A source with knowledge of the Nets' dealings told SI.com that Bosnian forward Mirza Teletovic is now likely to sign with Brooklyn for the team's mini midlevel exception (three years, combined $9 million max) rather than full midlevel exception (four years, combined $20 million max) as originally reported. It's a key distinction in any possible dealings with Howard, as it previously appeared that Brooklyn lacked the necessary salary cap flexibility to pull off a deal for the six-time All-Star and three-time Defensive Player of the Year.
The source said Teletovic's agreement to the mini mid-level would "probably" get done, and that the agreement -- which can't be signed until the free agency moratorium ends on July 11 -- was being finalized on Wednesday afternoon. Signing Teletovic to the mini midlevel exception is a borderline necessity for any realistic Howard trade, and for the Nets' general flexibility.
The new collective bargaining agreement contains several rules designed to discourage spending at the high end. One such rule creates a hard cap -- placed $4 million above the luxury tax threshold -- for any team that uses the full midlevel exception, valued at about $5 million per season, to sign a free agent. The tax will be set again at just over $70 million this season, meaning that hard cap would come into play at the $74.3 million mark.
If the Nets sign Teletovic as a free agent, they would have between $50 million and $51 million committed to just four players -- Teletovic, Joe Johnson (acquired from Atlanta on Monday), Deron Williams (who agreed to a five-year, $98 deal on Tuesday) and Gerald Wallace -- with the exact figure depending on the precise value of Wallace's salary. Adding Howard's $19.5 million salary would take Brooklyn to about $70.5 million, not including MarShon Brooks, Reggie Evans or charges for empty roster spots. The only way to fill the remaining seven spots without exceeding the $74.3 million hard cap would be to sign seven players at the rookie minimum -- an option that is simply not workable.
In theory, the Nets could send one of these high-salaried players to make room for Howard, but the chances of Orlando accepting a $40 million player are basically nil. A third team would to have to enter the equation, which is why all reported versions of an Orlando-Brooklyn trade involve Brook Lopez and Kris Humphries, players whom the Nets could sign-and-trade to friendlier contracts.
Signing Teletovic to the mini mid-level changes the game. That hard cap set $4 million above the cap only comes into play if a team uses the full midlevel. A team can use the mini midlevel and spend as much as it likes, provided that the owner is willing to pay steep luxury tax penalties. Signing Teletovic at this level, in other words, reopens the possibility of a Brooklyn-Orlando deal centered around Lopez, Humphries, Brooks and future first-round picks.