Can Young Men Teach Old Dogs New Tricks?

The Denver Nuggets management team of Masai Ujiri and Josh Kroenke has figured out a new way to use cap space.  Some teams throw all their money at a big name free agent and ultimately end up overpaying.  Denver fans know that approach first hand thanks to Kenyon Martin.  Some teams will preserve it and play let let’s make a deal collecting players and draft picks by facilitating trades for less fiscally responsible teams.  This approach is made popular by Oklahoma City.  Some will hemorrhage out all their money towards a few mediocre players for no apparent reason (see the New Jersey Nets from the summer of 2010).  Other teams just sit on their cap space because their owners are too cheap to spend money and/or no players are desperate enough to take their money.  The pre Blake Griffin Clippers and the current Sacramento Kings are examples of this style of cap management.

The Nuggets have shown us a new way. 

They resisted the urge to go after high dollar players.  They also chose not to play it patient, hold on to their cash for a few summers and see what they could glean from other teams playing the middle man although they were able to pilfer Rudy Fernandez and Corey Brewer from Dallas before they ramped up their payroll.   Denver used their space to resign their own quality players.

OK, I hear you.  That does not sound like a new tactic.  However, how often have we seen teams get hammered in the last couple years of a player’s contract due to mindlessly dolling out the maximum raise simply because that is how contracts in the N.B.A. work.  Even with the maximum annual raise reduced from 10.5% to 7.5% that can still add up.  I believe Denver managed a minor coup as they resigned Nene and Arron Afflalo and extended Danilo Gallinari without giving up those killer annual raises.

Since their payroll was so low Denver was able to grant slightly higher first year salaries than the players could have earned on the open market, thus allowing the contracts to hit the cumulative level the players wanted, without getting hit by overly cumbersome salaries towards the end of the contracts.

Instead of paying Nene $15 million in the last year of his contract, they are paying him $13 million.  Afflalo will not be making $10 million, but $7.75 million.  Likewise Danilo Gallinari will be earning $10.5 million, not $12 million.  Even Kosta Koufos was signed to a three year deal with a flat $3 million for an annual salary.

The difference may seem nominal, but an extra couple of million dollars can help the Nuggets add players without entering into the dreaded luxury tax zone as those contracts mature.  It may not grab headlines.  It probably does not boost season ticket sales and maybe other teams will not take notes and emulate what Denver is doing, but headlines and accolades are not what drive this team.  Masai and Josh just do their homework and make smart decisions.

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  • aussienuggzfan

    yeah i noticed this and always wondered why it isn’t done this way or even the more extreme nick collison front loaded style deal

    • bayesk

      Great example, AUSnf. though he did get overpaid, no? I mean: good shooter (but not a deep threat, at all), below average PER, above average WS/48. But he’s 31 and made… wait for it… $13.25 MILLION last year!!! I know it was severely front-loaded, and it didn’t hurt OKC when it came time to sign Westbrook, but still.
      In any case, I’m a big fan of our signings so far. AAA and Nenê are underperforming a little, Koufos seems just right, and Gallo’s deal strikes me as anywhere from fair to a potential steal. IRRC, you and I may disagree on these signings a little, but hey, bottom line: great great time to be a Denver Nuggets fan!!!

  • fats