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The Philadelphia 76ers, the Salary Floor and Trade Rumors

Jan 11, 2014; Philadelphia, PA, USA; Philadelphia 76ers point guard Michael Carter-Williams (1) drives to the net as New York Knicks power forward Amar’e Stoudemire defends.

Now that the long-awaited Kevin Love trade has gone down, the Philadelphia 76ers could be more than $20 million under the salary floor heading into the 2014-15 season.

As a refresher: Under the terms of the latest collective bargaining agreement, teams must meet a minimum payroll equivalent to 90 percent of the salary cap. With the cap set at $63,065,000 this coming season, a team’s payroll must exceed $56,758,500 by the start of the its final regular-season game.

If a team fails to reach that threshold, the NBA lays down its hammer of justice upon them. In other words, the team must distribute the shortfall among its players in a way determined by the players’ association. (Oh, the horror.)

After their part in the K-Love deal,  the Sixers’ payroll is set at roughly $39.5 million assuming they pick up all of their contract options . That figure puts them about $17.25 million shy of the floor per Basketball Insiders’ latest salary cap table. At the moment, Philadelphia only has approximately $24.8 million of guaranteed salaries, which could leave them upwards of $31.95 million below the floor if they allow all of those non-guaranteed players to walk. (That figure does not include full rookie salaries, however, so their payroll will certainly be higher come opening night.)

The massive disparity between Philly’s payroll and the salary floor—even if the squad picks up every non-guaranteed contract—explains why you will be hearing general manager Sam Hinkie’s name a lot in trade rumors over the coming months.

For instance: On Tuesday, the Sixers traded a top-55-protected second-round pick to the Oklahoma City Thunder in exchange for center Hasheem Thabeet, who they are expected to waive before his $1.25 million contract becomes guaranteed on September 1. Because his contract is not guaranteed, Thabeet will not count toward the minimum team salary unless the Sixers keep him around past Sept. 1.

It does not sound as though Philly will retain Thabeet’s rights simply for the sake of moving closer to the floor, however. In a conference call Tuesday, Hinkie revealed that meeting the salary floor “is not something that is a concern” at the moment. “As for cap planning, we have lots of flexibility this summer, which enables us to be in some conversations and have some opportunities,” he said.

The Sixers will almost assuredly use their copious amount of cap space to absorb a salary dump at some point over the next six months similar to what the Utah Jazz did with the Golden State Warriors last summer. Hinkie, the consummate asset collector, recognizes that he will be in a position of power at the trade deadline, when playoff hopefuls in tight cap situations need a release valve for some of their undesirable contracts.

Basketball Insiders’ Steve Kyler recently speculated that the “long-rumored Amar’e Stoudemire to Philadelphia deal gets done at the [trade] deadline.” If the Sixers are able to extract a young, talented prospect like Iman Shumpert, Tim Hardaway Jr., Cleanthony Early or Shane Larkin in exchange for taking on two months of Stoudemire’s deal—likely meeting the floor in the process—you likely would not hear Philadelphia fans complain. (That said, New York owes their 2016 first-round pick to Toronto, which means the Knicks cannot trade their 2015 or 2017 first-rounders due to the Stepien Rule, possibly making a trade less appealing on Philly’s end.)

Keep the details of the salary floor in mind as you hear the Sixers floated in trade rumors. If Hinkie’s response to reporters Tuesday is any indication, he will not get backed into a negative deal simply for the sake of hitting the floor.

After all, the worst-case scenario is simply distributing the shortfall among the players on the roster. And given the suffering these players are likely to endure this season, awarding them a bonus might be a best-case scenario for the Sixers.

Bryan Toporek

Bryan Toporek is just talkin' about practice. He writes about the NBA for Mid-Level Exceptional, BBALLBREAKDOWN, Bleacher Report, Hoop365 and Hoop76 of the ESPN TrueHoop Network.

3 Comments

  1. I really don’t see the need for the Knicks to ship out Amare, yea it would be great for the Sixers but how does this help the Knicks?

    Phil Jackson is not gonna trade away any young talent just to rid themselves of Amare when his contract is up at seasons end.

  2. Brian,

    You’re missing the details. The Sixers will be about $24MM under the floor after accounting for their guaranteed contracts, Joel Embiid getting whatever Otto Porter is being paid this year, and minimum contracts to fill out the roster to 15. Sixers’ ownership has to pay out to the salary floor … or at least the Sixers have to account for salaries up to the salary floor.

    The gap between the Sixers’ payroll and the salary floor comes close to matching Amare’s salary. The trade deadline occurs about 2/3 of the way through the season; if the Sixers acquire Amare’ he would count $24MM towards the salary floor for accounting purposes, but he would only be owed $8MM in actual money. That is a $16MM savings for the Sixers’ ownership. But it gets better … since he would likely accept a buyout on his contract the Sixers wouldn’t even have to pay the full $8MM. So the Sixers have at least 16 million reasons to make a “bad” deal.

    Trading Amare’ also, as best as I can tell, would take the Knicks out of the luxury tax. That saves the Knicks’ owners anywhere from $25 MM to $50 MM depending on their repeater status. Removing that amount of money from the luxury-tax pool would have a noticeable impact on the checks that most of the other teams in the league receive.

    The likelihood of this deal happening is closely linked to whether the league persists in wanting to change the lottery rules for this upcoming season. It provides a tangible opportunity for Sam Hinkie to flip the bird to every other team in the league (saving his owners $16-20 MM and costing everyone else $2MM+).

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