The Warriors And The Salary Cap

July 6 2013 at 12:08pm CDT By Luke Adams

Even though Dwight Howard didn't end up choosing Golden State, the Warriors still managed to steal many of Friday's headlines by making a pair of splashy moves, agreeing to send more than $24MM in salaries to the Jazz and reaching a long-term contract agreement with Andre Iguodala. With so many moving pieces involved in the Warriors' series of transactions, let's break down how the moves will affect the team's salary cap outlook.

Heading into July, the Warriors had $69,905,195 in guaranteed salary on their books for 2013/14, according to Storyteller's Contracts. Throw in a cap hold for first-round pick Nemanja Nedovic and non-guaranteed salaries for Dwayne Jones, Kent Bazemore, and Scott Machado, and that figure rises to a total of $73,445,481. We don't know for certain that all these figures are 100% accurate, but they're at least in the ballpark, and for our purposes, we'll assume they're bang-on.

Now, a good chunk of the team's salary will be offloaded in the deal with the Jazz. With Richard Jefferson ($11,046,000), Andris Biedrins ($9,000,000), and Brandon Rush ($4,000,000) heading to Utah, the Warriors will eliminate $24,046,000 in guaranteed salary from their books, with only Kevin Murphy's non-guaranteed salary of $788,872 coming back. The result? $45,859,195 in guaranteed contracts, with non-guaranteed salaries and Nedovic's cap hold bringing the total to $50,188,353.

The way the pair of deals with the Jazz and with Iguodala were inititally reported suggested that the Warriors had cleared the necessary room under the cap to sign Iguodala outright. That's not quite true yet, if we assume a '13/14 cap line of $58.5MM — some or all of those non-guaranteed contracts would need to be waived if Iggy is going to receive a four-year deal in the neighborhood of $48MM. But that would be simple enough to do.

However, what if the Warriors don't intend to go under the cap at all? Using cap space to sign Iguodala would eliminate a ton of flexibility for Golden State. The team would have to renounce its rights to free agents Jarrett Jack and Carl Landry, making it extremely difficult to bring either player back. The Warriors would also lose access to their full $5.15MM mid-level exception, gaining instead the much more modest $2.65MM room exception assigned to under-the-cap teams.

On top of that, Golden State would have to renounce three significant traded player exceptions acquired in the deal with the Jazz, worth the equivalent of Jefferson's, Biedrins', and Rush's salaries. The Warriors also have a handful of smaller TPEs that would need to be renounced as well, but none of those are as potentially useful as the ones for Jefferson ($11.046MM) and Biedrins ($9MM) would be.

There's another way for the Warriors to add Iguodala without sacrificing all those exceptions and all that flexibility, but it would require the cooperation of the his old team, the Nuggets. Here's how it could work:

Once the July moratorium is lifted, Golden State would first finalize its trade with the Jazz. At that point, despite only having about $50MM in salaries on their books, the Warriors would still be considered an over-the-cap team because all of the their exceptions and cap holds would keep them over the presumed $58.5MM cap line.

After that, the next step would be bringing Iguodala into the fold. If the Warriors and Nuggets could work out a sign-and-trade agreement for the free agent swingman, it could potentially be beneficial for both teams. Denver likely wouldn't want to take back any salary for Iggy, but Golden State would have access to a newly-created $11,046,000 trade exception (for Jefferson).

Using that exception, the Warriors could acquire Iguodala via a sign-and-trade, giving him a starting salary of $11,146,000 (the amount of the TPE + $100K). Annual 4.5% raises on that amount would give Iguodala a four-year total of $47,593,420, which is in the ballpark of his reported $48MM agreement. This sort of transaction is how the Lakers were able to acquire Steve Nash last summer, using their Lamar Odom TPE rather than cap room.

From the Nuggets' perspective, accommodating a sign-and-trade with a conference rival that significantly helps that team become more flexible isn't necessarily good business. But if the Warriors were willing to include an asset or two (perhaps future draft considerations, cash, and/or the rights to Nedovic), Denver could add a couple pieces and create a trade exception of their own, worth Iguodala's new salary. That's better than getting nothing for a player the Warriors could sign outright anyway.

If the two teams were to work out such an agreement, the Warriors would still have trade exceptions worth $9MM (for Biedrins) and $4MM (for Rush). They also wouldn't necessarily have to renounce the rights to Jack and Landry, and they'd still have access to the full mid-level exception. The club would be hard-capped for the season, having acquired a player via sign-and-trade, meaning team salary couldn't surpass the tax apron (approximately $75.6MM) at any point, but there'd be plenty of wiggle room to add talent before reaching that threshold.

Needless to say, such a scenario would make a lot more sense for the Warriors, which is probably why beat reporters like Marcus Thompson and Tim Kawakami are hearing that the team anticipates ending up with one or more trade exceptions. Using cap room to sign Iguodala would mean losing those TPEs, so a sign-and-trade with the Nuggets looks like the preferred scenario for Golden State, assuming Denver is willing to negotiate.

25 thoughts on “The Warriors And The Salary Cap

  1. Denver isn’t going to negotiate. Why would they? There’s nothing that adds any real value for them. They showed how much they care about trade exceptions last year. Not happening.

    1. Not negotiating means getting nothing for Iguodala. Are they that concerned about helping the Warriors that they’d pass up on free assets?

      It also occurred to me after publishing that maybe the Nuggets would be interested in working out a sign-and-trade for Jarrett Jack as part of the deal. They’ve been linked to him this offseason, and working out a S&T for him that involves Iguodala would mean being able to land him without giving up their MLE.

      I don’t think the Nuggets will just get involved to pick up a 2018 second-round pick or anything, but I think there’s some incentive for them.

      — Luke

  2. Very good explanation of the entire process. Thank you.

    I think Denver will take the exception, then look to replace Iggy using it, perhaps a sign-and-trade for Monta Ellis or Brandon Jennings.

  3. Awesome writeup, Luke. although I’m confused about this part:

    “But if the Warriors were willing to include an asset or two (perhaps future draft considerations, cash, and/or the rights to Nedovic), Denver could add a couple pieces and create a trade exception of their own, worth Iguodala’s new salary. “

    I thought TPE’s couldn’t be traded for picks or multiple players? How would this work, then?

    1. Not sure I quite understand the question. A team is allowed to acquire a player using a TPE and send out multiple pieces in return. For instance, in that Steve Nash Lakers/Suns sign-and-trade I mentioned in the post, I believe the Suns got four draft picks and $3MM in cash from L.A. They also would have gotten a TPE of their own worth Nash’s salary, but they ended up going under the cap to sign players.

      — Luke

        1. There are a lot of different ways teams can break down trades to create a lot of different scenarios. With a few exceptions (ie. TPEs can’t be combined, TPEs can’t be used to sign free agents without a S&T, etc.), most scenarios are workable in some form or another.

          — Luke

  4. Thanks for your excellent analysis, Luke. The Jarrett Jack possibility is a good one. Hopefully the Warriors and Nuggets will come up with a trade that benefits both teams.

  5. I think Denver has some leverage in this situation. Give us a young player Barnes/Thompson and we give you the TPE….. Think about it they wont be able to pay them all

    1. If Denver got a TPE, it would be worth pretty much the same as the Warriors’ Jefferson TPE — a little over $11MM. That would rule out Gordon, since his salary is higher than that. But it could be used on any player earning $11MM or less, or they could try to use it to sign-and-trade for a free agent (ie. Monta Ellis).

      — Luke

        1. Very low. As I mentioned in the article, the Warriors can sign Iguodala outright, so they don’t NEED Denver’s cooperation. An Iguodala sign-and-trade would just make it easier for the Warriors to add a couple more non-minimum veterans. I don’t think they’d value the extra flexibility enough to give up either Thompson or Barnes though.

          — Luke

          1. Actually the Eric Gordon idea is very intriguing in my mind. Would they be able to trade the TPE + a player or two to New Orleans for Gordon to offset the salary difference? Sorry I am not really familiar with how a TPE can be used. I think with New Orleans signing Evans they would be willing to include Gordon in a trade or at least listen to one…

          2. TPEs can’t be combined with other TPEs or with players, so Gordon would be out of reach.

            — Luke

  6. Awesome article, the finances of the league can be a headache at times. This was extremely helpful, thanks.

    Quick question though, how little do you think Denver would take? We already dealt a handful of picks I wouldn’t be keen to throw away more for a guy we can sign outright anyway. Would cash and a second round pick be enough? Is it a case of “something is better than nothing”?

    And I read this on a conflicting article, what’s your take on it? Does it effect the possibility of the Iggy S&T?

    * The Warriors could conceivably get a free agent with the TPE, but it’s probably not feasible. It would require another team to perform a sign-and-trade. So, say the Warriors want to get J.J. Hickson from Portland. He could sign with the Blazers and be traded to Golden State. But the only thing Portland can get in return is the TPE. The Warriors can’t throw in a pick to sweeten the deal, as they did with Utah.

    * TPEs cannot be combined, nor thrown into another deal. So basically the Warriors can only get player(s) whose contract(s) fit(s) the amount of the individual TPE (which will be determined when the deal becomes official). They can’t give another player or picks away, nor can they receive picks

    1. As I alluded to in the article, if the Nuggets think they’ll remain in contention in the West, they certainly won’t be TOO motivated to help out the Warriors, another contender. I think the Jarrett Jack idea I mentioned in another comment makes sense. If not Jack, maybe the rights to Nedovic. I’m skeptical that the Nuggets would accept JUST a future second-rounder and/or cash. That’s probably not a strong enough incentive for them to deal.

      As for the two bullet points you pasted, I don’t believe those are fully accurate. As we saw last year, when the Lakers acquired Steve Nash via S&T, they sent plenty of draft picks and cash to the Suns, so I’m not sure why this case would be any different.

      — Luke

  7. Luke… would you please provide an example or two of how this might end up working out, perhaps with and without the cooperation of Denver. Thank you for helping to clarify these rather confusing Exceptions.

    1. Without Denver’s cooperation, the Warriors will likely end up waiving a few (or all) of their non-guaranteed contracts to fit Iguodala’s salary under the cap. Then they could sign Nedovic, maybe a player using the $2.65MM room exception, and minimum-salary guys to fill out the roster.

      If Denver is willing to sign-and-trade Iguodala to GS, maybe the Warriors send a future second-rounder, a little cash, and the rights to Nedovic to the Nuggets. In the 24+ hours since I published the article, Jack and Landry have agreed to sign elsewhere, so their rights probably aren’t relevant anymore to GS. But giving up those assets to Denver in a S&T would still allow GS to have its FULL mid-level exception ($5.15MM) to target a better player than the $2.65MM exception would allow. They’d also still have trade exceptions worth $9MM and $4MM, so they could acquire one or more players earning up to either of those amounts in separate trades. For instance, if the Rockets are looking to dump Jeremy Lin, his $8.37MM salary could fit in that $9MM TPE (just one example).

      — Luke

        1. Trade exceptions can only be held by over-the-cap teams, so if the Warriors went under the cap to sign Iguodala, they’d have to renounce the TPEs.

          — Luke

      1. Might the trade exception apply under both of these examples, either with or without Denver’s cooperation?

  8. It isn’t looking like Denver is going to work with Golden State, and I don’t think anyone can really blame them if/when they don’t.

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