The Pacers’ Current Salary Situation

The Indiana Pacers have 10 players under contract for next season. The league requires a team to have 13 players and the maximum roster size is 15. According to Larry Bird, the Pacers want one of those guys to be Lance Stephenson, so it is presumed that re-signing him will be the top priority of the summer. He is the Aerosmith tickets, if you will.

As previously discussed, Paul George making third team All-NBA will make it a bit tougher for Indiana to keep Stephenson. George got a salary bump of about $1.2 million, and that means Indiana is $1.2 million closer to the luxury tax threshold that the team will presumably not exceed.

But Indiana does have a few ways to clear some extra room, one of which involved waiving Luis Scola, whose contract is only partially guaranteed for next season.

Here’s the backstory of Scola’s deal: Originally, the salary ($11.0 million) for the final year on his deal (2014-15) was completely non-guaranteed. However, the deal said that the season could become partially or completely guaranteed if he met certain criteria over the first four years of the deal. It would have become fully guaranteed, had he been voted as a starter to the All-Star game. Other than that, he could get $500,000 guaranteed each year that he played 85% of his teams games and made the playoffs, and another $500,000 each year he either played in all 82 of his team games or played in 85% of his team’s games and the team went at least .500.

By the time he was amnestied by Houston in the summer of 2012, he had twice met those criteria (thus guaranteeing himself $1.0 million), but the Rockets are on the hook for part of that ($559,000). Then Scola earned another $500,000 with Phoenix by playing all 82 games, and he got another $1.0mm by (a) playing 85% of the games this year with Indiana and making playoffs, and (b) playing 82 games (also playing 85% on a .500 team).

That all adds up to $2.5 million guaranteed next year, though Indy is only on the hook for $1.9 million of it. Thus, if the Pacers waive Scola this summer, they will free up about $2.9 million.

Here’s the actual dollar situation:

Assuming the luxury tax threshold stays at the current projection ($77 million), the Pacers would have $9.7 million of space that could expand to $12.6 million if they released Scola.

However, the team would only have 10 players under contract with that $9.7 million number and just nine (after releasing Scola) if they got the full $12.6 million. Since they would have to employ at least 13 players (and they would probably want to carry 14), the table above assumes adding enough minimum-level-salary players to get to a roster of 14. (I’ve assumed the third-year minimum salaries here.

They could conceivably save about $400,000 per head by only signing guys on rookie-minimum deals, but you let me know how comfortable you feel about Donald Sloan as your 10th best player.

Side note on Sloan: his deal is unguaranteed, too, but he’s making the minimum, so there would be no savings in cutting him and if you’re going to employ minimum-level players there is probably some benefit in having one of them be a guy who already knows the playbook.)

You got it?

Even if not, here is the takeaway: The Pacers technically have $6.95 million of “available for Lance” money if they keep Scola, but they could increase that sum to $8.96 million by cutting the Argentine. Though those numbers are likely too high.

Why? Because we should assume that the Pacers want to have a bit of leeway under the tax. That is to say, if the luxury tax threshold is $77 million (as it is projected and assumed in this financials), then the Pacers will probably target to be at least $500k below it — if not more.

This is mostly to make sure that some minor accounting adjustment doesn’t put the Pacers over the tax, at which point Herb Simon shoots everyone. But it is also because, from a basketball perspective, not having any space at all to make moves during the season isn’t a desirable position to be in. Not only can you not sign anyone, but you can’t even take on small salary increases in trade.

That’s why the realistic “available for Lance” money in year one is $6.5 million (with Scola) and $8.5 million (without). Truth be told, those are probably still high. Honestly, I think the Pacers will be targeting to be between $75 million and 76 million in total payroll next year (if not less). If that’s is the case, shave another $1 million to $1.5 million off of those starting salary numbers for Lance.

Tangentially, I think it’s far from certain that the Pacers will release Scola. I think they like him well enough, but mostly it would depend on whether they viewed it as avoiding $2.9 (less his replacement) or paying someone $1.9 million to play for someone else.

There is one other way in which Indiana could save some: the “stretch provision.” This means that you (a) waive a player, and (b) pay them their full salary, but (c) the team, for salary cap purposes, is able to “stretch” the remaining dollars for twice the remaining left of the contract plus one year.

The obvious candidate for Indiana is Chris Copeland, whose remaining $3.14 million could be “stretched” over the next three years, counting just $1.05 million against the cap for the next three season.

I think there is absolutely no chance at all that Simon would ever approve of “stretching” a player, however. It’s one thing to release Scola to save money, but there’s no way that I see the Pacers stretching Copeland (or Ian Mahinimi, who would count against the cap at $1.6 million for the next five years) just to create space to sign someone else (or re-sign Lance). It’s just bad business. Plus, Bird likes Cope, and if they cut Scola, then the backup power forward spot is probably Cope’s job.

The most likely other avenues for creating space are either unloading George Hill or Roy Hibbert’s deal. The latter is probably more likely, but that would make it the “slim” in the “slim to no chance” category. That doesn’t mean I don’t think the Pacers would try to move Hill; it’s just that I don’t think they would do it as simply a salary dump.

What does all this arcane financial information mean?

Expect the Pacers to try to stand pat this summer, just re-signing Lance — if they can (I think it’s a 50/50 proposition at best). They don’t really have the space to fend off big offers, but more than anything else, I think it will be the years that could cost the Pacers. I have a hard time believing Simon would be willing to guarantee more than two, perhaps three years. There are just too many bad memories for this franchise, and to be brutally honest, I don’t know how you guarantee five years to Lance.

As always, Mark Deeks’ Shamsports and Larry Coon’s CBA FAQ were relied on heavily in the creation of this post.