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Indiana Pacers Salary Cap Situation After Signing Monta Ellis, Rodney Stuckey

By Tim Donahue

May 24, 2014; Miami, FL, USA; Indiana Pacers president Larry Bird watches the game against the Miami Heat in game three of the Eastern Conference Finals of the 2014 NBA Playoffs at American Airlines Arena. Miami Heat defeated the Indiana Pacers 99-87. Mandatory Credit: Steve Mitchell-USA TODAY Sports
May 24, 2014; Miami, FL, USA; Indiana Pacers president Larry Bird watches the game against the Miami Heat in game three of the Eastern Conference Finals of the 2014 NBA Playoffs at American Airlines Arena. Miami Heat defeated the Indiana Pacers 99-87. Mandatory Credit: Steve Mitchell-USA TODAY Sports /
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Life is coming at us fast, these days. With the news of the Roy Hibbert trade and the reports of the Rodney Stuckey signing, Indiana’s cap position has fluctuated wildly.

Right now, the few details give us a range or remaining cap space for the Pacers of almost $7 million — from an unlikely low of $4.8 million to a high of $11.7 million. A full $2 million of that range is due to the fact we don’t have absolute confirmation that the NBA salary cap will be that much higher than the previously projected $67.1 million.

For the sake of putting a stake in the ground, below is a quick look at three different cap scenarios for the Pacers, based on how these reported contracts could be structured, along with a few other assumptions.

(Note: All of these assume a the full $2 million increase to the cap, or a $69.1 million cap.)

0705Scenarios2
0705Scenarios2 /

Some notes on the development of that schedule

  • Assumes $69.1 million cap – The latest official communication from the NBA to its teams was $67.1 million, but Ken Berger reported that it was expected to be $2 million higher. This is likely, but not official – or exact – yet, so there is room to move here.
  • There are three scenarios in the table, based on how the reported contracts of Monta Ellis, Lavoy Allen, and Rodney Stuckey could be structured
    • Max Raises – This would assume that each player gets the maximum possible raise for each year of their contract. For Ellis and Stuckey, that would be 4.5% of their first year’s pay. The Pacers hold Larry Bird Rights for Lavoy Allen, so his could be 7.5%. This is far and away the most common contract structure, and probably the most likely scenario. It starts with a low salary and grows, making it easier to fit into the cap in most years.
    • Flat Contracts – This would assume that the reported contract value is simply paid in equal amounts each year. This is less common, but it’s one the Pacers have done in the past with both George Hill and Ian Mahinmi.
    • Backloaded – This would assume each contract starts with the maximum possible first year amount, then declines by either 4.5% or 7.5% of that first year’s salary. This is probably unlikely, but it’s useful with older players and to reduce cap hits in future years. This is somewhat less attractive, given that the salary cap is project to rise by $39 million over the next two years.
  • Lavoy Allen’s Cap Hold – Since the Pacers have Allen’s Bird Rights, they can go over the cap to sign him. All that’s required to do that is to keep a cap hold on their books, which is just under $1 million in Lavoy’s case. This would allow the Pacers to delay the actual signing of Allen’s contract until last, reducing his cap his from a projected cap hit by almost $2.8 million.
  • This schedule includes minimum level contracts for both Shayne Whittington and Joe Young. These are neither signed nor rumored, but are sound speculation. Because he was an undrafted free agent, Whittingon’s cap hit will be at the third year players’ minimum, despite getting paid slightly less. Young – a second round pick – will only be at the rookie minimum. If these two players are not signed, then it will reduce open space by a minimum of $0.4 million, though this is not likely to have any material impact on the Pacers’ summer plans.

Including Myles Turner and three reported signings, the Pacers have 10 players on their roster. The league requires 13 (and the Pacers will probably want 14 or 15), so Bird will need to add a minimum of three more players. Two likely placeholders — Whittington and Young — have been identified here, but there is at least one more name we don’t know.

As you can see above, how the Pacers actually execute their reported agreements can cause the amount they have to add that name (or names) to fluctuate significantly. For the sake of simplicity, it’s usually best to assume that a team will do what they can to maximize their room, meaning it’s reasonable to speculate on deals that fit into an $11.7 million budget.

For the sake of your sanity — and mine — keep in mind that any number of things can make that $11.7 million smaller, so don’t think it’s in their pocket.

Source for salary information: Basketball Insiders

Next: Rodney Stuckey Re-Signs with Pacers

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