Today, there is a 13-year-old middle schooler working on his handle and practicing his jumper. Eventually, he'll be a superstar. When his name gets called first overall on draft night in 2020 the Detroit Pistons will still be paying Josh Smith not to play for them.
That is just one impact of today's stunning decision by the Pistons to use the stretch provision to waive their high-priced power forward. Smith is owed $8.9 million for the rest of the season and $13.5 million in each of the next two seasons. Because the Pistons used the stretch provision, the Pistons are responsible for paying Smith $5.4 million a year for the next five seasons. Assuming Smith clears waivers and is signed for the minimum by another club, the Pistons could get around $400,000 in salary relief.
That $5.1 million counts against the cap each season. Essentially, the Pistons are paying the equivalent of the full mid-level exception to Josh Smith so that he will not suit up for their club. Ouch.
Leaving aside what this deal means from a chemistry or Xs-and-Os standpoint, the financial upside of this deal is twofold. One, the move opens up additional cap space. Two, the salary cap will explode and this will go from a pox on the organization to a minor blemish.
Most important from the organization's perspective is the impact on the salary cap. The team has only $32,288,922 in salary commitments next season assuming the team does not exercise its option on Caron Butler. Whether big man Greg Monroe returns is an open question, but the team is now poised to have around $34,000,000 in cap space, trailing only the Philadelphia 76ers in available money to spend. Specifically, the Pistons will have $34,211,078. The Spurs and Blazers will technically have slightly more money available but it will be largely tied up in cap holds on their own free agents.
The cap is expected to be around $66 million next year and in the following year it could skyrocket up past the $90 million range with the league's new TV deal coming into effect. That means that while the Pistons will be saddled with a $5.1-5.4 million penalty for an alarming five years, it will go from representing eight percent of the cap to six percent and decrease from there.
We'll call that the idiot GM tax.