The Denver Nuggets, Finances and Free Agency

The Denver Nuggets have an opportunity to add a quality player, or three, in the upcoming NBA Draft, soon after that free agency will kick off so it is important to know how the Nuggets stand heading into both events.  Kalen has been doing a fantastic job of covering the draft so I will lay out a picture of the Nuggets financial standing and provide a few insights into the upcoming free agency period.

Denver already has 11 players under contract for the 2012-12 season.  From highest salary to lowest they are, Danilo Gallinari, Arron Afflalo, Al Harrington, Wilson Chandler, Chris Andersen, Timofey Mozgov, Corey Brewer, Kosta Koufos, Ty Lawson, Kenneth Faried and Jordan Hamilton.  They have a bottom dollar team option on Julyan Stone, who would be number 12.  They also have two restricted free agents, Rudy Fernandez and of course JaVale McGee.  If they keep and use the 20th pick in the draft, that player would be number 15 and Denver will have hit their 15 man roster maximum.  Do not forget their unrestricted free agent Andre Miller.

There is no doubt that at least one or two of the names listed above will not be with the Nuggets come the start of next season.

Financially, the Nuggets are in a good position considering they have so many quality players under contract.  Every single one of those 15 players listed above is good enough to deserve consistent minutes in the NBA.  The 11 players under contract have a combined salary for 2012-13 of $48,693,532.  That puts them $9-$10 million under the salary cap.  However, the salary cap does not simply consist of the salary of players under contract.  There are cap holds for restricted and unrestricted free agents, as well as the 20th pick.  Add in the cap holds for Miller, McGee, Fernandez and their first round draft pick and the Nuggets cap number is over $74 million.

Denver does have the ability to create some cap flexibility.  First of all, if they renounce their rights to Andre Miller they will shave almost $12 million off the cap number.  Karl loves Miller, but it makes little sense for Denver to keep a 36 year-old point guard on the roster.  Denver offers Miller neither a starting job, nor a chance to win a title.  Despite Karl’s crush on him, the two sides are not a good match and even if Denver pursues him, I doubt Andre chooses to return.

While renouncing Miller outright would seem like a good idea, in and of itself, it does not provide Denver with any usable cap space.  It also removes the potential for a sign and trade.  With the caliber of teams Miller would be interested in signing with, a sign and trade may be the only way for him to get a market value contract meaning Miller could possibly bring in another asset.

The Nuggets can also cut ties with Rudy Fernandez.  Fernandez is popular with many Nuggets fans, however, I believe parting company with Rudy is the correct decision.  First of all, he is not very good at what is supposed to be his primary skill, shooting.  He has converted less than 33% of his three point attempts over the past two seasons mostly due to his poor base (his feet are too close together) and love of shooting off balance.  Fernandez is at his best when he is creating for his teammates.  Rudy won a lot of fans over early in his tenure with the Nuggets as he compiled three eight assist games in his first 11 contests.  Sadly, he only tallied more than three assists twice the rest of the season though to be fair the rest of his season only consisted of 20 additional games.  I would much prefer Rudy’s shots go to a player who is already a better shooter, Jordan Hamilton.

It may seem like a no brainer for Denver to make Fernandez his qualifying offer of $3.2 million to retain his restricted rights, but seeing as how he would have little sign and trade potential and his presence is not beneficial to the Nuggets, they should allow Fernandez to walk.  Rumor has it the Hornets have shown interest in Rudy and of course, he may one day follow through on his threat to return to Spain.

Aside from bidding adieu to Miller and Fernandez, Denver has one other option to clear money off their cap, amnesty.  There are three amnesty options for the Nuggets, Harrington, Birdman or none of the above.

Harrington was a prime option for amnesty last season; however, Big Al came into camp in shape and ready to play.  He proved to be a solid contributor on both ends of the floor and proved to be a warrior gutting out the final few weeks of the season with a torn meniscus.  Harrington’s play earned him another season, plus Harrington only has half of his salary guaranteed for both the 2013-14 and 2014-15 seasons.

Birdman is the other amnesty candidate.  It was clear that he had fallen out of favor with George Karl, although it was interesting that the time when Birdman ceased seeing the court was roughly the time the investigation into his off the court behavior commenced.  Plus the guaranteed portion of his contract is within one million dollars of Harrington’s guaranteed money over the next two seasons.  If Bridman is no longer in the team’s plans, amnestying him is a possibility.

The third option is not to amnesty anyone.  The amnesty provision was designed primarily to let teams out from under the weight of paying tax on their horrible contracts.  A potential side benefit would allow teams to create more cap space in order to go after free agents.  The Nuggets are not in danger of paying the tax and the most money they could create under the cap is roughly $9 million.  To do so, Denver would have to renounce Miller and Fernandez, amnesty Harrington and waive Julyan Stone.

It may sound appealing for Denver to take those steps to be a player in the free agent market, but consider Denver would still have to pay the guaranteed money due to Harrington, sign McGee to a new contract which will undoubtedly be north of eight figures annually and they would be adding a big money free agent prior to extending Lawson.  Under that scenario, Denver would be a tax paying team in 2013-14.  That is not going to happen.  Basically the chances of the Nuggets jumping through all of those hoops just to sign a subpar free agent resulting in paying the tax two seasons from now is lower than the ratings for the European soccer championships in Compton.

As currently constructed, Denver has fantastic depth, they have enough financial flexibility to retain their key young players for the next few seasons and they have a crafty front office who has shown they are willing to make difficult decisions.  Even if the Nuggets decide they need to retain Fernandez, or bring back Miller, they can afford to do so.

The bottom line is, if the Nuggets are going to make any franchise altering moves, it will be via trade, possibly on draft night.  Paying through the nose for a free agent this summer does not fit the long term plan, nor does it make sense.  Not to mention, Denver already has more players than they can play.

So enjoy draft night Nuggets fans.  It will probably provide the most exciting moments of the offseason to come out of Denver, even if all they do is make their three picks.

Player Salaries from Sham Sports

  • aussienuggzfan

    Your right on the ball Kalen. We need to let miller and fernandez walk and amnesty birdman and maintain some flexibility to extend lawson and mcgee.

    Hopefully hamilton will replace rudy in the rotation and stone/ draft pick will replace miller finally giving ty the oppurtunity to be the star PG we know he can be

  • al68

    Hay que dejar marchar a rudy y miller y no ofrecer mas de 9 mill. por mcgee, si quiere mas lo mejor s&trade.

    Lo que mas necesitamos tiro exterior ¿hamilton? y juego al poste bajo ¿Sullinger?.

    • Ricky Rubio

      estoy de acuerdo

  • steve

    I think we are in good shape. This year we resign mcgee, stone and extend ty and draft at 20 at the very least. Obviously we dont bring back Andre or Rudy unless Dre comes extremely cheap on a 1 year deal which is doubtful.

    Next year we can get more flexibility when Brewer and Mozgov contracts are up. That is roughly another 6 mill and by that time Harrington’s deal also become half guarenteed and can make a decision on him.

    I honestly think Chandler will move at some point as well. It’ll be surprising if he’s still on this team this time next year.

  • ricer

    Well, I like the idea of letting Rudy walk, Birdman gets amnesty, and then finally a sign and trade (for draft picks). Why not for once play the draft? If a team is going to put something out there in young talent with the draft this would be the year. Every analyst that I have read their comments on the draft have stated to the effect of it being loaded with good talent well into the 40 first picks.

    Nuggets have 2 in that range and I am sure with a sign and trade of Miller the Nuggets can get a third pick in that range. Now as for the team, well Karl doesn’t play rookies. That is OK because there is still plenty of veteran talent to take the minutes. This also helps Karl in his coaching and his style of play he likes to see (fast paced breakout points) and less of trying to figure out how to rotate all his players.

    Starting line up already set if McGee is re-signed.

    Lawson
    AAA
    Galo
    Manimal
    McGee

    The oldest guy on the start is AAA at 26 youngest is the Manimal at 22. Then to fill in the second line up with big men Koufos and Mozgov. Also Chandler, Big AL, Brewer, Stone, and Hamilton. That counts up to 12 for a 15 man roster and it just so happens to be Nuggets have 3 draft picks.

    This would be great for front office not only appeasing Karl, because the office gets financial flexibility for years to come to continue to resign good players or get super stars and Karl gets his way to not play rookies right away.

    • steve

      I agree somewhat with what you are saying. the problem is, eventually we will need to condense. All these young guys aren’t going to sit the bench and wait their turn for 3 or 4 years. Jham needs to see the court soon along with Stone. I’d love to take a overseas player with the 50th pick and let him over there for a couple years or even sell the pick. Even in this draft, 50th pick is risky and most likely won’t land anyone that is ready. Heck, id love to trade 38 and 50 and move up 4 or 5 spots. I would just like to leave room for a vet FA even if it’s deep on our bench. Let’s say we draft Royce White at 20 and then Kevin Murphy at 38, we could still use a backup PG with Ty and Stone. With that 1 spot we could grab a vet like Bibby or Dooling or maybe even bring Anthony Carter back.

      • Ryan

        I thought that Anthony Carter was banished from Denver and could not legally return due to his horrific play for the Nuggets…

        • Gary

          Thanks. I had the gun in my mouth.

          • Andrew

            And I had the noose around my neck.

  • Sanokumo

    For all the depth in the draft this year, there is only maybe one Franchise guy in the whole draft.
    So getting more solid players to develop, while good, doesn’t really help.
    Ty, Javale, Arron and Kenneth are all Really good players. None of them Franchise guys. Danillo and maybe Wilson are Good Second options. Julian and Jordan look to become more Really good players, K2 and Moz are really tall. But where is The Franchise Defining player?
    Lots of people talk about how other teams have done it without a superstar (one team in the last 30 years by my memory) but if thats our model where is the incredible defense?
    It just seems like the Nuggets are really good but not great, and not on their way to great with any of the things going on.

    • ryanvdonk

      i think the idea is that ty will become an allstar caliber point guard with dre being allowed to walk. with no miller to defer to, ty will have to choice but to take command at all times. as for mcgee, i think the main goal will be to have him be a more athletic dikembe, shut down all access to the rim and fly high for some dunks and rebounds. his potential is truely great on the defensive end, and has shown flashes on offense, but we really don’t need more than 12-15 points per night if he’s doing his job around the paint.

  • Poz_303

    Jeremy, firstly, thanks for the thorough outlook into the finances and FA possibilities. I hadnt thought about a S&T of Miller. Could this be done prior to the draft? Also, can Miller be traded for a draft pick or is this not a possibility?

    I am all for the Amnesty of Birdman, we really have no one else we could use it on. And being the fifth (currently) highest paid player on the roster for 0 minutes of playing time seems to me a situation which needs to be addressed.

    Let Rudy go back to Spain, which he has long wanted and does not see as a “step back” in his career.

    Another question, if we extend Lawson this off-season, does the new salary take affect for this year or does he maintain his rookie salary this year and gets the pay bump next year?

    Again, thanks for the article and I guess I will look forward to the draft even more so now.

    • asdqqq

      No S&T prior to draft, I believe. Free agency opens July 1.

      Lawson’s extension would not kick in this year, it would start the year after that.

    • Ryan

      Yeah, the amnesty provision is designed to banish players with contracts so horrific that they can’t be traded (Well, unless you’re Golden State. Then you use it to save a mere 4.2 million in cap space by amnesthetizing Charlie Bell to try to sign DeAndre Jordan only to fail and be stuck with Biedrins for a bajillion dollars LOL). Anyways, with the disturbing legal circumstances surrounding Andersen right now, no team would ever trade for him. Therefore, amnesty is definitely the best option for him.

  • Juan

    I think the nuggets should be focus on the young players, let Miller and Fernandez go away, and let hamilton and stone get those roles, the draft pick is important and denver need a big man that can be McGee support or his bech, kk and Mosgov aren’t the solution, so a big men for the draft is the key. I don’t know how possible it could be to trade one of those big men that the team have. And also corey brewer shoul go in a trade for a more comfortable player

    • Greg

      i wonder if the Mcgee is offered something close to the max deal and denver doesn’t match it. If the nuggs would sign and trade with say a team like houston or sacremento or milwaukee to get a higher 1st rd pick? Just a thought…

      • Greg

        whoops i forgot free agency doesn’t start till monday

  • http://nuggets.proboards.com LotharBot

    It’s completely pointless to try to clear $9m in cap space by renouncing various FAs, because the Nuggets still have a $13m trade exception (Nene). Any scenario where we could sign a FA using theoretical cap space, we could instead pull a S&T using the Nene exception and either a future 2nd or a player like Moz. Or we could sign a smaller contract player directly using the midlevel.

    Because the Nuggets have a nearly complete roster, are in no danger of paying the tax, and also have nothing to gain by clearing space, we’re probably going to see the draft and FA played pretty straight. We’re not going to see any weird salary dump type maneuvers. Probably just re-sign JaVale, draft the best player available, and then look for a cheap FA or small trade to shore up any remaining roster holes.

    One caveat: if there’s a blockbuster move available (say, to get Dwight Howard) then everything changes.

    • asdqqq

      I agree. Ujiri hasn’t been in any hurry to waste any assets. He even manipulated everything during free agency last year so that he kept Kenyon and J.R.’s bird rights so that he could swing a sign and trade with them if one became available. I’d expect a tender to Rudy and no amnesty to Bird unless they can immediately use the cap space opened up for something, which seems unlikely. Maybe if they really need a roster space they might get rid of him.

      Depending on how the legal stuff works out with Bird, it seems to me like he’ll either 1. be cleared, at which point he’ll have some trade value and also be a decent backup big to have around or 2. get into serious trouble, in which case the Nuggets would probably be able to void his contract under the morals clause and get out of both his cap hit and paying him. Although the morals clause is a hard thing to enforce, I’d think what Birdman is accused of is probably bad enough to invoke it. Hopefully there will be some indication which way it is going to turn out soon.

      • Andrew

        Great points on Masai and his patience. Anderson will eventually be amnestied and Rudy will be cut loose, but you can bet Masai will try to sucker someone into a trade.

    • http://www.roundballminingcompany.com Jeremy

      LotharBot, you are correct that Denver can use their trade exception to trade for a player without sending out any salary in return. It cannot be used as cap space to sign a player so without cap space to sign a free agent outright, Denver cannot pressure another team into doing a sign and trade to acquire a free agent with the exception.

      If Denver uses that trade exception, it will be in a trade such as the one that brought Fernandez and Brewer to Denver from Dallas. The point I was trying to make was Denver cannot afford to bring in an expensive free agent and remain under the luxury tax and pay McGee and Ty.

      • http://nuggets.proboards.com LotharBot

        Sign-and-trades are still legal under the new CBA. So we could use the Nene exception to “sign” a player, as long as we could convince the team holding their rights to play along. If they were going to lose the player for nothing anyway, a future second or two is plenty of incentive. Perhaps a restricted free agent would require more picks; the one advantage to cap space is that you can overpay and get the other team not to match instead of having to use crappy picks to get them to go along.

        Point being, cap space doesn’t do much for us that the exception doesn’t. So there’s no reason to make a push to create cap space. I don’t expect us to use the exception (especially for its full value), but I also recognize that its existence means “cap space” is an irrelevant consideration.

        You’re right that, if we were to use the Nene exception to bring in a big salary player and keep JaVale, then the tax becomes an issue (though it’s still manageable, with a bit of careful salary wrangling.)

  • DAN

    Good to hear from you Jeremy. Thanks for the write up. Looking forward to this week!

  • Greg

    Does anyone know what the cap would be for the nuggs assuming they amnesty bird, let miller and fernandez go, and resign McGee for say… $9 million annually. What would the nuggs payroll sit at? If you can figure this out it will be much appreciated!

  • Matt

    Denver doesn’t offer Miller the chance to win a title? Then…why are we even watching?

    • Andrew

      Ha ha. I had the same thought. I didn’t think the Nuggets had much of a chance last year, but then when they traded for Javale, and he started to emerge, I thought, maybe…

  • Andrew

    I honestly think, that if the Nuggets resign Javale, and find another backup PG (or if maybe Stone emerges) and a bona fide shooter, they have a legit shot this year.

    So, is this the consensus? Unless Masai works some sort of crazy trade for D Howard, the Nuggets best bet is to:

    Re-sign – Javale, Stone.
    Waive/Amnesty – Rudy, Birdman.
    Sign-and-trade/trade – Miller, Chandler.
    Bring in, through draft or trade – legit backup PG (again, I like Stone and hope he gets a shot), lights out SG that can defend, and maybe a big, mobile, PF that can defend big post men.

    • Greg

      that’s my line of thought as well. If chandler is traded with someone like houston in the mid teens, we could get kendall marshall there. Otherwise I would like to see the nuggets wait and get tyshawn taylor, he is a bigger version of ty. Then with 20 we could get nicholson or sullinger. And then try to get back into 1st rd and get john jenkins. I would love this draft

  • Eddi0

    I like a lot of what is said here guys but I do disagree as to what to do with Wilson Chandler. I think we need to run with the team we have (minus Miller and Fernandez) and let the value of Chandler and Gallinari rise (hopefully). Just to be clear, I do think we need to trade either Gallo or Chandler at some point (for salary cap reasons next year) but I think GK needs to make this a competition for the starting SF job. Best man gets to start and the loser gets traded. I think both players are very evenly matched in terms of talent level but Chandler’s salary is a pretty large distinction (roughly $3M difference) and I’m not sold on Gallo’s injury history and his playoff performance (yeah, yeah, yeah, I know he was hurt). Once the SF “issue” gets ironed out I see just a few glaring weaknesses that should be addressed in draft/FA.

    1) Need more consistent outside shooting to spread the floor much better and create more not only more 3′s but more points in the paint (JHam might be the man but a SG is probably preferred over another SF).

    2) Will need a pass first, defensive minded PG with a decent 3 to counterbalance Ty’s deficiencies. This assumes Andre’s departure which I hope is the case. (Stone might be the man).

    3) Some might disagree with this one but I think we need a more imposing PF to back-up Faried or to use in certain matchups (Pau Gasol, Garnett anyone?). Kenneth will be a Nugget for a long, long time but he is about 6’6″, maybe 6’7″. He quite simply cannot defend the taller PF’s in this league. Until he can channel Dennis Rodman (who was about the exact same size) and become a lock-down defender we need a taller (agile 6’10″ or above) PF who is great defender/rebounder/blocker in the post.

    4) The Bird amnesty issue shouldn’t really be a concern as that I do not think Kroenke is the type of owner that believes in the benefit of amnesty. It really would only free up another roster spot for another player that likely will not see much playing time. I see this as a non-issue.

    Really looking forward to draft day and start of free agency…Go Nuggets!!!

    • DAN

      Faried did every bit as good a job against Gasol in the playoffs as the 6’10″ Ibaka. And he is 6’8″ in shoes.
      that said I agree that a better compliment than Al would be nice. That’s why I’m hoping Perry Jones falls to us.

    • Manimal

      If you are gonna call him 6’6 than gasol is 6’10. Its either both with shoes or without shoes. You can’t call faired 6’6 to make a point. And fairied did a great job for a rookie on gasol. Remember gasol had no impact until the last game.

      And you say you want a great defender/ rebounder/ shot blocker. Where exactly is this man available? Oh yeah Anthony Davis I forgot. We can draft him at 20.

      I too would like someone better to replace big al but it’s hard to find much better and you need to give faired a chance to learn more about nba defence with a full training camp

      • Ricardo

        Nicholson could be that guy if we draft him. He’s a good rebounder and shot-blocker, and could stretch the floor. Nicholson could end up replacing Harrington as a back-up, just like Faried replaced Nene in the starting line-up.

  • Paul

    what does everyone think of signing ray allen? our one problem last year was that we couldnt hit a 3 for our life. he prob wouldnt come super expensive, and he would add great leadership.

    • ryanvdonk

      pretty sure he and karl didn’t get along all that well in milwaukee, but i could be wrong.

    • Manimal

      Would never happen. We can’t afford the amount it would cost to bring him here. And yeah I think I also heard gk and Allen don’t get along

  • Landry

    Frankly I don’t care that the Nuggets couldn’t ever hit the 3 ball last year. We have streaky shooters as does everybody else in the league, it happens. A championship strategy on the other hand is to win using defense and tenacity which the nuggets have none of at the moment. I mean who was our lock-down defender this year?? It sure as heck wasn’t AAA to the rescue and with Gallo our supposed leader of our franchise?? holding his face on the floor as his man dunks right past his flailing body.

    That is why we need either a culture change via a tough free agent or to draft a lock down defender. There’s a reason why we always lose in the first round. Also there a reason we’ve gone to the Western Conference Finals once is because we don’t have an elite defensive standout player at the SF position as or a hunger vet who can will the game for a 7 game series. SF is the most important position to this cause because as Lebron has shown, they provide the most versatility as a defender guarding both the post and the 3 ball. If the Nuggs want any chance of becoming an elite team, they don’t need the 3 ball, they need for their best defender to not be Al Harrington guarding not only centers but guards as well. I mean seriously are we kidding ourselves that we need offense here?? We were the number 1 offensive team in the league! We dominated the paint, accounted for the most free-throw attempts this season, and even rebounded the basketball on the offensive boards thanks to 1 Kenneth Faried. What the nuggets need is not another standout offensive player but rather a defensive standout to play SF a la Shawn Marion style.

  • ny nugs fan

    does anyone know what would be the impact if the nugs simply bought out birdman’s contract?

    i know nobody wants to hear this, but i’d trade gallo… think we’ve seen pretty much what we’re gonna see from him

    • Greg

      I may be wrong but I think amnesty basically is like buying out a contract but maybe not. Also Gallo was hurt almost all of last year, before he was hurt he averaged almost 18 a game for us so I definitely see no reason to trade him until he is healthy more nearly a whole year. If he doesn’t improve this year then maybe the Nuggs would look to move on.

  • Bad Analogy

    Given that Compton is 65% Hispanic or Latino of any race, I would be very surprised to hear that the ratings of the European championship in this region are low.

    • Peter

      Hahahaha!