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Sports Breaking down the Raptors’ off-season salary cap outlook

17:57  17 may  2018
17:57  17 may  2018 Source:   sportsnet.ca

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Heading into next season the Raptors are in a strained spot when it comes to their salary cap situation, making this a particularly challenging off - season for Ujiri and Co. As you can see from the table above, the cap is estimated to be increasing by about two per cent from this current season.

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  Breaking down the Raptors’ off-season salary cap outlook © Aaron Vincent Elkaim/CP

With the dismissal of longtime coach Dwane Casey after another second-round sweep at the hands of the Cleveland Cavaliers, off-season business is in full swing for the Toronto Raptors.

At the moment, the most important matter team president Masai Ujiri and general manager Bobby Webster have on their plate is searching for Casey’s replacement, but that doesn’t mean they won’t be thinking about how to potentially upgrade the team’s personnel, either.

On the matter of roster improvement, it’s not as easy to do as hiring a new coach. Heading into next season the Raptors are in a strained spot when it comes to their salary cap situation, making this a particularly challenging off-season for Ujiri and Co.

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The Raptors are currently over the league salary cap . This means Cap Holds & Exceptions are NOT included in their Total Cap Allocations, and renouncing these figures will not afford them any cap space. The team may only sign outside players using any available exceptions or at league minimum salaries .

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Here’s a closer look at Toronto’s 2018-19 cap situation and why the Raptors are likely looking at a summer of tough decisions.

NOTE: All salary cap figures are via Spotrac, while collective bargaining agreement details are sourced from Larry Coon’s CBA FAQ.

What will the salary cap be next season?

Before looking at the Raptors, specifically, it’s important to know just what the cap and luxury tax threshold will be next season for the rest of the league as it will help us to better frame Toronto’s outlook.

2017-18 2018-19 (estimated)
$99,093,000 Salary Cap$101,000,000
$119,266,000 Luxury Tax$123,000,000
$125,266,000 Luxury Tax Apron$129,060,000

As you can see from the table above, the cap is estimated to be increasing by about two per cent from this current season. It’s also important to take note of the luxury tax and tax apron figures as well because understanding what those limits are will help to better clarify Toronto’s situation.

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In the years since, the cap has spiked dramatically, the league and union have introduced a new CBA. The Raptors have moved to operating as an above- cap and, this year, a likely above-tax team, all of which introduce new complications and wrinkles.

The apron is of particular interest to the Raptors because the team will likely be paying the luxury tax next season (more on this in the next section) and could exceed it, meaning it’ll be under additional restrictions when it comes to certain exceptions and transactions such as sign-and-trade deals.

Raptors outlook for next season

Here’s a summary of the Raptors’ cap outlook for next season:

PlayerCap Figure
Kyle Lowry$31,000,000
DeMar DeRozan$27,739,975
Serge Ibaka$21,666,667
Jonas Valanciunas$16,539,326
Norman Powell$9,367,200
C.J. Miles$8,333,333
Jakob Poeltl$2,947,320
Delon Wright$2,536,898
OG Anunoby$1,952,760
Malachi Richardson$1,569,360
Pascal Siakam$1,544,951
Alfonzo McKinnie$1,378,242 (non-guaranteed)
Justin Hamilton$1,000,000 (dead cap)
Total: $127,576,032

Immediately what should jump out to you when looking at this table – maybe outside of the eye-popping salaries of Kyle Lowry, DeMar DeRozan, Serge Ibaka and Norman Powell – should be the total figure of $127 million.

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Remember that estimated tax apron figure for the coming season? Well, as it currently stands, the Raptors are just about $2 million out of hitting it and would be looking at a luxury tax bill of about $7.1 million with the real kicker being the fact they only have 12 players on the roster for next season (Justin Hamilton doesn’t take up a roster spot as he was waived, but his “dead” money still counts against the cap), and need a minimum of 14.

Not what we’d call an ideal scenario, particularly because the Raptors will also have to deal with three free agents in the summer, one of whom is of exacting interest.

Free agents

The three Raptors who can become free agents on July 1 are Lorenzo Brown, Lucas Nogueira and Fred VanVleet.

Brown and Nogueira’s situations are pretty straightforward. Brown is an unrestricted free agent, while Nogueira is a restricted free agent.

Despite his status as the G League MVP, Brown isn’t much of an impact player so bringing him back on a minimum contract or renouncing him are both equally viable scenarios.

Bebe, on the other hand, will command a qualifying offer worth approximately $4.1 million. What this means, essentially, is that in order for the “restricted” part of Nogueira’s free agency to kick in Toronto would have to first make that offer to him by June 29 and would then hold the right to match any offers that would potentially come his way.

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Smith is coming off a bad season that did nothing for his free agent value, especially in light of all the big money disasters of the 2012 wide receiver free Pitta has a .2 million cap hit in 2015, which will be the cap charge even if designated a June 1 cut because of the million in guaranteed salary .

The risk with this is the fact that $4.1 million seems like a lot for a player like Nogueira and sending him the offer sheet means no guarantee other teams will be clamouring for him at that price. The safest bet for the Raptors here would be to just renounce him and, if they want to keep him, potentially lock him up on a much more affordable deal.

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And then there’s VanVleet.

Potentially the toughest call that Ujiri and Webster will have to make this off-season is on what to do with the sixth man of the year finalist.

Because he’s a restricted free agent and the Raptors own his Early Bird Rights, VanVleet is in a territory known as the “Gilbert Arenas Provision,” meaning any deal offered for him above the Mid-Level Exception (estimated to be worth about $8.6 million) would be limited to the value of the Mid-Level Exception in the first two seasons of the deal and then can rise afterwards.

So, for example, if VanVleet is offered something in the range of a four-year, $40-million contract from a team, the first two seasons of that contract would likely see him paid $8.6 million the first year and somewhere in the range of $9 million the year after, and $11 million per year for the last two years.

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VanVleet has a qualifying offer valued at about $2.9 million. Given the breakout season he just had it’s highly unlikely he’ll be without suitors outside of Toronto. Additionally, because of his unique free agent status and the way his salary and cap figures can work out in the short term teams without a lot of money on the books a few years from now could really out-price Toronto.

And even if the Raptors are adamant on keeping VanVleet in house, they’ll be paying a very hefty luxury tax bill because of it, or, if they use their Mid-Level Exception to sign him, will have to find a way to shed enough salary to remain under the tax apron.

It’s looking unlikely that the Raptors will be able to retain VanVleet.

Mid-Level Exception could be big

So, if retaining free agents — particularly key ones like VanVleet — is not looking all that possible, how else can the Raptors improve?

There aren’t a ton of options out there, but there are a few. One being making use of the Mid-Level Exception.

The main reason why the Raptors really want to find a way to stay underneath the apron is because there are a few types of Mid-Level Exceptions, and the non-tax payer Mid-Level Exception provides more flexibility than the tax payer Mid-Level Exception.

The non-tax payer Mid-Level Exception is available only to teams below the apron and is the one the Raptors would want to have access to as it’s worth about $8.6 million. The tax payer Mid-Level Exception, on the other hand is available to teams above the apron, but is only worth about $5.3 million.

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One thing important to note: if a team is using its non-tax payer Mid-Level Exception, the salary it’s taking on must still keep the team underneath the apron as using it will hard cap the team that season to the apron’s value.

Making use of the Mid-Level Exception won’t exactly bring to Toronto an all-world player, but it’s possible to find quality role players using that pool of money like C.J. Miles, whom the Raptors used the Mid-Level Exception to sign last off-season.

Means to a trade

But, if the Raptors want that big impact player, their only realistic avenue at the moment looks like a trade and they do have a couple assets that can help them facilitate one or two.

Outside of their own personnel and any potential trade value someone like a DeRozan or a Valanciunas has, the Raptors have a couple of Traded Player Exceptions that are actually worth a fair bit.

A Traded Player Exception, or just trade exception, is a mechanism that can allow teams over the cap to complete trades as the money from a trade exception can be used to help match salaries and make a deal work.

In Toronto’s case, they hold trade exceptions worth $11.8 million from the DeMarre Carroll deal with the Brooklyn Nets and $7.6 million from the Cory Joseph-Miles sign-and-trade with the Indiana Pacers last summer. They also have a third one worth $2.4 million, but that isn’t as important as the Carroll and Joseph ones because those two will expire on July 13 and 14, respectively, while the Caboclo one will remain valid until February next year.

It’s important to note that trade exceptions can’t be combined to help facilitate a single trade, so if Toronto really is looking to use both exceptions before they expire it’ll have to do two separate transactions.

The $11.8 million from the Carroll exception could really prove useful for the Raptors if they are looking into the trade market. It just might hold the key to any sort of meaningful roster change this summer.

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