills" however, this is a current All-Star and Defensive Player of the Year. Such players do not grow on trees and are virtually impossible to replace when over the salary cap.

    Most interesting is that the Pistons are over the cap, flirting with luxury tax, and nearly at the maximum roster size if they spend what would be assumed, the minimum amount in free agency this offseason.

    I hope this has been informative and would love to field discussion on any of the ideas and scenarios I have presented.

    If you have spotted any omissions, errors or inconsistencies, by all means, let me know. If you have questions, feel free to COMMENT on this article.

    Full credit to StoryTeller's Salaries, Hoopshype, Patricia's, the NBPA and Larry Coon's NBA CBA Faq.
  2. #1Pistonfan

    #1Pistonfan First Round Draft Pick 2x Fantasy Champion

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    Amir Johnson is signed through 2010/11 or is that just the assumption that we resign him?
  3. TheeTFD

    TheeTFD All-Star

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    Well laid out and readable Cro.
    "Keys 6. assumed to be $51mil."
    $61mil. right?
    BBens Bird Rights don't count against the LuxTax, right?
  4. mercury

    mercury Bench Warmer

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    Major props to Micro... this is a very time consuming exercise and well beyond the call of duty.
    I like the concept of throwing out different scenarios (even though there's probably 200 different scenarios)

    My belief is that scenario #2 is the most likely... I don't see a 12M market for Ben.
    I'm not sure that we can exclude our #60 pick from the salary... the only way this happens is if he goes over seas or we don't offer a him a deal... NBDL players still count on the cap.

    I'm still struggling with the concept of being able to offer a one year player (Acker) a qualifying offer... this may be right but I'd like to see this documented somewhere.

    I'm leaning towards our #60 playing for Souix Falls (on our salary) and the team not using the bi-annual so they can give existing players a chance to prove themselves.... especially considering the lux tax... it's very possible that Joe deosn't use the MLE either... which could leave the team under the lux threshold.... this MLE player would have to be a major stud to cost Mr. D multi millions in lost tax distribution.
  5. mercury

    mercury Bench Warmer

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    Thee, Ben's bird rights does count on our cap 150% of current salary until he signs a new contract or we renounce his rights (Micro correct me if the % is not right)
  6. roscoe36

    roscoe36 All-Star Administrator

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    It's the assumption we re-sign him. Somewhere in my 30 pages of scribbled notes and 5 private post drafts, I forgot to add that info. Will update shortly with an explanation. Very good catch btw.

    150% is correct. 150% of his last year's wages.
  7. mercury

    mercury Bench Warmer

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  8. roscoe36

    roscoe36 All-Star Administrator

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    Thanks Merc (and TFD). It's been a real challenge but I'm a sucker for learning so...

    There are a load of scenarios for most teams but the fact that many Pistons are signed and I excluded trades from this look meant that really the big decision (Ben) is the key one for how FA plays out, not only this year, but in future seasons.

    To be honest, the longer contract for slightly less allows the Pistons to defer salary and tax. What we are seeing though is that without a large jump in league revenues, the Pistons will be "capped out" for several years to come if they wish to keep a talented and veteran core.

    The days of Dumars rebuilding with salary space and multi-player trades are gone for the time being.

    http://members.cox.net/lmcoon/salarycap.htm#36

    If Joe only re-signs Ben, doesn't use one exception, we will have room for the 60th pick based upon my assumptions. The problem is a lack of trade assets if the MLE and Bi-Annual are not used. We're basically looking at trading from the existing bench less Hunter.

    The tax impact should be looked at as a team cost, not specific to one exception or free agent (Ben). If money was no object, Joe could look into options like a Cato S&T with Sacramento.

    What I hoped to show is that losing Ben doesn't get us out of being capped out, and that the ability to add talent in our current situation is entirely at the hands of ownership and how much money they are willing to pay. Many teams will pay luxury tax next year. As fans, we can't consistently expect Cadillac results from a mid-range sedan.
  9. basketbills

    basketbills All-Star Forum Donor

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    Nice job Slim. Scenario 2 looks good to me.
  10. TheeTFD

    TheeTFD All-Star

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    Now you sneak that in on me.
    I got no business in this thread.
    Thanks anyway.:)
    Over/under on C-notes new deal next year.
    $11mil.
    Over!
  11. roscoe36

    roscoe36 All-Star Administrator

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    Everyone has business in this thread. It's how we learn, and there are no dumb questions, so don't be shy.

    Gonzo.
  12. kolay

    kolay First Round Draft Pick

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    Well done, Micro, but there is something wrong though. the contracts of Mo Evans and D. Davies won't raise will still be 1.5M and 3.5M, as I know...
  13. kolay

    kolay First Round Draft Pick

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    I think if we signed a player with MLE, there is no way that Delk will stay, it is said that he will opt out the contract. And if Delk stay, Delfino will like to be traded, because he will no time to play.

    Ben's contract with MAX raise will be way to much. Will the contract be full 10.5% raise if it start with 12M. Actually, I think it will be a 53M 3+1 contract.

    As MLE contract, like Evans', is 3 years, 4.5M, so, if we count it 1.5M for first year, it will be 1.5M per year, too. As I know, we give DD 7M 2 year contract, it will be 3.5M per year, or the first year with 3,365,384$ then 2nd year will be 3,64616$. It depends on how the contract going.

    There is another situation the contract can go, degrading. we can offer Ben the most of the money of the contract for the first year, then degrading every year. For example, 14M for first year, then 13.5, 13, 12.5, etc. It's good for us to sign Chauncey, if we still want him.

    As for over Lux cap, I think Joe may over the cap a little more with the MLE signed with a legit PG, or Wells(though I don't want him). But for over the cap with 5M, no way. if you are under cap, you can earn some money from other teams over the cap; if you are over the cap, you pay. if one team can receive 2M when under the cap, the team will actually lose 7M if the team over the cap with 5M.

    As for the Lux cap, I don't think it will stay at 61M every year, we can actually assume the cap will increase 3~5M per year, till the Market full.
  14. roscoe36

    roscoe36 All-Star Administrator

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    Thanks Kolay! You've got a lot of knowledge.

    There are different reported contract amounts, however I chose to use the ones that made the most sense under the CBA and based on history. As far as I can tell, Joe has always built raises into his deals, and there is no reason to believe he would not do the same for Davis or Evans. Hence why I used StroyTeller's numbers with the increases.

    The Ben degrading contract is interesting. I do not think anyone has ever taken a degrading contract before, and I am not sure that Ben would be happy to be the first. :ohwell:

    Losing $7 million. That is a simple way to look at it. Shares to teams under the cap of the luxury tax are 1/30th (based on 30 teams). Then the remainder is either used by the league (for special funding purposes) or returned EQUALLY to the teams.

    Very few teams are under the cap during the year, and traditionally, the league redistributes the money to the owners. So even if you are over the cap, you can still get luxury tax shares. And of course, the higher league salaries, the more likely that escrow will be triggered.

    The Cap and Tax Threshold will fluctuate each year, but $3~5 million may be a bit much. Both #s are based on Basketball Related Income. If something should happen to reduce league revenue, then the cap and tax levels would sink. For the sake of simplicity, I used constant values BECAUSE, there is no reason to believe that BRI will jump up in a big way over the next 3 years.
  15. kolay

    kolay First Round Draft Pick

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    There are two links about Tony Battie's V-contract,

    http://0rz.net/291kZ

    http://www.realgm.com/boards/viewtopic.php?t=502590

    not degrading, but a "V" shape contract.

    about degrading, it's just a total number. I don't think there is any different with increaing salary, it's the same number. Just a thought...

    According to the report, the salary cap of 04-05 was 43.87M, this is 48 of the BRI, if we change to lux cap 61%, it's 55.75M. As for the Lux cap of 05-06, it's about 61M. So, according to this, I said it will increase about 3~5M.

    sorry for the last post, there is some misuse about the cap, I mean the Lux cap....
  16. roscoe36

    roscoe36 All-Star Administrator

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    That's a good point Kolay, but remember that the CBA was re-negotiated between those two years. We should see a more consistent cap and tax threshold now because it is fixed at 51% and 61%. The only way the cap and tax thresholds can increase is if league revenue also goes up.

    The jump you see is in large part due to the difference betwen 48% and 51% of BRI.

    http://members.cox.net/lmcoon/salarycap.htm#10 ~ Salary Cap

    http://members.cox.net/lmcoon/salarycap.htm#16 ~ Luxury Tax

    My numbers of $51 and $61 are simply baselines. Rather than over-estimate I chose to go with more conservative #s. We can't assume that league revenues will go up every year. At some point, they will start to level off, even if only for a brief period.
  17. kolay

    kolay First Round Draft Pick

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    Thanks Micro, yes the salary cap and Lux cap should be re-evaluated, not just for this two year. I am just a little positive :)

    There is still another way to build Ben's salary according to his performances. Some "no likely to be achieved" performances like rebounding title, block title, or MVP, etc. By the type of this bonus, Joe can negotiate with Ben with a little low salary.
  18. roscoe36

    roscoe36 All-Star Administrator

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    Those are good ideas Kolay. A V contract, or building in bonuses. If I am a player, I want guaranteed money, not incentives, but if the Pistons guarantee enough, and the incentives are sweet, maybe Ben will be interested! :)
  19. 3Championship Drive

    3Championship Drive Second Round Draft Pick

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    I think this is the best sight for all the information on the Pistons. the microwave is the man and I think that you should be considered for a 10 minute radio spot as a piston guru. You are excellent at what you do, and the time and dedication is unlike any other. I hope that a higher up will recognize and give you props.
  20. jammertime

    jammertime Starter 1x Fantasy Champion Forum Donor

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    Great job Micro - as always!

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