A Successful Nets Summer?

No matter what happens during the duration of the Nets’ playoff run, one thing is certain: they will enter the summer with more momentum than any of us imagined. Even four straight losses to the Sixers will result in a playoff appearance and road playoff win – better than the most rosy of projections.

When that offseason comes, what can the Nets do, exactly?  And what would make for a successful summer?

The short answer: they can do a lot, and they probably need to do a lot for the summer to be successful.

It should be noted that there is one popular misconception floated in conversations, and even in articles about the Nets: the premise that the Nets have two max contract slots. In reality, the Nets do not have even one max slot unless they let D’Angelo Russell walk. With Russell, they top out at $30,315,297 in space, assuming Allen Crabbe opts in.  The max is $32,700,000 for a 7-9 year player, or $38,150,000 for a 10 year player.  To open max room, the Nets must unload salary in a trade.

The origin of the misconception: there is a popular belief that if you subtract the salary cap, from the salaries on the roster (plus dead $), that you wind up with the cap space a team has. This belief is not accurate.  Rather, you cannot calculate a team’s cap room without accounting for two critical item: cap holds and incomplete roster charges – and when you do that with the Nets, the numbers are vastly different.

What is a cap hold?  A cap hold is a placeholder on a team’s cap, for each of its free agents, set as a percentage of the player’s prior salary.  There are also cap holds on the salary books for first round picks before they sign, set by the rookie scale.  For example, suppose a team has $10 million in cap space, but one free agent with a $4 million cap hold. In reality, that team has $6 million in space; 10-4.  As for your incomplete roster charges, the players under contract, and the holds on the books, take up a certain number of roster spots.  The incomplete roster charge is a cap charge for each roster spot short of 12 ($897,158 per spot this year).  So, if you have six players signed, and four cap holds on the books, your cap has two incomplete roster charges; 12-2.  

Finally, whether a cap hold remains on the books or not is up to the team.  A cap holds remains on your books, and thus the hold subtracts from your cap space, unless one of three events occur:

1: the player stays and signs a contract: the new contract replaces the hold once the writing is signed (this happens when the writing is signed, but NOT when the verbal is done. So if the cap hold < new contract, it makes sense to have the player sign after your other polayers sign so that you can operate around the smaller hold and have more space to work with – this is what the Nets did with Joe Harris last year).

-2: the player signs elsewhere, or the team renounces the player (more on renouncing later): the hold is now removed from the books

Applying this to the Nets, they have six players under contract (Dinwiddie, LeVert, Harris, Allen, Kurucs, and Musa), and two first round picks (at 17 and 27) — that makes for 8 players on the books.  This means that as a technical matter, if the Nets elected to renounce all of their free agents, and if Crabbe opted out, they would have four incomplete roster charges on their books (12-8=4), at $897,158 per charge. With these twelve pieces on their books (the six players, the two picks, and the four charges), and a $109,000,000 salary cap (projected), the Nets would $68,116,076 in cap space, if they renounce all of their free agents.

This technical matter is causing the language, “two max slots” to get thrown around as it has. But this technical matter is not practical and is incredibly unlikely.

First, Crabbe opting in is highly likely – that alone takes the Nets out of “two max” territory.  Second, there is Russell.  If the Nets renounce him — like the Lakers renounced Julius Randle in 2018 — he becomes an unrestricted free agent and leaves while you pursue other items, as the Nets lose the right to match any offer a suitor makes to him. This is highly unlikely, and thus Russell’s hold MUST be accounted for – how can the Nets possibly renounce him?

The Nets’ cap space when accounting for Crabbe’s figure, the Russell cap hold, and thus two less incomplete roster charges? $30,315,297, or about $2 million outside of 7-9 year experience max contract territory. 

Essentially, the Nets do not have max room if they renounce Russell and Crabbe opts in, and both are likely.  And they only have room for two maxes if they renounce Russell and Crabbe opts out, while both are remote.

So Where do the Nets Go from Here?

With this baseline, the Nets enter the summer with approximately $30.3 million in room, and the 17, 27, and 31 picks in the draft. Which begs the question? What makes for a substantial offseason?  Sean Marks has set the Nets up well such that the foundation from which to build a contender exists. But Marks has not built a contender, not yet – and that is what the best GM’s ultimately do. Build one. That is the next step for Marks. With 42 wins, 3 picks from 17-31 in the draft, near max cap room, and potentially more if they unload bad money, the opportunity is there.

An offseason building a bonafide contender, getting a superstar, would be a smashing success. An offseason leveraging all this flexibility substantially to get a second tier free agent (think a Tobias Harris level player), and push the Nets to the upper 40’s area in wins with significant financial flexibility to add down the road?  That would be a good summer and a success, if not a “smashing” one.  Simply moving the chains, running it back, and being a fringe playoff team again?  That would leave something to be desired.

So how do the Nets leverage their flexibility?  After getting to the $30.3 million figure, the Nets will likely renounce Dudley and Carroll, as their cap holds are $14.295 million and $23,100 respectively.  If you renounce a player, this does not mean that you cannot keep the player.  It merely means that you must use cap room (or a cap exception) to keep the player.  Stated simply, the Nets may want to keep Dudley and Carroll, but not at their cap holds.  As a result, renouncing them, to have cap space instead of their cap holds, is the easy play.

Here is where decision time gets harder.  The Nets would be sitting at $30,315,297 in cap room, with the following holds to decide on: Davis ($5,388,800); Graham ($1,645,357 nonguaranteed July 10 trigger); Napier ($1,845,301 nonguaranteed July 10 trigger); Hollis-Jefferson ($7,411,071); Pinson ($1,443,842.06); Williams ($1,443,842.06).

Davis is interesting because he is worth a contract at his hold figure.  The Nets could basically give him a 2 year, $11 million offer with a player option at that rate.  If he wants more, the Nets would have to dip into cap space because they lack his bird rights.

RHJ at that large of a hold, with such a small role, feels like a candidate to be renounced. Pinson may stay with the Nets, around his hold figure.  Williams may be renounced as if he stays as a two way, his hold disappears (cap space is not needed to sign a two way), whereas it does not appear the Nets would give him a roster spot. With Graham and Napier, the Nets have the luxury of July 10 trigger dates on their guarantees.  If they want both back, or are unsure, they can keep the nonguarantee figures on the 2019-2020 cap (which would come at only minimal cost, as two incomplete roster charges would come off), see how free agency shakes out, and then decide on them.  If they know one or both will not be back, they can cut them up front.

The Nets could decide that they need more space than the $30.3 million they presently have.  If so, they would need to unload a piece to get there.  The obvious one is Crabbe, despite the draft pick cost.  If the Nets are able to convince a max player to sign with them, they likely have to unload Crabbe.  While there are other ways the Nets can open space, those other methods would only open slivers of space, or make little sense.  LeVert is too good to deal for space, and does not even make much.  Would the Nets really deal Dinwiddie or Harris for space?  Both could recoup so much more.  And there is dealing their picks, or cheaper pieces like Allen, Kurucs, or Musa, but the Nets want to develop their youth, not dump it, and the gains cap room wise are tiny.  The last method might not even be a method – if you sign Russell at a year 1 figure below his hold, then you open cap room, as the new deal would replace the hold.  However, Russell signing below his hold might not be possible anymore, and even if it is, the gains cap room wise again would be minimal.

Crabbe. That is the guy to unload, if you need more cap room. 

Crabbe’s mere presence on the Nets roster is not a problem.  The Nets have 15 roster spot, and if one is wasted on them, they can still win games – they did it this year, after all.  But his contract also could impede their efforts to get a player this summer – and would preclude the signing of a max free agent. The Nets must make a judgment call because there is an opportunity cost here.

On one handl, dealing Crabbe will have an asset cost.  You will likely lose a first rounder and second rounder, at the very least.  The benefit?  Relinquishing Crabbe provides the flexibility to add better players in free agency, or possibly by trade as, with more room under the cap, you have the ability to absorb better pieces.

The Nets can deal Crabbe, but the deal is only good if it results in acquiring players WORTH the cost of the outgoing picks.  The deal probably needs to permit them to add a high level starter they want in their core for the long term, in order for it to make sense.

The 2019 summer is an exciting one.  The Nets have not often had significant flexibility to upgrade their roster.  When they have, being a bad team has typically precluded them from doing anything meaningful.

This time, they have both – the flexibility, and the competitive roster.

As Bart Scott once said, “CAN’T WAIT.”