The Lakers Mishap and Fix
by Matt Coleman | Friday, June 28, 2019
How the Lakers' blunder was bailed out by the Wizards...
Rob Pelinka and his Magic-less crew were able to pull what was thought to be unimaginable 48 hours prior – the Los Angeles Lakers trading Moritz Wagner, Isaac Bonga, and Jemerrio Jones to the Washington Wizards. Essentially, the Lakers' front office was able to pull off the NBA’s version of an Italian Job-like heist to create enough cap space for the additions of Anthony Davis and another 7 to 9-year level max contractIf the cap comes in at the expected $109 million, this contract's value in the first season will be $32.7 million, which is 30% of the cap. (i.e. Kemba Walker, Jimmy Butler, Klay Thompson, Kawhi Leonard,or Kyrie Irving). But, before I get to the “what do the Lakers do now?” part, I want to first “cap-splain” how the Lakers messed up, and then I’ll go into why the Washington bailout mitigated Pelinka’s initial egregious mistake.
The Initial Mishap
When ESPN’s Adrian Wojnarowski (“Woj”) broke the initial version of the Anthony Davis trade to the Lakers, many, if not most, of the media thought that the trade was straightforward, believing the Lakers have also preserved enough cap space for a marquee free agent. However, as the details started to trickle out, analysts and cap gurus realized that the trade would ultimately go through, but it would cost the Lakers $3.8 million in dead cap space because the Lakers, even though under the cap, was not matching salaries.
When trades occur in the NBA, the general rule of thumb is a team can take back an additional 25% in salary plus $100,000 more than what it sent out. For example, if a team trades a player with a salary of $20 million, that team can then take back a player, or players, with a total salary of $25.1 million. In the initial Lakers-Pelicans trade, the most prominent Lakers’ assets were Lonzo Ball ($8.7 million), Brandon Ingram ($7.3 million), Josh Hart ($1.9 million), and this year’s 2019 4th overall pick. Because the pick counts as zero dollars, unless the pick is signed and both teams wait to the end of July to execute the trade, the Lakers’ outgoing salaries equaled $18 million; however, to match Davis’ incoming $27.1 million, the Lakers actually needed to be sending out combined salaries worth $21.7 million, which accounts for the 25% reduction of Davis’ contract. So, if this were the deal's final rendition, the Lakers would have had about $23.5 million in cap space, which is just shy of the 25% max contractIt is expected that players who have 6 years or under of service are eligible for max contracts equal to 25% of the cap. For this offseason, it is expected that that contract is worth $27.25 million in the first season., the one D’Angelo Russell is eligible for.
What the front office got incorrect was how to account for the 4th overall pick. When the asset sits on your books, let’s say during free agency even before you sign your drafted player, the asset is a hold and eats up a portion of your cap space. In this case, the experts are estimating the hold to be around $7.1 million. However, when you trade this asset, the CBA states that to calculate incoming and outgoing salaries this asset counts as zero dollars. According to those in the business, this was overlooked by many of the experts, but I find that hard to believe given the innumerable resources in NBA front office. But who am I to judge from the outside looking in?
By bringing the Washington Wizards into this deal, the Lakers were able to remove the dead cap, caused by the initial trade construction. Because the Lakers are sending Moritz Wagner ($2.1 million), Isaac Bonga ($1.4 million), and Jemerrio Jones ($1.4 million) without taking additional money back, the Lakers are able to cross the necessary threshold of $21.7 million. In fact, ESPN’s Bobby MarksI have been following his Twitter acount closely to glean as much info as possible. mentioned on Friday’s SportsCenter how important Jones, who was signed midway through the 2018-19 season, is to this deal. Without his salary, the Lakers would still not be sending out enough salary to match the Davis contract. So Laker fans, if your organization ends up signing Kawhi Leonard, Klay Thompson, or someone of that caliber, you can thank Jemerrio Jones and whomever is running the Wizards.
Rather than prognosticating about who will and won’t be in purple and gold next year, it is more important to explain what’s next from a roster mechanics perspective. Technically, the Lakers still have all of its assets from before Davis trade on its books, such as Ball, Ingram, Hart, the 4th pick, and the players going to the Wizards. With this understanding, the team has $32.0 million in cap space to sign a 30% max contact free agent, if that is how the team’s front office wanted to proceed. The team can always use that space to sign multiple players using that cap space, but no matter what, it will have that space for new players coming from other teams. However, these deals need to be agreed to before July 6, when, what is now, the Lakers-Pelicans-Wizards trade is consummated.
Assuming the team maxes out the space and completes the trade, the team will have the ability to use the Room Mid-Level exception, which I believe will be about $4.8 million, to sign a player or players that will take them over the salary cap. After that, the team will have to go “bargain hunting” and find players willing to play for the minimum salary.
One last note: the Lakers’ front office is squeezing out as much cap space as possible while still being handcuffed to the atrocious Luol Deng contract. After stretching Deng, the Lakers still have $5 million of dead money on its books. Because of that, the Lakers aren’t able to resign a player like Reggie BullockAfter thinking about this, I think the Lakers could renounce everyone, except Bullock or another player, sign players using the cap, such as JJ Redick or Patrick Beverley. Then, I think it could resign Bullock to a number over the cap, and once this is done, the franchise could complete the Davis trade. With the goal of getting the larger MLE and Bi-Annual. However, more to come., without renouncing his cap hold, to a number over the cap, which would have allowed them use the Non Taxpayer Mid-Level exception, which I project to be around $9.3 million, and the Bi-Annual exception, which should be around $3.6 million. It just shows how devastating one really bad contract can be when contending for a title.