The Value of Cap Space During the Season

The other day, Tom Ziller of SB Nation ranked the Pacers among his “winners” of this NBA offseason, largely due to the fact that Larry Bird didn’t squander his cap space by over-paying players. Chad Ford agrees, praising Larry Bird’s patience and his foresight to keep his team’s payroll well below the salary cap.

"Awash with cash in a shallow free-agent pool, Bird and Morway did what they always do — they waited. And once again, it paid off. They patiently plugged and plugged away for more than a year until the San Antonio Spurs finally surrendered Indy-born George Hill. Then they waited until impatient teams overpaid the more overhyped free agents on the market and signed West to a very reasonable two-year, $20 million deal. Both players fit their needs perfectly without breaking the bank.Meanwhile, the Pacers still have about $14 million in cap room to play around with during the season. With so much player movement expected closer to the March trade deadline, the Pacers are perfectly positioned to be major players in the trade market while still boasting a roster that’s as deep as any team in the East. Even if Indy doesn’t make another move, it’s not inconceivable that this team could be a top-five team in the East this season."

The reason having cap space, even during the season, is potentially so valuable is that teams below the cap can make trades without the silly salary-matching requirements the league imposes on any teams that are above the cap. As an example, let’s say the Magic do end up trading Dwight Howard to the Nets.

Let’s say it happens in early February and the Magic get back Brook Lopez, Anthony Morrow, the Nets’ first-round picks in 2012 and 2014, and some other odds and ends. This would put Orlando in complete “tank-and-rebuild” mode. They would likely no longer have any need for Jameer Nelson, since he is good enough to keep them winning (a little bit) this year but likely too old for Orlando GM Otis Smith to want to him around long-term. Why pay a veteran floor general $8 million when you can let a younger guy learn on the job and perhaps be seasoned enough to lead an offense full of blue chippers in three years? Instead, what Otis would likely want is draft picks, young players with small salaries, and more draft picks.

So maybe Larry calls him up and gets him to agree to part with not only just Jameer Nelson but also JJ Redick. And all Bird has to give up is Darren Collison and a first-round pick. If the team was over the salary cap, the only way they could get Nelson and Redick in a trade would be to send back a package of players (or one player) with a combined salary around $15 million. Such a deal would not be attractive to Orlando since the Magic’s motivation is not so much getting rid of good players like Nelson and Redick, but gutting their payroll commitments and stacking assets for the future. They would be trying to press the reset button on the Dwight Howard era and build from scratch. And there wouldn’t be another team in the league that could so easily assist them in doing so.

If he made this theoretical deal with the Pacers, Otis Smith would be looking at a roster that includes some young talent (Brook Lopez, Darren Collison, Anthony Morrow), a few veterans he could either use to bridge the gap from the Dwight era to the future or trade later (JRich, Big Baby), and five first-round draft picks to use over the next three seasons (three of his own, two from New Jersey and one from Indiana). Not the worst scenario to start over.

Or, in a different made-up scenario, say the Utah Jazz are floundering in February and realizing that the Paul Millsap/Al Jefferson front court experiment has failed. Like Orlando in a post-Dwight world, the Jazz would likely covet salary relief and draft picks/young talent more than anything. Perhaps they look at Al Jefferson and his $14 million salary and decide it’s best just to get rid of that hindrance to their rebuilding process. They want a core of Devin Harris, Paul Millsap, Derrick Favors and Enes Kanter. They call Larry Bird, who likes Al Jeff’s game but not his price tag. Still, if he can get him without giving up much, he will pull the trigger. Technically, he can take him on payroll-wise without sending anything back. They haggle, and Bird eventually agrees to take on the last two years of Jefferson’s deal in exchange for a first-round pick in 2013. Utah gets out of the contract, gets a pick and gets a $14 million trade exception. Two years ago, the Minnesota Timberwolves wanted Bird to give up Danny Granger in exchange for Al Jeff. In this made-up reality, Larry would be getting him for next to nothing.

Both these examples may sound a little rosy for the Pacers. They probably are. It’s unlikely Bird could add this type of talent while giving up so little. But they illustrate the potential benefits of being so far below the cap. These are the types of deals that may emerge as possibilities. Right now, every team has an infinite hope in their roster that can only comes with having not played a game yet. By March, most GMs will be looking at the flawed realities of their squads. And most will be considering some sort of move to either radically change their roster or tweak it as they gear up for a playoff run.

This in no way guarantees that the Pacers will be able to turn their in-season cap space into anything. But just because his team’s payroll is so far below the cap, it means lots of GMs likely will be calling Bird’s office.