There is lots of speculation in the press about JR Smith’s future with the Knicks. I have zero inside information, but I know how the salary cap works, and how it works with respect to Smith in particular.
JR Smith was paid $2.8 million this season, and holds a $2.93 million player option for next season. If he exercises it (which is highly unlikely), he would be a free agent next season and the Knicks would hold Full Bird rights, which would allow them to offer up to the maximum salary.
If JR Smith opts out:
Knicks hold Early Bird rights. Under Early Bird rights, the Knicks can exceed the salary cap to offer up to 104.5% of the League Average (which is basically the mid-level exception) for the first year (about $5.3 million) with potential raises of 4.5% per year for up to 4 years. The catch: the the contract must be for a minimum of two years. The New York Post story is speculating that JR Smith will take a four-year Early Bird Deal. The Knicks could give JR Smith an option on year 4 of the deal, so that he would only be locked in for three years.
Knicks also hold non-Bird rights on JR. Using those, the Knicks could offer JR up to a 20% raise on $2.8 million, meaning they could offer him $3.36 million for next season. They could also offer Smith an option on year two of the contract at a 4.5% raise ($3.51 million). That $3.51 million would essentially be an insurance policy on JR blowing up or blowing out his knee. If JR signed this deal, he could get a full Bird contract after next season.
Competing bids from other teams. Other teams can offer JR Smith up to the league maximum (not saying they will or should — just a possibility). Since JR Smith has nine years of service under his belt, his maximum salary for year one is roughly $16.4 million (new numbers will come out over the summer). Additionally, a new team could offer annual 4.5% raises. Minimum length of the contract is one year, but the team must have the salary cap space to fit JR.
If JR Smith signs the non-Bird Knick Contract:
If JR Smith signs the non-Bird Knick contract ($3.36 million plus $3.51 million player option on year two), the Knicks would hold Full Bird Rights on JR Smith after next season. Because he would be a 10 year veteran, the Knicks could sign him to a contract starting at $19.1 million (numbers will change slightly because of revenues). The maximum length of the contract would be 4 years, with a maximum 4.5% raise each year.
If JR Smith signs for four years at the Early Bird price, he would receive a $2 million raise this year and forego the possibility of cashing in for up to 5x his current salary starting in 2014-15. I would be shocked if he took that deal, but if we’ve all learned anything, it’s that Smith is one of the most unpredictable players in the league. If he rolls the dice by signing the non-Bird Knick deal, he could cash in huge starting in 2014-15. And if there is a competing bidder, they could make JR Smith an offer this year that the Knicks could not match.
I have no idea what he will do. If you do, you either (1) work for CAA, (2) are related by blood to JR Smith, or (3) are fooling yourself.