Caponomics: Fact, Fiction and the Milwaukee Bucks’ Summer of 2017

It’s not often we get to welcome Brew Hoop Co-Founder and Editor Emeritus Frank Madden (also co-host of Locked on Bucks) back to his hallowed Brew Hoop halls he remembers so fondly, but today’s our lucky day. Yours and my favorite Bucks aficionado was kind enough to join us for a Q&A walking us through some of the peculiarities of the Bucks’ impending cap situation this summer. Without further ado:

1. Let's say Greg Monroe and Spencer Hawes opt in, how much cap room would Milwaukee have to operate at that point?

Barring other moves, the quick answer is none. And if Monroe and Hawes opt out, the answer won’t be substantially different.

For starters, it’s important to note that when we talk about cap space, there’s a big difference between being able to have any cap space and having it actually be worth using it. Technically speaking, a non-tax payer like the Bucks will start July 1 with the mid-level exception ($8.4 million), bi-annual exception ($3.3 million) and all of their current trade exceptions at their disposal. But those exceptions also count against the cap even before they’re used, so for teams with significant potential cap space, we usually just ignore them even though they don’t need to renounced until a move is going to happen. Any time you see me quoting cap numbers, you can assume I’m not counting those exceptions, but bear in mind that the mid-level effectively acts as a floor for how much cap space a non-tax-paying team has — if you can’t open up more than $8.4 million in room, you might as well operate “above the cap” and just use the MLE instead.

As for the question of cap room? Well, even if you ignore Gary Payton II's non-guaranteed $1.3 million and Tony Snell's $5.9 million restricted free agent cap hold, the Bucks' total cap number including Monroe and Hawes adds up to over $108 million, well north of the projected $101 million cap figure that the league projected back in April. And more realistically they'll start the summer closer to $115 million due to Snell, whose cap number stands a good chance to double or more if and when he re-signs. Depending on how much Snell ends up getting and where the cap numbers end up, the Bucks could easily end up in the vicinity of the luxury tax -- currently projected at $121 million -- if Monroe and Hawes stick around. That's not exactly an exciting prospect for a team that needs another leap before it contends for anything.

Monroe opting out of his $18 million player option would go a long way to alleviating any luxury tax concerns they might have in the short term, though it's worth noting that Monroe’s departure wouldn't simply open up a commensurate amount of cap space for the Bucks to spend on the open market (sad!). The table below helps explain why:

The Bucks have close to $85 million in guaranteed dollars on the books for next year (including Larry Sanders’ deader-than-dead buyout money and a hold for the 17th overall pick), so even if you assumed Snell, Hawes, Monroe and Payton are gone you’d be at “only” $16 million in potential cap space. Keep Snell’s cap hold on the books (which they should) and you’re down to around $10 million, which might seem like a decent chunk of change...until you realize that the mid-level exception that every non-tax paying team can use is $8.4 million. That’s an exception the Bucks would be able to use even if Monroe, Hawes and Snell remained on the books, so in many ways they’re in salary cap no man’s land.

Which brings us back to an important question: if Monroe opts out, can we reasonably expect the Bucks to improve this summer? Aside from the tax breathing room, the answer is, uh, probably not? To have meaningful cap space — an amount well in excess of the $8.4 million MLE and a handful of other exceptions the Bucks would lose if they maximized their cap space — they’d also need to ship out at least one of their higher-priced veteran rotations guys and figure out a way to actually make productive use of that cap space in free agency. Can they actually sign a guy who would contribute as much as Monroe or who would otherwise provide long-term value? If the history of the NBA has taught us anything, it’s that Bucks fans probably shouldn’t count on it.

Still, it’s likely that the Bucks will be better off from a flexibility standpoint keeping those exceptions and operating “over the cap,” and either way they have the option of hanging onto all those exceptions until they don’t need them. Consider the scenario where Monroe and Hawes opt out — and yes, Hawes not taking his $6 million PO is likely a pipe dream, but bear with me:

Operate “over the cap” — retain exceptions, which puts them over the cap:

• $8.4 million MLE
• $3.3 million BAE
• $5 million trade exception (Roy Hibbert)
• $1.7 million trade exception (Tyler Ennis)
• $1.1 million trade exception (Miles Plumlee)
• $815k trade exception (Michael Carter-Williams)

Operate under the cap — renounce all exceptions to maximize room:

• $10.2 million in cap room
• $4.3 million “room” mid-level exception

If you think the Hibbert trade exception could actually be of use — which is debatable given it can’t be combined with other exceptions or used to sign free agents — then there’s a good argument for operating over the cap. If you don’t, then $10 million in cap space and the $4.3 million cap room exception — given to teams that operate under the cap -- looks clearly better than “just” the MLE ($8.4 million) and BAE ($3.3 million).

2. What mechanisms are available to Milwaukee that could provide some flexibility beyond traditional cap space and Bird Rights?

Let’s break it down by different types of moves:

Trades: This should be a priority regardless, simply because the Bucks have too many fringe rotation guys making “solid rotation guy” money. Salary dumping John Henson, Mirza Teletovic or Matthew Dellavedova (priority in that order) combined with Monroe opting out would be the starting point for creating meaningful flexibility; it’s very possible the Bucks could have over $20 million in cap room if both of those things happened.

Stretching Hawes: Spencer Hawes wasn’t bad for the Bucks last season, but from a flexibility standpoint it’d be a clear boost if he opted out of the $6 million he’s owed next season. If he doesn’t, the Bucks could still reduce their cap number by $4 million in 17/18 by stretching his salary — the mechanism by which a player is waived and his remaining salary is stretched out over a longer period (two times the remaining years on his deal plus one, so for Hawes $6 millon divided by three). If the Bucks free up enough salary to have real cap space — which, again, will take more than just Monroe opting out — then you could see Hawes stretched in early July if they want to make a big free agency splash. Alternatively, if Monroe opts in and the Bucks re-sign Snell for eight figures, they could eventually stretch Hawes to give themselves more breathing room relative to the tax. The good news is that the tax is levied based on team salaries at the end of the year, so they wouldn’t have to do anything right away.

Hope for a cap bump: The NBA’s cap estimates have often been conservative, so it’s possible the $101 million cap estimate ends up being on the low side. Not what you’d want to pin your flexibility hopes on, but it’s not a set value at this point.

3. Giannis took a "hometown discount" last year when he signed to give Milwaukee additional flexibility. How much maneuverability will his lower contract actually provide them?

It’s not a complete game-changer from a cap flexibility perspective, but given how much money the Bucks have committed it does at least make some difference. Giannis will make $22.5 million this season, which based on a $101 million cap means he’s getting nearly $3 million under the max figure he could have gotten. Given they likely won’t have much functional cap space regardless, it’s tough to argue that the Giannis discount really provides much direct flexibility for signing high-profile free agents, though it would certainly provide breathing room relative to the tax if Monroe opts in and Snell re-signs.

Moreover, the precedent might be more important than anything — when it comes to eventually re-signing the likes of Middleton and Parker, having your best player at a lower cap figure could help make the case for a more modest number for those other guys as well.

4. Is offloading guys like Henson or Delly into someone else's cap space a reality? If so, how much does that open things up for Milwaukee?

I imagine it’s possible the Bucks could find a team willing to absorb one of their bench veterans for nothing, though I’d stop short of saying it’s easy. I’d also argue that Dellavedova and Teletovic in particular could be valuable (albeit not particularly cheap) rotation pieces, and even Henson could play a more prominent role next season if Monroe and Hawes depart. That said, you can’t pay $31 million to three guys who are roughly your 7-9 rotation guys and expect to have a bunch of freedom to sign another star.

Teams are in a difficult position in that the cap floor incentivizes them to spend their money on something, but last year’s cap spike was problematic in that it artificially inflated the market for players who just so happened to be available in a season when the cap rose by over 30%. Don’t expect backup bigs like Ian Mahinmi, Miles Plumlee, Timo Mozgov and Bismack Biyombo to easily claim $16-18 million per year deals in a world where there’s half as much cap space as last year — there may well be something of a correction this year, at least in terms of the number of guys who get stupid-looking deals. That will also have an effect on the trade market; the Bucks’ trio aren’t overpaid to the extent of some of the deals given out last summer, but they’re not bargains either, and with less cap space in general there simply aren’t as many landing spots for potentially salary dumps.

5. Frank, I just want a star. Cleveland spends oodles of money to keep their team together, why can't Milwaukee just do the same?

Keeping a team like the Bucks together is typically just a matter of will — and deep pockets. They could keep Greg Monroe, extend Jabari for the 18/19 season and then give Khris Middleton a big new deal in 2019, though it would likely take them into the tax and necessarily thin out the team’s bench. It would also squeeze their ability to ultimately give big new deals to Malcolm Brogdon (also 2019) and Thon Maker (2020), but in theory they can do all those things.

Ultimately I just don’t think Bucks ownership will want to pay the tax for a 40-something win team, and paying the tax isn’t just a financial decision any more. Teams over the tax have smaller mid-level exceptions and generally far less flexibility to make moves than teams under the tax, so any team close to the tax figure faces major incentives to avoid it.

6. Would there be any cap benefits to signing Jabari to an extension this fall?

The new CBA bumped up various type of cap holds including Jabari’s, so he’ll count for roughly $20 million against the Bucks’ cap next summer provided he doesn’t sign an extension. That’s very different from Giannis, who would have had a cap hold under $10 million this summer if he hadn’t been extended last fall. Not that I’m complaining, but the cap hold gaming option just doesn’t matter as much with Jabari.

What does matter with Jabari are the major questions about both his knee and how good he can actually be moving forward. While it’s possible the Bucks and Jabari could agree to a discounted extension this fall — to give Jabari security and potentially save the Bucks money compared to him potentially getting a max offer sheet in the summer of 2018 — I doubt it would be a massive discount. With Jabari’s max in 2018 projected to be around $114 million over four years, I’d be surprised if he settled for much less than $20 million per season; that would mean a significant savings relative to a max scenario, but it’s still a ton of money for a guy coming off a second ACL tear to the same knee and who hasn’t shown to have much of a clue defensively even when he has been healthy.

The Bucks should have a decent idea how Jabari’s rehab is progressing this fall by the time extension deadline hits in late October, but I’d still say it’s more likely they punt their decision until the summer of 2018. Not that things get much easier at that point -- he’ll have only had maybe a couple months back on the court at that point, and historically we know expectations will have to be tempered during that initial period. Will a random team with cap space take a chance by throwing him a max offer in restricted free agency? That’s the big question to me and certainly the scariest option for a Bucks team that might understandably have their doubts about Jabari as a championship cornerstone.