How the Pacers Can Create Enough Room for the Full Mid-Level Exception

Free Agency is not too far away and there are several avenues the Pacers can take to better improve their current roster.

We have heard from the front office that they have a contingency plan after losing their pick in the 2026 NBA Draft Lottery, but there is no indication of what said plan might be.

Current State of the Salary

As of right now, the Indiana Pacers currently sit $278,776 over the luxury tax according to CapSheets.com. This means that the Pacers are only able to offer a free agent the taxpayer mid-level exception, which is equivalent to $6,066,000 for this upcoming season.

However, since the amount of money over the tax the Pacers are at is significantly low, they can easily find ways to clear space and receive access to the non-taxpayer mid-level exception.

Non-Taxpayer Mid-Level Exception

For teams who are under the luxury tax, the non-taxpayer mid-level exception is $15,049,000 this season. However, there is a very important rule here for using the full non-taxpayer mid-level exception: teams are not allowed to go into the first apron when using this exception.

If we look at the Pacers roster, Micah Potter is on a non-guaranteed contract for $2,801,346. If the Pacers decided to waive him and free up that extra money on the books, that would put them below the luxury tax at $197,951,430. However, the First Apron begins at $209,063,000M. This means the Pacers would only have $11,111,569 available to spend of their non-taxpayer mid-level exception.

Apr 7, 2026; Indianapolis, Indiana, USA; Indiana Pacers guard Kam Jones (7) dribbles the ball while Minnesota Timberwolves guard Ayo Dosunmu (13) defends in the second half at Gainbridge Fieldhouse. Mandatory Credit: Trevor Ruszkowski-Imagn Images | Trevor Ruszkowski-Imagn Images

The Pacers would need to shed roughly $4M more to create enough space for the full $15M to be spent. Quenton Jackson is only guaranteed $275,000 next season, so that would free up $2,309,539 off the books if he were waived. Kam Jones is only guaranteed $1,075,459M next season, so that would free up $1,220,812.

If you combine Jones and Jackson's salary that gets Indiana to $3,530,351M off the books. If you include Potter's money, that number improves to $6,331,697M total that can be waived in non-guaratneed money. That would get the Pacers all the way down to $194,421,079 total salary, and frees up 14,641,920 of non-taxpayer mid-level exception money, which is almost the full $15,049,000, but still about $407K short.

This also removes three players off the roster and would force the Pacers to make moves to be a first-apron team if they wanted to use their full 14.6M on one player. That is why I think Indiana could go a different direction.

Traded Player Exception

There are eleven teams currently in the league that have Traded Player Exceptions (TPE) that would help the Pacers free up enough cap space to sign someone with the full non-taxpayer mid-level exception (NTMLE).

Those teams are: Memphis, Boston, Dallas, Chicago, Miami, Washington, New Orleans, Minnesota, Atlanta, Cleveland, and Detroit.

Jarace Walker will make $8,478,542 next season and is an expiring contract before hitting restricted free agency next offseason. If the Pacers and Jarace agree that there might be a better opportunity elsewhere and there is no long-term fit in Indiana, moving off of him to free up a large portion of offseason spending money could be done.

Trading Jarace Walker into a Traded Player Exception

The Chicago Bulls created a $17,991,071 TPE when they traded Kevin Huerter to the Detroit Pistons. If the Bulls wanted to take a flier on Jarace Walker, as they are currently in a rebuild, they could use their TPE to acquire Walker's $8.47M contract. In return the Bulls could send the 38th overall pick in the 2026 NBA Draft to Indiana.

That would get Indiana's total salary down to $192,274,234 and $16,786,766 away from the first apron. They would then be able to use the full non-taxpayer mid-level exception (NTPMLE) and have wiggle room to sign the 38th overall pick to a team-friendly deal.

Also, Indiana would create their own Traded Player Exception equivalent to Walker's current contract of $8,478,542. It would not expire for an entire year from the date of the deal.

ayo — Apr 7, 2026; Indianapolis, Indiana, USA; Minnesota Timberwolves guard Ayo Dosunmu (13) looks on in the second half against the Indiana Pacers at Gainbridge Fieldhouse. Mandatory Credit: Trevor Ruszkowski-Imagn Images | Trevor Ruszkowski-Imagn Images

Trading Walker would be a hard decision to make, but if Indiana is able to target someone like an Ayo Dosunmu, Anfernee Simons, or CJ McCollum with their full NTPMLE that is an upgrade for the current window.

Indiana could also trade for a player using their NTPMLE, absorbing the contract and treating it just like Chicago would use their TPE to acquire Jarace Walker in this idea. Indiana does not have to spend all of their NTPMLE on one player. They could target multiple players and split the $15,090,000 accordingly, which would add more depth to the roster.

Final Thoughts

Jan 12, 2025; Cleveland, Ohio, USA; Indiana Pacers guard Andrew Nembhard (2) celebrates with forward Jarace Walker (5) and forward Pascal Siakam (43) after a basket during the second half against the Cleveland Cavaliers at Rocket Mortgage FieldHouse. Mandatory Credit: Ken Blaze-Imagn Images | Ken Blaze-Imagn Images

Indiana has options to maximize space to build the best bench possible for the next two seasons. It really all comes down to what they value the most, and if they truly believe in Jarace Walker. Cutting the back end of the bench players who are making pennies in NBA terms doesn't really help with the financial situation like trading Walker would.

You can follow me on X @AlexGoldenNBA and listen to my daily podcast, Setting The Pace, wherever you get your podcasts.

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