I did one of these last week but then the Knicks traded everyone, so now let’s take a new look at the Knicks’ cap situation heading into free agency at midnight, July 1st. Enjoy!
Teams are technically not allowed to sign deals until July 7th, but can negotiate and basically agree to deals starting July 1st (teams are allowed to agree in principle with their own free agents before then). The reason for this moratorium is because the league isn’t actually sure about the salary cap figures until July 7th, as they perform an audit during the week (why they can’t do the audit right now is beyond me). Teams can sign their own draft picks in the moratorium period, plus players can be signed to minimum contracts (plus players can accept qualifying offers). These deals rarely take place during the moratorium, but they are possible. In any event, this is a long way of telling you all that we don’t actually know for absolute certainty what the cap will be. We will know for sure on July 7th. That said, the league gives the teams an idea of what they think the cap will be, and it tends to be pretty darn accurate, so let’s go with the figure that the league told teams recently – $94 million.
The maximum initial salary that a free agent can sign for is based on how many years of service they have in the league, 1-6 years, 7-9 years and 10 years plus. They are 25% of the cap, 30% of the cap and 35% of the cap, respectively. Oddly enough, though, the league uses different math to figure out these percentages, so they tend to be less than actual percentages of the cap.
Players with 1-6 years experience can sign an initial contract of $22.2 million
Players with 7-9 years experience can sign an initial contract of $26.6 million
Players with 10 years plus experience can sign an initial contract of $31 million.
Okay, with that out of the way, where do the Knicks currently stand?
The Knicks currently have six players under guaranteed contracts for next season:
Carmelo Anthony – $24,559,380
Derrick Rose – $21,323,252
Kristaps Porzingis – $4,317,720
Kyle O’Quinn – $3,918,750
Justin Holiday – $1,015,696
Marshall Plumlee – $543,471
They also have Ron Baker on a non-guaranteed contract worth $532,471. There’s not an absolute certainty that the Knicks will keep Baker on the roster, but since they just signed him, it appears likely.
The Knicks apparently are close to signing Willy Hernangomez to a 4-year/$4.5 million contract, so that $1.1 million would come out of the cap space, as well. I figure we should probably add him, right?
The Knicks have a bunch of free agents on their team, but most of them will be renounced, so they do not matter. Two of them, however, are unlikely to be renounced. Therefore, we have to deal with their cap holds.
Langston Galloway is a restricted free agent. His cap hold is his qualifying offer, which is $2,725,003. It is higher than a typical qualifying offer for a player like Galloway because the Knicks allowed him to play enough minutes to qualify for an increased qualifying offer given to players who are major parts of a team rotation.
Lance Thomas is an unrestricted free agent. His cap hold is based on his current salary. It is 130% of what he made last year. So his cap hold is $2,127,895.
The Knicks might still re-sign some of their other free agents like Sasha Vujacic, but since Vujacic will likely not make more than the league minimum (and thus, the Knicks can exceed the cap to re-sign him), they will still likely renounce him.
So the six guaranteed contracts, the one non-guaranteed contract, Willy Hernangomez plus the two cap holds gives us ten players and a total of: $62,174,638.
However, you also need to take into account the fact that the Knicks have to have cap holds for their remaining two roster spots (each team has to have a minimum of twelve roster spots. The Knicks can, and will, add three players later on to get to fifteen spots, but that’s not going to matter for this exercise, so ignore that). Each cap hold is the minimum, so $543,471 per slot. Two spots, so it would be $1,086,942. However, for every free agent you sign, you fill in one of those slots. So for the purposes of this exercise, let’s assume Phil Jackson signs two free agents, so we don’t have to factor in anything extra for cap holds (basically, Plumlee and Baker took the places of the cap holds that the Knicks were going to have to take into account no matter what, so Jackson figured that they might as well sign actual players if the Knicks were going to be stuck with those cap holds anyways). So it would remain $62,174,638.
Okay, so working under the presumption that the Knicks will sign two free agents, the Knicks would have: $31,825,362 in cap room to spend on two free agents.
If they wanted to sign three free agents, they would still have the same amount of money available, as they don’t have to concern themselves with cap holds beyond that.
As noted, free agents with 7-9 years of experience, like Nicolas Batum, have starting salaries beginning at $26.6 million. So if the Knicks were to sign Batum, they would have $5,225,362 to spend on another free agent. As you might have noticed, that is not a lot of money.
The Knicks could free up another $3,918,750 by trading Kyle O’Quinn for nothing. Then you would have to deduct $543,471 from that freed up salary (so basically $3.3 million), though, as that would be another open roster spot that you’d need to get a cap hold for.
If you got rid of O’Quinn for no return, you’d have roughly $8.8 million to spend on the second free agent (but no back-up power forward).
On top of all that other salary, the Knicks would also have their “room” exception, which becomes available to teams that are under the salary cap but then spend enough to get to the cap. The league allows them to go over the cap via a “room” exception of $2.898 million, that they can spend on anyone they want (they can split up if they’d like). The Knicks spent it on Kevin Seraphim last year. They used it on J.R. Smith years ago, as well.
Back to Galloway and Thomas. Okay, let’s presume that the Knicks have now used up all of their $31,825,362 on two free agents. They now can go over the cap to re-sign Galloway and Thomas. In the case of Galloway, they can give him a contract equal to the average salary, which I have no idea what it will precisely be this year. Let’s say it’s $5.8 million (it should be around there). So the Knicks can sign him up until that amount without using their other cap space. However, since he is a special kind of restricted free agent (a free agent following his second year in the league), no other team can sign him to a contract for MORE than $5.8 million in the first year of the deal. However, teams can backload contracts to them, just like the Omer Asik and Jeremy Lin “poison pill” contracts, so teams can offer Galloway up to $22.2 million a year for up to four years (they won’t, but bear with me here) and the contract would work like this:
Year 1: $5.8 million
Year 2: $5.8 million
Year 3: $38.6 million
Year 4: $38.6 million
Obviously, reduce those later two years based on how much he’s offered (if he’s offered $7 million a year for four years, it’d be $5.8 million, $5.8 million, $8.2 million and $8.2 million – that same deal over three years would be $5.8 million, $5.8 million, $9.4 million). But it shows how quickly the numbers can get nuts on the back end.
As for Lance Thomas, the Knicks are allowed to exceed the cap to give him a contract of roughly $5.8 million (the average salary – I don’t know precisely what that will be yet). If someone else offers more than that, well, the Knicks might be out of luck. Hopefully Thomas will repay the Knicks’ loyalty for giving him a guaranteed contract with a raise just because they liked him. And then if he signs a two-year deal for $12.6 million, he can have the second year be a player option and then he would have full Bird Rights next year, and the Knicks could re-sign him to a larger deal. Or maybe no one will offer him more than $5.8 million and we’re worrying for no reason.
If the Knicks were to sign, say, Joakim Noah for $18 million, then they would have $13,825,362 to offer a second free agent (or they could split that same money between two other free agents, like $5 million for one guy and $8.8 million for the other guy).
Okay, to recap, the Knicks currently have roughly $31,825,362 million to spend on two or more free agents, plus an extra roughly $3 million to spend on a single free agent (or two, but at that money, it’s tough to see you getting two guys for that little cash). It’s not going to be easy to add big time talent to this team, but it CAN be done!
NOTE: If Hernangomez doesn’t sign, then that’s another $556,529 to spend (his salary less his cap hold). So not really much of a difference.