For fans looking at sites like Hoops Hype that show the Denver Nuggets with nearly $30 million in cap space and wondering why on earth Denver is not making plays for some of the big names on the free agent market I have two words for you.
Personally I had not factored the various cap holds oppressing the Nuggets until I noticed that John Hollinger, in his piece analyzing the free agent signings on Saturday, noted that Denver signed Luc Richard Mbah a Moute using their mid-level exception. The mid-level exception is for teams over the cap. How can Denver use it when they are so far under the salary cap? It is due to the immense power of the cap hold.
The Nuggets have several cap holds that even though Denver does not have salary committed, is accounting for more than all of their cap space. Nene, Kenyon Martin, J.R. Smith and Wilson Chandler are technically still on Denver’s books until they sign with Denver, sign with someone else, or the Nuggets renounce them and the total number of these cap holds is quite astounding.
According to this article by Larry Coon the percentages used to determine cap holds have been altered in the new CBA. The highest level in the old CBA was 300% of a player’s previous year salary and now it is reportedly 250%. We will use a hybrid of that report along with the data in Mr. Coon’s Salary Cap FAQ.
If a team holds a player’s “Bird Rights”, he was paid more than the league average in the last year of his contract and he is not on his rookie contract, his cap hold is 150% of their previous salary. Hello Nene, Kenyon and J.R. Affording to this article by Mr. Coon the league has altered If a player is coming off the fourth year of his rookie contract whose salary is under the league average has a cap hold of 300% of his last year’s salary. However, as mentioned above, the 300% figure is replaced with 250%. I will assume since Wilson Chandler and Arron Afflalo would have fallen under the 300% cap hold calculation they will now have their previous year salary multiplied by 250%.
If you do the math, and I have, here are the cap holds for those five players:
Add all of that up and you get $62,220,106! Sum up their holds along with their committed salary the Nuggets have a team payroll for cap purposes of nearly $100 million dollars.
In order for the Nuggets to make an offer to someone like DeAndre Jordan starting at $10 million a year, as Golden State is reportedly ready to do, Denver would have to renounce Kenyon, Nene and either J.R. Smith, Chandler or Afflalo. Renouncing is not the worst thing in the world, but if they renounce Afflalo or Chandler, they would sacrifice their restricted status. Renouncing Nene would mean they would no longer have his bird rights to add an additional year with higher raises than other teams.
I understand fans are frustrated as they see free agent after free agent snatched up and other teams dominating the rumor mill. The Nuggets are demonstrating patience, which is a tremendous asset as has been made obvious over the years by teams who react and jump into bad contracts without thinking.
The front office is very much aware of what they are doing and there is no need to renounce anyone at this point.
I also realize there is frustration over the fact Afflalo has not been resigned as of yet. The front office is ensuring they do not get caught in the common sin of bidding against themselves and artificially driving up the price. I believe Afflalo will get a five year contract starting at just above the $5.0 million MLE starting salary. Unless someone offers Afflalo an offer sheet or he threatens to sign the one year qualifying offer all he can do is wait. Sure Denver could offer him a five year pact starting at $7 million just to get him in camp, but the expedience is not worth the extra cost. Call it cheap if you want, I believe it is wise.
In the past Nuggets management has spent whatever money they had at their disposal and they have lost flexibility because of it. This regime so far is looking to avoid the mistakes of the past.
As fun as rumors and splashy signings are, avoiding mistakes is the most important thing.