Caponomics | Salary cap expected to surge to $63.2 million, but what does it mean for Bucks?

There's good news for agents and fans of summer spending bonanzas: the NBA's latest revenue projections suggest Milwaukee--and every other team with cap space--will have an extra $5 million to spend this summer compared to a year ago.

As reported by cap guru Larry Coon last week, the league's latest forecast suggests the cap will rise from its current $58.7 million to $63.2 million for the 14/15 season, while the luxury tax limit will bump from $71.7 million to $77 million. It's the second time in a year that the league has upwardly revised its original $62.5 million estimate from last July, which Coon notes was already 2% above the usual 4.5% annual increase. In other words, the NBA was expecting big things this year, and they've turned out even better than expected in revenue terms--despite Michael Redd ($91m), Mo Williams ($52m), Bobby Simmons ($47m), John Salmons ($34m), Drew Gooden ($32mi), Ersan Ilyasova ($32m) and O.J. Mayo ($24m).

$312 million! That's about three-quarters of a brand new arena!

It's not to say that everyone the Bucks signed has been a bust (hello, Mike Dunleavy!), but having money to spend does not imply money being spent productively. Moreover, even when the Bucks haven't broken the bank they've generally been inefficient in their salary distribution--witness the nearly $40 million spent on Mayo and Zaza Pachulia last summer. Even if none of those deals are individually back-breakers, they add up over time--and it's absolutely stunning how little value the Bucks have gotten for all the money they've spent on free agents.

This is of course precisely why you hear Steve and I always talk about the "do no harm" principle when it comes to free agency. As much as a team like the Bucks might be tempted to make a big splash with their cap space, the best long-term strategy for a rebuilding small market team is generally a pretty boring one. Scrape the bargain bin for undervalued veterans and younger cast-offs to fill out your rotation, and if you are going to throw bigger money at someone, try to keep deals short or with good chunks of non-guaranteed money. You're guaranteed to miss out on big names using this strategy, but you're also guaranteed not to light money on fire. Which is its own reward, isn't it?

So what does the Bucks' cap situation look like, and how might they optimize their summer plans? Let's start with a snapshot of what the numbers project to look like when the NBA calendar changes over on July 1(thanks as always to Mark Deeks' ShamSports.com for salary info):

Assumptions:

• Lottery pick hold. As you'd guess, the higher the Bucks pick in the draft, the higher the cap hold associated with their pick. To be conservative (from a cap perspective), I assumed the Bucks get the first overall pick and the nearly $4.6 million hold that comes with it, though it could fall to as little as $3.3 million if they dropped to fourth. You could put in placeholders for subsequent draft years as well (ie their 2015 cap space will also be reduced by the cap hold for their 2015 pick), but given we have no clue where they'll be picking in future years I didn't bother.
  
  Note that the hold numbers above are equal to 100% of the rookie scale prescribed by the CBA, which is what counts against the cap while the player remains unsigned. That said, virtually every first rounder gets the maximum allowed 120% of their scale number when they sign, so the Bucks' cap space in this scenario would fall by about $918k (20% x $4.59 million) when they actually signed the first overall pick. Typically first rounders sign by the time summer league starts, though a team can delay the signing in order to game the incremental cap hit. Considering the circumstances however, I wouldn't expect the Bucks to get too cute with this.
• What about all those second round picks? Good question. Unsigned second round picks do not count against the cap, so I'm not including any allowances for the Bucks' three second round picks (#31, #36, #48) above. Common sense suggests it's also highly unlikely that the Bucks actually keep (let alone sign) all three of those second rounders. We know the Bucks are rebuilding, but few teams this side of Sam Hinkie's Sixers have the appetite for carrying four rookies at once. It's always possible, but for now I'd peg it as rather unlikely.
• Roster spots. Including the lotto pick and the non-guaranteed deal of Chris Wright, the Bucks currently project to have 13 roster spots filled before factoring in any free agents or additional draft picks. My guess is that the Bucks ultimately end up with one or maybe two picks in addition to their lottery pick, but also keep in mind that there's no restriction on carrying more than 15 guys during the summer anyway. All that matters is that no more than 15 guys are under contract by opening night.
• Cap holds. I listed the holds associated with the Bucks' three free agents, but none of these are particularly relevant to the Bucks' cap space. All can be renounced (and thus not count against the Bucks' cap number) without any real consequence since the Bucks have more than enough cap space to bring any or all of them back without using an exception. So feel free to ignore them and/or laugh at the number next to Ekpe Udoh's name--it's easy to forget that once upon a time he was the sixth overall pick in the 2010 draft.
• Cap space. Factoring in all of the above, the Bucks currently project to have nearly $12 million in cap space and two open roster spots when free agency kicks off in July, leaving two spots for additional picks, free agents or additional bodies from trades. That's assuming nothing else changes of course...and something almost certainly will.
• Salary floor. Even though the cap number in the table above is around $6 million under the league's minimum salary floor (90% of the cap), the Bucks payroll will actually be a fair bit higher due to the amnesty money still owed to the Drew Gooden through next season. And for the salary floor it's actually the payroll that matters. As a result, it looks like the Bucks should be right around the league's minimum salary floor even before they spend a dime in free agency.
  
  I'd also add that it wouldn't be a huge deal if they weren't close to the minimum. Teams have until the end of the season to get to the floor, and the only penalty is having to pay the difference into the players' association kitty. The bigger issue is perhaps the public perception of being too cheap to pay more than the minimum total amount of salary, but that's no reason to overpay players or needlessly give out multi-year deals.
• The difference between value and cost. An obvious indicator of the Bucks' penchant for wasteful free agent spending and good drafting: their highest-paid players are also their least-valuable trade assets, while their cheapest guys are their best assets. While having promising youngsters is critical for any rebuilding team, you're also guaranteed to be rebuilding if your highest paid players were as disappointing as Larry Sanders, Ersan Ilyasova, O.J. Mayo and Zaza Pachulia were last season.
  
  Speaking of which, you can expect the Bucks to shop some or all of their high-priced veterans this summer, but that doesn't mean they'll fetch anything you'd actually want. Ilyasova might be the most likely to be dealt if the Bucks added someone like Parker, but the Bucks could also solve a potential frontcourt glut by cashing in a more valuable asset like John Henson.

So what can the Bucks do? What should the Bucks do?

As you've probably figured out by now, these are very distinct questions. And it's worth noting that we don't know what the Bucks' summer strategy will be or who will even be calling the shots in the first place. With league approval of the team's sale to Wes Edens and Marc Lasry likely to take at least another couple weeks, decisions on who will lead the Bucks' front office may not be resolved until mid-May at the very earliest. My gut says we'll see some broad changes in the front office and coaching staff, but it may be a while before everything fully shakes out, especially given the challenge of cleaning house right before the most important draft in the franchise's recent history.

Still, it's difficult to see anyone looking at the Bucks' current roster and thinking a huge turnaround is in the cards for next season--or at a minimum that free agent spending will be the route to accomplishing it. Ultimately, everything will start with the draft, where the Bucks are guaranteed to land 1) a high-upside player who may or may not be able to contribute next season and 2) possibly one or more other young players with long-term potential as rotation players.

The Bucks' goal in free agency and trades will then be to make sense of what they have after the draft. If they draft Joel Embiid or Jabari Parker, you would expect that someone from the front line would be dealt. If it's Andrew Wiggins or Dante Exum, then the Bucks don't necessarily have to trade anyone. Either way, the "draft for talent, trade for need" axiom will hopefully be the one the Bucks live by.

With that as a backdrop, what are the Bucks' options after the draft in July?

Spend that cap money on a big-name young guy. Depending on whom they select in the lottery, there are some not-completely-crazy ideas involving free agent spending that are worth discussing. Specifically, the Bucks could throw a big, $10 million-plus offer sheet at a young restricted free agent like Gordon Hayward or Greg Monroe, or they could take a run at unrestricted free agent Lance Stephenson with a similar offer. All of them are young and talented, which at least makes more sense than spending big money on a mid-tier veteran (which I'm not even going to entertain in this space).

Still, I'd argue that the Bucks' best move is avoiding any big-money temptations for now. Stephenson seems like a good bet to spontaneously combust on a bad rebuilding team, Monroe brings some of the same spacing/defensive problems that John Henson brings, and Hayward is a really nice player who likely won't be available at a palatable price. I'd consider Hayward the least objectionable of the three by quite a margin, but that also makes it unlikely that you could pry him out of Utah for a non-stupid number.

DO NO HARM. So instead of spending all that money for the sake of spending it, let's just go back to do the "do no harm" principle. The first rule: don't sign non-elite talent for more than the mid-level. While I still have some hope that Larry Sanders can turn things around--we already know that he can be an elite defender/rim protector--this is a lesson that the Bucks have learned over and over without seemingly learning anything over the years (see that ugly list of signings I mentioned earlier).

Still, all of this should be pretty simple. You pick the best player you can find in the draft, ignore potential big free agent signings, and then try to sort through whatever you have left with trades and cheap free agents. Example: if you really need a power forward, re-sign Jeff Adrien to a two-year, $2-3 million per season deal. He'll play as much or as little as you ask, work his ass off when he does get on the court, and toughen up the young guys in practice. You'll never be disappointed at that price.

On that topic, I'm less interested in bringing back Ramon Sessions, though the Bucks will presumably need to add some type of shot-creating combo guard to complement Brandon Knight and Nate Wolters--through the draft, trade or free agency. Maybe it's Sessions, maybe it's someone else, but the main point is that it shouldn't cost much money no matter who it is.

Opportunity knocks? The big upside of not spending money on mid- to high-priced free agents is that it leaves more flexibility to upgrade the roster through trades. The downside: you can't really plan for which opportunities will come your way, though a rebuilding team like the Bucks can also afford to be patient in ways that win-now teams can't. This may seem too ambiguous for some fans in constant need of a "plan," but I'd argue that a good overarching strategy--"we're going to build around our picks, avoid non-elite guys making more than the MLE, and stay cap flexible in case a big opportunity becomes available"--is more important than having a 20-step punchlist to winning a title. One of these things is feasible, the other is not.

So what kinds of opportunities are we talking about? Well, the rising tax level and a lower inventory of existing bad contracts around the league means we'll likely see fewer teams desperately trying to shed salary for luxury tax reasons. But there will always be teams jockeying for financial flexibility and needing other teams to help make it happen--whether it's to dodge the tax, open up money to sign free agents, or to move redundant pieces elsewhere.

For instance, Utah nabbed a pair of first round picks from Golden State last summer by agreeing to take on the salaries of Richard Jefferson and Andris Biedrins, while the Suns kickstarted their renaissance by snapping up Eric Bledsoe on the cheap from the Clippers. The Bucks' cap space combined with cheap young talent and an abundance of second round picks could similarly open up any number of opportunities to acquire additional picks and/or young talent. Just think of cap space as another type of asset that can be used to facilitate deals--and if you don't end up using it, that's hardly the worst outcome either. Lasry and Edens can always take the money they don't waste on big name free agents and put into a new building, eh?

The bottom line: doing too little in free agency is almost always better than doing too much. It may not be a sexy solution or provide a quick fix to the Bucks' bigger problems, but a conservative first summer under new management would be a good start to building a more coherent, financially rational roster--and maybe even a new arena for them to play in.