In case following the Cleveland Cavaliers this summer hasn't been your thing, they've been making some moves. They brought in a wing player and big man that EVERYONE is talking about:
That's right, Keith Bogans and Brendan Haywood.
What, were you expecting something else?
On name alone, I understand that neither excites. Both are in their mid-thirties, and their best days in the NBA are far behind them. They each have a small amount of potential to contribute as a situational defender for the Cavs, but neither can really be counted on for much after combining to play in 6 games last season. This leads us to the common question ...
Why is everyone acting like they're so important, then?
Step one to understand that is understanding the modified hard cap that the NBA operates with. There are three big things you need to keep in mind when contemplating your favorite teams' salary situation:
The Salary Cap and subsequently the Luxury Tax change each year, usually in raises, as both are related to BRI (Basketball Related Income). As basketball related income goes up, so does the cap and tax. For a Cavs team employing LeBron James, Kyrie Irving, and Kevin Love the Salary Cap is almost irrelevant. They will be at that number. They might be a little over, or vastly over but they will be over.
This brings the Luxury Tax and the Apron into focus.
What is the Luxury Tax, and Why do I care?
The Luxury Tax is basically a hammer to keep the teams willing to spend into oblivion somewhat in check since the NBA does not have a true hard cap. Once the tax line is hit, a team will pay anywhere from $1.50 to $4.50 to $1 for each dollar they go over the tax limit. This is dependent on how far over the tax they are, and whether or not they have been over the luxury tax in the past three years. This is very important to the Cavs. If you are a tax paying team in 3 out of 4 prior seasons, the repeater tax kicks in. The repeater multiplier is incredibly punitive, as outlined below"
Coon, Larry (2012); "NBA Salary Cap/Collective Bargaining Agreement FAQ"
http://www.cbafaq.com, last visited September 26, 2014
So the tax is important, super important. What Dan Gilbert is willing to spend is important. Avoiding the repeater tax is important. Most important though is the "Apron".
Explaining the Apron
The Apron is exactly $4 Million above whatever the tax limit is for the current season, which seems simple enough. The catch is, it also acts as a hard cap when certain exceptions are used by teams. For teams over the Apron, you do not have access to the full Mid-Level Exception, the Bi-Annual Exception, or the ability to receive players via sign and trade. Doing any of these three things will in effect lock you into a hard cap, as you are not allowed to exceed the apron under any circumstance, even to sign minimum salaried players.
So hypothetically, let's say the cap for next season is $68 million. The Tax line is $76 million, and the apron is $80 million. Again, I'm basically ball parking some generic numbers here. Were the Cavs to receive a player (say, Greg Monroe) in a sign and trade, they could not spend a penny over $80 million. Were they to sign a player to the full $5+ million mid-level exception, or any amount that exceeds the smaller mid-level exception for Apron teams, they could not spend more than $80 million. Were they to use their Bi-Annual exception, you guess it! They could not spend more than $80 million.
Are you seeing it yet?
Brendan Haywood and Keith Bogans represent close to $17 Million in non-guaranteed money. Money a team can just wipe off of it's books at the snap of a finger. For a tax team, it would be an even more staggering savings. For teams paying the luxury tax, you are allowed to take back 125% of the salary you are sending out. For the Cavs this represents the ability to add about $21.25 Million, which would almost certainly put them well above the apron, without having to use any of the exceptions that would lock them into the apron. From there, they would have access to the mini mid-level which is about $3 million.
Again, it all depends on Dan Gilberts pocketbook, but thanks to his willingness to spend what it takes to win, the Cavs have turned the $5 million in contracts of Alonzo Gee, Carrick Felix, and Scotty Hopson into enough money to bring in any player in the NBA. They might use it to acquire younger long term pieces. Maybe a superstar becomes available, though the odds of acquiring one with only their own draft pick, the Memphis pick, Dion Waiters, and Tristan Thompson as assets is slim.
The options are only as shallow as the check book, but thanks to a little creative GM work, the Cavs shouldn't have to worry about a hard cap next year.