The 2013 NBA free-agent class is stocked with top talents including All-Star point guard Chris Paul and stat-sheet-stuffing gadget forward Josh Smith, and Dwight Howard's decision to forgo free agency until that summer--the Orlando Magic center waived his Early Termination Option on Thursday, eliminating his ability to become a free agent in 2012--has given Magic fans hope the team will be able to re-sign Howard and add another top-shelf player via free agency.
But a glance at the team's future salary commitments, as listed at ShamSports' NBA salary database, paints a less rosy picture; Orlando likely won't have the cap space necessary to sign Howard and another player to maximum-level contracts unless it guts its roster.
Orlando's on the hook for $30.9 million in salary for the 2013/14 season for five players: power forward Glen Davis, point guard Chris Duhon, swingman Jason Richardson, swingman Quentin Richardson, and small forward Hedo Turkoglu.
But the Magic will certainly have other salary commitments for 2013/14, including whatever contract they sign starting power forward Ryan Anderson to when the four-year veteran becomes a restricted free agent on July 1st, 2012. Anderson, who won't turn 24 until May, is averaging 16.1 points and 7.8 rebounds and has become the Magic's second-best player behind Howard. The premium league general managers place on young big-men who can rebound and space the floor--Anderson leads the league with 121 three-pointers made this season--strongly suggests he'll command a salary in the high seven-figures, perhaps $9 million.
Throw in salaries for the Magic's 2012 and 2013 first-round draft picks--likely around $2 million each--and Orlando's commitments balloon to $43.9 million for Anderson, Davis, Duhon, the Richardsons, Turkoglu, and their next two first-rounders. In addition, the Magic will be charged a cap hold equal to the league's minimum salary for each open roster spot below 12 players they have; it's not an actual fine they'll have to pay the league, but each empty spot has a dollar value that counts against the cap until it's filled. The cap hold, per roster spot, should be approximately $480,000. Multiply that number by four roster spots to reach $1.92 million, which boosts their cap figure to $45.8 million. Assuming a salary cap of $58 million, they'd have $12.2 million to offer a free agent. That's solid, but won't get them Paul, Smith, or even Ellis.
Fortunately for the Magic, they have some ways to dispose of salary. Here's a tentative plan the Magic can follow to clear as much cap space as possible:
Waive Chris Duhon and Hedo Turkoglu
The salary figures I presented above assumed the Magic would retain Duhon and Turkoglu for the 2013/14 season; they're under no obligation to do so, however. Only $1.5 million of Duhon's $3.5 million salary for that season is guaranteed, meaning the Magic can waive him on or before June 30th, 2012 and only owe him $1.5 million, lopping an even $2 million off their cap. Similarly, only half of Turkoglu's $12 million is guaranteed, so the team can cut him loose for an additional $6 million in savings.
To be clear, the Magic would still owe both men that money, and it'd count against the cap. But if Orlando is serious about clearing the books as much as possible, that's a reasonable step for it to take. Savings: $8 million
Trade Quentin Richardson
Richardson isn't terribly productive now, having posted single-digit Player Efficiency Ratings in each of his two seasons with the Magic, but he's still a useful player due to his locker-room presence, willingness to play defense, and ability to rebound well from the wing positions. But there's no telling how much more his game will drop off over the next year, and he's not a great value even at $2.8 million.
But Richardson's deal will expire following the 2013/14 season, and Orlando might be able to entice a team under the cap to absorb him into its space, provided it sweetens the deal with a future draft choice and/or cash. To ensure they won't add to their cap figure, the Magic could deal Richardson in a pure salary-dump--that is, in a trade for a future draft pick with top-55 protection, which is the least any team can get in return in a trade under the league's rules. Savings: $2.8 million
Use the stretch provision Glen Davis
Another tool at Orlando's disposal is the stretch provision in the new Collective Bargaining Agreement. Under this one-time-only clause, the Magic can waive a player signed under the terms of the new CBA and lower their annual cap hit in exchange for keeping that player's salary on the books for double the length remaining on the player's contract, plus one additional year.
For the purposes of this post, let's assume the Magic cut their losses with the woefully unproductive Glen Davis, who'd be owed an even $13 million over the final two seasons of his deal, which he initially signed in December 2011. Stretching the former Louisiana State Tiger would lower his 2013/14 cap number from $6.4 million to $2.6 million. Savings: $3.8 million
Orlando would realize $14.6 million in cap savings if they made the above-outlined moves. Again, assuming a $9 million salary for Anderson and $2 million each for their two draft picks, their cap figure entering free agency would be $31.2 million entering free agency.
The maximum salary for which a free agent can sign is 105 percent of his previous salary, which means Howard would be eligible for a $20.5 million salary in the first season of a new contract. Is there a possibility the Magic could pair him with another high-level talent? Perhaps. Paul and Smith headline the class, which could also include Monta Ellis and Andre Iguodala if the pair exercise their Early Termination Options.
And if Orlando strikes out on any of the above players, it could try signing a restricted free agent to an offer sheet; notable restricted free agents in the 2013 class include point guards Darren Collison, Stephen Curry, Brandon Jennings, Ty Lawson, Jeff Teague, and Eric Maynor; and shooting guards Tyreke Evans and James Harden. Note that it's possible those players' respective teams could sign them to extensions before they hit unrestricted free agency.
But let's not get too far ahead of ourselves: to even begin dreaming of re-signing Howard and pairing him with another superstar, the Magic must first clear salary-cap space, either by using some of the suggestions outlined above or by some other means. There's a chance, however, and if Orlando makes the most of that chance, it could set itself up quite nicely for the future once July 1st, 2013 rolls around.