Keeping Up With NBA CBA Changes, How They Benefit Pelicans
NEW ORLEANS- "With all of the media accounts that are out there now you are kind of led to believe that the CBA may help teams in our position."
Those were the words of New Orleans Pelicans Executive VP David Griffin during the team's exit interviews when addressing the changes in the NBA's CBA as Zion Williamson's new cap hit kicks in. Griffin explained it is still early in the learning process and, though the new CBA presents different issues compared to the old one, there is reason to believe there are several parameters that benefit the small market organization.
As the offseason gets into full swing, the front office is still dealing with two slight unknowns from an operational perspective. The NBA Draft Lottery (May 16) is less than a month away and the CBA is not fully available for dissection.
Looking towards the lottery fate, there are only two possible outcomes. New Orleans will either hear they are the 14th overall pick to start the ESPN broadcast or start celebrating when some other team gets the last lottery slot. Not being 14 means the Pelicans have shot up into the top four selections.
Nothing can be done to read the tea leaves of ping pong balls. The front office can start trying to piece together the puzzle of the CBA. The leaked info provides an outline the team can use to draw up their own blueprints to build a sustainable, small-market championship contender going forward.
Nov 30, 2022; New Orleans, Louisiana, USA; New Orleans Pelicans forward Zion Williamson (1) drives to the basket against Toronto Raptors forward Chris Boucher (25) during the fourth quarter at Smoothie King Center. Mandatory Credit: Andrew Wevers-USA TODAY Sports
Putting Money In Pockets, Keeping Players In Place
Good scouting and drafting will get rewarded. So will the gems that get unearthed. Guys like Naji Marshall, Jose Alvarado, and Herb Jones. Second-round picks, two-way players, and other fringe NBA guys will have a better chance to get paid by the franchises that found them.
Alvarado is locked up for under $2 million a season over the next two years before becoming an unrestricted free agent. Naji Marshall ($1.9M) has one year left on his deal. Jones is the big decision, however, in being eligible for a four-year, $70 million extension.
Teams can now sign veterans to extensions starting at 140% of their current contract, up from 120%. This should make it easier for organizations to retain their best players without risking them hitting free agency.
Brandon Ingram and Lance Nance Jr., for example, are both extension-eligible soon with only two years left on their respective deals. However, players like Zion Williamson with contract stipulations tied to winning individual awards now have a games-played milestone to chase. All-NBA and NBA MVP honorees will have to have played 65 games.
A third two-way contract spot has been created as well. The Pelicans have gotten a lot of production from their two-way guys since Griffin and Co. took over. The extra two-way slot gives New Orleans another chance to invest in an overlooked talent or bring over a draft-and-stash prospect like Karlo Matkovic a bit sooner.
With three slots, the Pelicans can cycle through two-way players and perhaps avoid signing a more expensive veteran to play the same minutes. For a full rundown on Exhibit-10 and other non-typical deals, Larry Coon's CBA FAQ primer and Sam Quinn's CBA 101 explain how millions more will go into the pockets of players from the All-World talents down to the G-League benches.
Teams will also potentially be able to begin negotiations with their own free agents weeks earlier than currently allowed. Starting in 2023-24, teams can start talks one day after the final game of the NBA Finals in June.
This would give New Orleans weeks to wind through a deal with Trey Murphy III before other front offices even had a chance to say hello. That is a big swing in leverage from the days of the Lonzo Ball negotiations
Leveling Playing Field Past Luxury Tax
There are a lot of new checks and balances for ownership groups that practically ignore the luxury tax while trying to buy an NBA Finals appearance. These teams have been undeterred by mere financial slaps on the wrists so the new guidelines make it more difficult to add talent.
Teams that exceed certain salary limits will be restricted in their ability to trade future first-round picks, prevented from signing players in the buyout market, and forfeit away their taxpayer exception to sign players.
There are now two luxury tax thresholds that trigger certain roster-building limits. One is set at ~$7 million over the initial luxury tax line. The next, SuperTax line is set at over $17 million. Staying under the $7 million line is important for New Orleans, at least until they feel the roster is fully set. (Griffin did say the team was close, when healthy, during exit interviews.)
In the new NBA CBA, teams that are above the first $7 million tax apron will not be able to sign "buyout" players. A "buyout" player is defined as anyone waived during that season who had a pre-waiver salary amount greater than that of that season's Non-taxpayer Mid-Level Exception.
Also, if a team proceeds to pass that second apron twice in the following four years, their first-round pick will fall to the end of the first round. If this rule was in place this season the Clippers, Warriors, Bucks, Celtics, Mavericks, and Suns would be unable to trade a first-round pick seven years out to acquire a player.
Furthermore, a taxpaying team has been able to take back 125% of the outgoing salary, plus $100K. Starting in 2023/24, that will be reduced to 110% for teams over either the first or the second tax apron. That will be cut back to 100% the following season. (The Kevin Durant to the Suns and James Harden to the Nets trades would have been illegal under the new terms.)
New Orleans will have to pay a tax eventually, but they'll flirt with the lines not languish millions over the highest tax bracket limit. In short, the new CBA makes it harder for teams with bottomless pockets to ignore cap restrictions, which theoretically spread talent a little wider at the top of the league. The Pelicans need to take advantage of these fringe benefits while they can.
Mar 12, 2023; New Orleans, Louisiana, USA; New Orleans Pelicans center Jonas Valanciunas (17) and forward Herbert Jones (5) hold back Portland Trail Blazers guard Matisse Thybulle (4) on a free throw attempt during the first half at Smoothie King Center. Mandatory Credit: Stephen Lew-USA TODAY Sports
Banging Out The New Budget
NBA revenues are rising and so are the salary caps. The roster exceptions are, well, no exception.
The mid-level exception for teams not over the luxury tax line increases by 7.5%, up to $12.2 million. The Room Exception jumps 30% to $7.6 million next year and now can be three years long (it had been two). This will really help the Pelicans attract a playoff-caliber veteran to play a role around this core.
The New Orleans Pelicans are one of two NBA franchises to have dodged the luxury tax in every year of their existence. The Pelicans shipped out Devonte’ Graham and four-second round picks to the San Antonio Spurs for Josh Richardson, who is on an expiring contract. It was a move that was understandable but also looked like a high price to pay just to avoid the luxury tax yet again.
The outgoing second-round draft capital ensured that the Pelicans did not have to pay Graham the $12.1 million he was owed next season, and it will allow the Pelicans to keep under the tax line in 2023-24 if they choose. But it also took away a $12 million trade chip that could have been replaced. Now, the team could lose Richardson for nothing as a free agent.
As for keeping veterans that have a role and want to stick around at the right price (Nance Jr., Jonas Valanciunas), they will be able to decline their options and sign extensions starting with a first-year value below the declined option in the new CBA, giving both teams and players a little more negotiating flexibility. The former CBA disallowed taking less money.
Apr 1, 2023; New Orleans, Louisiana, USA; New Orleans Pelicans forward Larry Nance Jr. (22) and forward Herbert Jones (5), on left, reacts during a stop in play against the LA Clippers during the second half at Smoothie King Center. Mandatory Credit: Stephen Lew-USA TODAY Sports
No More Smoothie King Center Mid-Season In-Season
NBA Commissioner Adam Silver has the In-Season Tournament slated for December. The new concept will overlap with the regular season with certain games designated as tournament games. Since the tournament itself is single elimination, it gives New Orleans a higher-variance chance at winning something and hanging a banner.
Also, there is a chance teams visiting New Orleans take the In-Season Tournament seriously and fans packing the Smoothie King Center get to see the other team's stars actually play. New jerseys and new court concepts are in the works. Watch this in-season space to be more entertaining than expected.
Pelicans Scooped By Different Small Market
There is one danger to the new CBA: the salary floor. The Pelicans do not have to worry about that while Zion Williamson, Brandon Ingram, and CJ McCollum are under contract. No, they have to worry about other small market teams not contending for a title overpaying for a rotational player New Orleans deems necessary.
Teams that do not reach the salary floor do not get the luxury tax payouts. New Orleans got a $28.9 million payout thanks to staying below the luxury line but above the floor this season.
The salary floor this season was approximately $111 million. If this rule had been in place this season, the San Antonio Spurs and Indiana Pacers would've missed out on a hefty $15.2 million payment as they spent just $101.5 million on their roster.
This rule will help discourage teams from building rosters meant to tank, because as you can see they would be missing out on quite a bit of money if they don't hit the minimum spending. The one issue we could see with this rule, though, is a team like the Spurs who are rebuilding could throw a one-year deal to a player worth $15 million to hit that minimum.
Imagine a team like the currently for-sale Charlotte needing to spend $17 million hit the salary floor and the Pelicans having a free agent worth only $10-12 million. New Orleans would also have to worry about tax implications when deciding whether or not to match an offer sheet.
That might be the one drawback to the new CBA. To quote Snowfall's Leon Simmons, "A hard game just got a whole lot harder." The second tier of teams might have just gotten turned against each other for talent that is now being spread out more equally at a time when more teams believe they have a chance at a playoff spot.
