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Are the Pistons in luxury tax territory?

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Will Tom Gores be paying premiums for a deadweight loss?

NBA: Charlotte Hornets at Detroit Pistons Raj Mehta-USA TODAY Sports

*h/t to Crosseyed for the post idea in the FanPosts

There’s been plenty of concern lately from fans, both on this board and on Twitter, about the salary cap situation of this team. With the salary cap now projected to be at $99 million instead of the previously expected $102 million, that’s effectively eliminated any wiggle room the Pistons may have had, not that it was expected to be much.

Lazarus Jackson has something similar on this topic from before the draft, based on how this may affect the team’s plans, which you can find here. This, however, will purely be a financial examination, with no real analysis into the psyche of the team.

First off, as commissioner of the Ron Marshall Memorial Mock Draft, I’ve been forced to create an absolute f**kton lots of salary cap spreadsheets for the 30 teams in the NBA. So, here’s the sheet for the Detroit Pistons as they expect to enter the 2017-18 NBA season.

Ben Quagliata - Detroit Bad Boys

As things stand right now, with cap-holds included, as well as the dead cap hit for Josh Smith (shakes fist), projected salary for Luke Kennard and potentially unguaranteed deals, the Pistons have -$25 million in space.

There’s nothing you can do about Smith’s cap hit. It stays there until the apocalypse (2020). Sophomore Michael Gbinije has a $500 thousand guarantee if waived before July 15, while Hilliard is fully unguaranteed if waived before July 1.

CAP HOLDS

A player’s cap hold is basically the expected amount that the player if expected to re-sign for based on previous salary and nothing else. A cap hold is always an increase of the previous salary, so teams can compensate and project what they may pay players. The exception to this is guys coming off rookie scale contracts, as a lot of these guys will make far more than their hold. KCP is counting for just over $9 million right now, when he’s expected to sign a deal close to $20 million annually.

The key part of cap holds is, when a player has bird rights, you can go over the cap to re-sign them. This isn’t the case with Beno Udrih, who is a non-bird player having only been in Detroit for one season. You can clear these cap holds from your books to free up salary, but this is a risky measure for two reasons:

  1. For RFAs, it eliminates any rights you have to match an offer sheet, making them unrestricted.
  2. Once a cap hold is renounced, you have to stay under the cap to sign them, as you lose bird rights.

I wouldn’t expect the Pistons to renounce any of their holds until the player is effectively signed to another team (in the case of KCP, they won’t do anything to him until all other business is taken care of, a la Drummond last year).

EXCEPTIONS

Floating around in salary cap Valhalla are numerous exceptions and back doors that teams can use to sign players, even if they are in salary cap purgatory. For the Pistons, they possess two such instruments this offseason:

  1. Non-Taxpayer Mid-Level Exception = $8,406,000. If a team is over the salary cap at the start of free agency, but not in tax territory, they are allotted this exception, which is measured as the average salary in the league.
  2. Bi-Annual Exception = $3,290,000.

These exceptions are able to be split and given to multiple players, think of them as kind of a pool of funds (for example, you can sign one player to $5.406 million per season and another player for $3 million, both under the Non-Taxpayer MLE). As long as the totals of the players signed under the exceptions doesn’t exceed the exception, they’re valid, regardless of cap situation.

There are a couple of rules regarding these exceptions. The Non-Taxpayer MLE is able to be used every year if eligible, and it can be used to sign a player for up to five years. On the other hand, the Bi-Annual Exception can only be used to sign a player for two years maximum and, as the name suggests, can only be used every second year. For example, if the Pistons sign someone to the BAE (lol) this season, they cannot use it next season.

LUXURY TAX

This is the portion that is probably most concerning to Pistons fans right now, as people are worried that we’ll become a taxpaying team perpetually mired in mediocrity. Due to the cap projection being lower, the luxury tax level has been set (reported, anyway) at $119 million, down from the $121 million figure expected with the $102 million cap. Not a huge jump, but it can be enough to effect things.

Doing some quick maths, the Pistons have a little over $124 million committed now including everything listed above on the spreadsheet. We can assume that Baynes, Bullock, and Udrih are donezo in Detroit and their cap holds will eventually be wiped, freeing up approximately $15.5 million in room, dropping the total to $108.5 million.

Lets assume the difference in salary between KCP’s cap hit and contract extension is about $11 million ($9 million cap hit to $20 million salary). This raises the total back up to $119.5 million, tax territory.

Remember, this is before we’ve used any exceptions to sign free agents. Now, exceptions can obviously be used regardless of cap situation, but they also contribute to the cap figures (duh), so full use of both available exceptions would push the Pistons close to the $130 million threshold.

I’m not going to bother jumping through the hoops for Hilliard and Gbinije because cutting them would save minimal money, approximately $2 million combined, and roster spots do need to be filled.

The positive is that, despite projecting (by my estimations anyway), as a tax team now, the Pistons have the whole season to get under the tax apron before they are charged for it. As long as the payroll is under the magical $119 million figure by season’s end, the Pistons’ (and Tom Gores’) wallet will be fine (as much as spending $119 million is fine).

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Tl;dr

DAMN YOU JOSH SMITH

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All salary info is from Spotrac and Larry Coon’s CBA FAQ.