Pistons Payroll 2006 : Part 2

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:



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:



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:



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.

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.

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.

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

Gonzo.

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.

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.

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.

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!