May 30, 2014; Miami, FL, USA; Indiana Pacers guard Lance Stephenson (1) reacts during the second half in game six of the Eastern Conference Finals of the 2014 NBA Playoffs against the Miami Heat at American Airlines Arena. Mandatory Credit: Steve Mitchell-USA TODAY Sports

Pacer Cap Situation - Chasing Lance - July 15th Snapshot

May 28, 2014; Indianapolis, IN, USA; Indiana Pacers guard Lance Stephenson (1) goes up for a shot past Miami Heat center Chris Bosh (1) in the first half of game five of the Eastern Conference Finals of the 2014 NBA Playoffs at Bankers Life Fieldhouse. Mandatory Credit: Aaron Doster-USA TODAY Sports

Two weeks into Free Agency – and five days after the July moratorium ended – Lance Stephenson, the Pacers, and their fans are still trying to find out where the quirky, talented wing will continue his NBA career. While we have no new information from either camp, events over the past few days have at least eliminated some possibilities. Friday, it became apparent that the Lakers were no longer in the hunt. When Houston chose not to match Dallas’ three-year, $46 million offer sheet to Chandler Parsons, the Mavs dropped out of the market.

However, several teams still have the means to beat the Pacers’ offer. Charlotte is back in play after losing Gordon Hayward, but beat reporter Rick Bonnell maintains they aren’t interested. Atlanta has enough space, as do potentially Houston and perhaps Phoenix. For teams with space, it is simply a matter of will.

The biggest threat to the Pacers remains – in my opinion – a big dollar, short term contract. Indiana’s offer of five years and $44 million only pays Lance roughly $7.7 million next season, and a combined $15.9 million in the first two. A two-year, $20 million offer gets Stephenson 25% more money in these years. I’m sure none of us doubt Stephenson’s faith in both his talent and indestructibility, so should we doubt his faith in his ability to land another big contract in two years? Another big contract signed after a new TV deal is inked?

In any case, there’s a lot we don’t know about the actual machinations of the market surrounding Stephenson’s next deal. However, thanks to Mark Deeks of Shamsports, we do know a lot about the Pacer cap situation and the dilemmas they are facing.

Mark’s right, but the Pacers have an even more immediate issue regarding their offer to Lance Stephenson. Their current payroll makes signing Lance to that deal illegal.

July 15th sitch

On July 3rd, we outlined the Pacer Cap situation at that time. We also noted that – due to details in the 2011 CBA – Indiana was actually hard capped at $4 million above the tax threshold, which has since been officially locked at $76.829 million. That cap update indicated that the Pacers would be a couple thousand dollars above that hard cap figure, but that’s so small as to be a rounding error.

However, Lavoy Allen was signed in the intervening two weeks, and now the Pacers have to clear almost $1.1 million before Lance can put his name to the current offer.

Now, this is ostensibly a minor detail. Indiana can reduce their payroll in any number of ways. The most direct is to waive Luis Scola, who is only guaranteed $1.9 million of his $4.9 million salary. However, what is important is the timing .

Barring something unforeseen, the Pacers will not pay the tax for this – or any other – season. So, as a practical matter, Larry Bird will be looking to keep his total payroll under the $76.829 million threshold. However, the deadline for being under that number is the last day of the 2014-15 season. Conversely, Indiana cannot exceed the $80.829 million hard cap for any reason or any amount of time.

If Lance’s contract fit under the hard cap, then Bird and Kevin Pritchard could spend the rest of the summer looking for a salary-saving trade that would get Indiana under the tax. They could even wait until the trade deadline, but it would likely be their preference to have this resolved before opening night. Since it doesn’t – and the offer remains on the table despite their current payroll – Indiana will have to act immediately, should Lance accept.

For those watching, the Lance Stephenson Free Agency experience has moved at a snail’s pace. However, if Stephenson chooses to be back home again in Indiana, then things will start to move very quickly, indeed.

Tags: Lance Stephenson

  • Ian

    Phoenix seems really unlikely, given they already have 3 starter quality guards plus Gerald Green as a swingman. Either he or Lance at 3 would give them an extremely small team playing 2 point guards at the 1-2 spot.

    Houston has never really expressed any interest, and by signing Ariza, they are locked up at 2-3, so again no place to play Lance. Neither he nor Ariza is capable of swinging to the 4. They really need a big man at this point. Also I’m not sure Lance is a good enough 3-pt shooter for them.

    Charlotte I think is down to about 10M in cap space, after signing Williams and Roberts. Would lance really go for a 2-year, 10M/yr deal over 5 yr for 45? Maybe. I think the Pacers should offer him an opt-out after year 2 or 3. The cap will balloon at that point anyways, so if Lance takes off and is playing at a star level, he can know he can opt out and get paid then while still starting the deal with long term security. I think it’d be a smart move by the Pacers as well, because if Lance does play well and is stuck on a below market, 5 year deal he might get grumpy. Finally the opt out gives Lance a chance to save face after turning down the offer once already.

    • Earl Malmsteen

      I’m guessing Bird would offer 2-3 yr deal at the same money if Lance wanted, but I think giving away an opt-out for nothing would be a bad business move if there’s nothing else out there for him. The moves made by a lot of other teams (esp the Parsons deal) that you mentioned plus the
      Lakers inexplicably overpaying Jordan Hill & SwaggyP make me think
      Lance has zero leverage so far.

      Seems like either someone weird comes out of nowhere with 2/22m+ or Lance is a Pacer.

  • ced

    good stuff, really interesting… and strange. If the priority is really to sign Stephenson what the point to sign Allen and Whittington who, let’s face it will not see the court this year?
    Without them you can sign Lance and still being under the hard cap.

    Obviously Indy got too much bigs, so the Pacers got to trade for 2nd rounders 2 of Mahinmi/Scola/Cope to make it work.

    • Ian

      I think Allen will definitely see the floor. He was insurance for the fact we’d likely have to release Scola and/or trade Mahinmi. I don’t think any of the deals on the books keep us from signing Lance. The Pacers have months to figure out how to get below the tax if they do sign him. In fact, looking at the chart, they could conceivably go up a couple million (to the hard cap) if they had to to get him by cutting Scola, then sort out clearing space later. Yes its never good to clear space under pressure, but if the Pacers have to throw in a 2nd rounder to get a team to take Scola (thus saving another 1.9M) or Mahinmi, that’s the price you pay.

      • ced

        Have you read the article until the end? because that’s exactly what it’s written, Pacers can’t sign Lance now, because of the hard cap ;)

        • Ian

          Pacers would be at 81.9M with Lance’s deal, BEFORE they release Scola. The hard cap is 80.9.

          Releasing Scola frees 3M. Trading him frees nearly 5M. So by doing either they can fit Lance no problem. Then its a matter of making further moves to get below the tax which they have months to do.

          • ced

            Ahah yeah sorry at the end it was me, not reading your post entirely.

    • Brandon Burton

      Their contracts are hardly the issue here; more like Scola’s and Copeland’s. Whittington is hurt, but was a really good scoring big at WMU, so he could be useful when he heals up; and Allen is a good rebounder and proficient defender, which makes him very useful backing up West if the team decides to dump Scola. Mahinmi may not be worth $4M, but he is definitely a solid backup for Roy. On the other hand, Scola is on a major decline, and Copeland is getting 3M to ride the pine for his lack of defensive ability; they should be the contracts you are concerned with, not Whittington’s and Allen’s likely below $1M contracts. I doubt the team could trade Scola at this point, especially with it being an obvious salary dump, so the better option would be to waive him and take the smaller cap hit. As for Copeland, they might be able to dupe a team into thinking he is worthy of a draft pick (At 30 with only one NBA-level skill, he isn’t), but otherwise we’d have to keep him since his entire contract is guaranteed waiving him would be pointless.

  • Realist

    Why can’t we give him something backloaded, like say 4 years for 40 mill, 8/8/12/12 (or even more extreme, 7/7/13/13 etc), which hits 12 or 13 when Roy and West come off. Is this do’able? I’m not an expert on the cap. Those weird Lin/Asik deals lead me to believe it must be,

    • Tim Donahue

      The CBA limits raises (and decreases) on most contracts to 7.5% per year. The Lin & Asik deals were special exceptions under something called “The Gilbert Arenas Provision.” It only applies to what are called “Early Bird” or “Non Bird” Free Agents. The Pacers have Lance’s “Full Bird” rights, so he wasn’t eligible. Larry Coon explains it in detail here.